FORWARD indicators for soyameal prices have now switched back to ‘down’ in the coming months.
Despite concerns about short-term variables such as weather and demand from China, the fundamental of ample supplies are now starting to weigh on market sentiment.
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However, this is not before those shorter-term factors gave UK soya prices a final upward flourish during September, peaking above £390/tonne, compared with £368/t during July/August.
UK feed wheat has also crept some £3/t higher in the past month but is not expected to move significantly in the coming months.
The main reason for the latest price increase was the quarterly USDA report showing US stocks to be at their lowest for 14 years.
Also contributing to the price rises has been the weakness of Sterling against the Dollar and the Euro.
Forward prices for soyameal in November are currently set nearly £20 lower at around £373/t.
News from both North and South America is reducing support for soya prices.
Although stocks are at their lowest for five years in the US, the key news was that stocks in September proved to be more than 2mt above the trade’s expectations.
Trade forecasts for Brazil are already pencilling in a record harvest for 2021-22, even though the crop there is yet to be planted.
But once again, there is a weather uncertainty, with crop development relying on the arrival of sufficient rainfall.
Grain Market Drivers
UP – WHEAT – (short term) Tight stocks are supporting prices
DOWN – WHEAT – (longer term) Higher production should cap prices
DOWN – SOYA – (short term) Ample US supplies suppressing the market
DOWN – SOYA – (longer term) Brazilian output likely to pressure the market