SOYAMEAL managed to climb still higher during February, halting the downward trend in ration costs for the time being.
At the same time, UK feed wheat has remained steady, although the longer-term outlook for prices generally remains downward.
During the past month, global wheat prices were supported by dry weather worries over the crop in Argentina and reports of recent administrative delays in the Black Sea corridor.
There is a deadline of 19 March for the renewal of the agreement on the corridor, which may prove challenging.
The outcome of this will have a significant impact on sentiment.
Meanwhile, forecasts for Ukraine’s wheat harvest this year are down again from last year, by at least 2m tonnes, to 18mt or lower, down 14mt from the pre-invasion total.
In the case of soya, the persistent drought in Argentina has turned the South American crop, which is now entering the marketplace, into a tale of two harvests.
The Brazilian harvest was approaching its halfway point during the first week in March, and forecasts indicate that it is still on track to be exceptional in size.
Global soya prices
This is likely to be the reason global soya prices remain bearish in the longer term.
However, last month’s rally in soyameal was caused by the continuing drought in Argentina, which has badly mauled the harvest there.
The national forecast has already been reduced by 15mt since the crop went in the ground, to 33mt, a fall of 30%, with more downward revision likely.
Grain market drivers
NEUTRAL – WHEAT – Current expectations are that the Black Sea Corridor will remain operating, although any setback could push prices higher.
NEUTRAL – SOYA – The drought damage to Argentina’s crop has supported prices for now.
DOWN – SOYA – Traders are still expecting Brazil’s impending heavy harvest to govern the market for the next six months.