The cereals marketing year has ended on a high, stalling any further declines in feed costs, for now.
Confounding predictions of a generally bearish outlook for key raw materials, spot prices for UK feed wheat rose by over £7/tonne over the past month. They have now hit their highest level for 14 months.
Softening the blow for poultry farmers has been the downturn in soya costs, dropping around £13/t during May.
This takes soya back to where it was in December and is £45/t down on the initial coronavirus-related peak in March.
The result is that overall ration costs have largely drifted sideways for the fourth consecutive month.
Our Feed Price Index (below) was down £2/t over the month.
Driving up wheat prices during May have been concerns over the impact of dry weather across Europe and Russia, overriding the longer-term prospect for plentiful supplies.
The change in the weather and arrival of rainfall has now put a brake on further rises.
Worries persist about lack of rain in some areas, and whether prices subside again soon will depend on drought damage to crops.
Soya has shown an opposing trend over the same period.
Expectations of bumper harvests had pushed prices down, while more recently, a resurgence in soya purchases by China has given them a boost.
|Grain Market Drivers
|↑ WHEAT – Some concerns persist over dry conditions in Russia and elsewhere. The first harvest reports will confirm the true situation.
|↑ SOYA – Continued purchases of soya by China could maintain prices despite the high supplies outlook.
|↓ WHEAT – The longer-term view remains bearish for the present.
|↓ SOYA – Global supplies are still set to be high with the harvest in Argentina currently progressing well.