RAW MATERIAL costs have levelled off in recent weeks, but remain far higher than a year ago.
The average UK price of feed wheat stood at £203.70/t (ex-farm) in the first week of February, a gain of less than £1/t over the month.
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This was the smallest monthly increase for a year, which has seen average UK prices gain more than £50/t overall.
At the same time, soya has slipped back by some £23/t following its stratospheric increase in January, though it remains at a historically high level.
The two movements combined have shaved £5/t off our basic layers ration for February, which is as yet only a marginal improvement given that feed costs are around £70/t above this month last year.
According to the AHDB, “wheat is now taking a breather across the globe.
“There are a few worries about new crop supplies, and old crop markets have had little new news to continue to feed the bull run.”
Wheat prices have mainly been supported by a tense global situation in the maize market, and maize prices are still high internationally.
Demand for maize from China is still heavy, but prospects for bigger crops in Brazil and the US this year are keeping things in balance.
Export restrictions in Russia have also been a major factor in maintaining current wheat prices, and although the market may yet have a little further to go in the short term, the eventual ‘top’ may not be far off.
The outlook for old crop wheat prices (from here to June) is now looking less firm, while according to Humphrey Feeds, “new crop prices remain in no man’s land, waiting for further details on crop development and yield projections”.
“However, news from Europe and the Black Sea is, so far, looking positive.”
Soya prices have eased back after last month’s ‘panic’ increases but still remain well supported.
In recent weeks, significant rainfall in Brazil has helped to calm the market, but it is now likely to delay exports.
Longer-term, the global supply and demand balance is looking tight, and soya may need to rise in price still further to attract the necessary acreage, especially in the US.
- GRAIN MARKET DRIVERS
- ↑ WHEAT – Tight world market in the short term
- ↑ SOYA – Tight world market in longer-term
- ↓WHEAT – New crop supplies look promising in the longer term
- ↓ SOYA – Brazilian rainfall has reduced harvest concerns.