Key raw material costs held their own for another month despite the persisting, long-term bearish outlook for both wheat and soya prices.
In fact, little has changed to affect the market fundamentals, which remain on the side of egg and poultry producers with expectation of plentiful supplies.
Even so, feed wheat has made a marginal gain over the past month to reach a UK average (ex-farm) of just over £160/tonne. This is £23/t above a year ago and £5/t above July 2018.
Prices have been, at least temporarily, buoyed by latest estimates for the US wheat acreage, which has now been forecast lower, along with reduced estimates in the EU and eastern Europe.
However, the supply picture is being balanced by higher forecasts for the southern half of the globe.
Indirect support to feed wheat prices has also been coming from the latest US estimate for maize acreage showing a 5% downwards adjustment.
Soya prices in the UK advanced around £7/t during recent weeks, the market gaining its support from an unexpectedly low estimate for the US soya acreage.
This was not so much a downward revision to the estimate, as an upwards adjustment that was smaller than expected.
Another factor currently holding traders’ attention is the risk that an imminent dry spell across the mid-west could have a negative impact on yields.
For now, this leaves soya prices at much the same level as in the July-Oct period last year.
The lack of real movement in the raw materials market has kept our growers’ ration index (see chart) on an even keel, with little change since March.
GRAIN MARKET DRIVERS
|↑ WHEAT & SOYA||Short-term news about reduced plantings and potential weather concerns have given prices a boost.|
|↓WHEAT & SOYA||The longer-term outlook for both commodities remains on the bearish side, with markets likely to be well supplied during the coming season.|