FEED INGREDIENT costs are now calming down again after a surge in March and April.
Although the fundamentals for wheat and soya have remained bearish since the new year, the uncertainty unleashed by coronavirus caused a two-month jump in soyameal during March and April, gaining nearly £40/tonne at one stage.
Currency weakness against the dollar and the Euro caused by the pandemic, which reached a low in mid-March, played a significant role in this.
Soya prices have now subsided but are still higher than previously, during the marketing year to February (see chart).
As a result, the spot cost of our Basic Layers’ Ration topped out in March and April but is now back at a similar level to January and February, and also at much the same level as a year ago.
The lasting impact on producers occurred at the turn of the year when wheat prices rose sharply during December and January to reach the level they are now.
This puts our basic ration cost more than £20/t up on last October.
If it can be assumed that the more unpredictable elements of market reaction to the pandemic have now passed, markets should return to assessing the fundamentals again.
With all the indicators pointing to a well-supplied market, there should be no significant feed shocks ahead for producers.
Grain Market Movements
| ↓Wheat | Recent concerns about dry weather in Europe, Ukraine and parts of Russia are receding in the short term. |
| ↓Wheat | The longer-term supply outlook is ample, combined with the latest forecast of reduced global demand from the International Grains Council (IGC) |
| ↓Soya | Coronavirus has intensified the already bearish trend on prices, as demand has decreased internationally for feeding livestock. |
| ↓Soya | Harvests in South America are going well, and there is a large area planted in the US for 20/21 season. |