Read our commentary on latest developments in the global cereals and oilseed markets.
Please note that from now on this commentary will only be updated monthly. To follow developments in cereals and oilseed markets in the meantime, please see the markets section of the website of AHDB Cereals & Oilseeds.
April 2017 update
Looking at the past month in isolation you could be forgiven for thinking that grain markets have been relatively quiet, with feed wheat (spot, delivered East Anglia) increasing by just 0.7% on the month to 14 April (£1.00/t to £149/t). However, last month also witnessed East Anglia delivered feed wheat hit its highest point since June 2014 (£149.50/t on 31 Mar).
The impact of currency movements over the past month, as well as this season’s tight domestic supplies have further emphasised how uncompetitive UK feed wheat is on the global market.
Maize prices received a boost earlier in the month following the release of the US Prospective Plantings report. The release by the USDA highlighted the possibility of a tighter maize outlook going into the 2017/18 season. The USDA survey of US farmers planting intentions highlights a switch in production from maize to soyabeans. An estimated 36.4Mha is intended to be planted to maize, some 1.6Mha (4%) down on the area of maize harvested in 2016.
The area intended to be planted to wheat in the US also looks set to fall going into the 2017 harvest. The intended area to be planted to wheat, at 18.6Mha, would represent the lowest area ever planted in the US (on records back to 1919), this is likely a reaction to the lower wheat prices experienced in the US this season.
Bringing it back domestically and February’s GB animal feed production statistics released in April highlighted a 3% (360kt) increase in wheat usage on the year, while barley usage declined by 4% (89Kt).
At face value, it may seem unusual that barley wasn’t included in diets at a higher rate in February, given that the discount of GB average ex-farm feed barley to feed wheat averaged £22.40/t. However, this season the poultry sector is the driving force behind a rise in wheat consumption as animal feed, accounting for 43% of total GB animal feed production so far this season.
Nevertheless, with feed barley being at a substantial discount to feed wheat, inclusions of barley in certain diets, such as pig and ruminant, are expected to be at relatively high levels. Between July and February, cattle and sheep feed production was up by 0.5% at 2.7Mt and 20.8% at 452Kt respectively, while pig feed production was down by 6%, at 1.3Mt.
Similar to global grain markets, global protein markets were also impacted by the release of US prospective plantings data, with intended plantings of soyabeans in the US estimated up 7% to 36.2Mha, adding further weight to the market.
South American supply forecasts added further pressure to markets, with both USDA and Conab forecasting increased output from the region. April’s USDA World Agricultural Supply and Demand Estimates, forecast Brazilian soyabean output at 111Mt, 14% higher than the nations previous record set in 2014/15 (97.2Mt)
The combined pressure of increased output in both the Northern and Southern Hemispheres helped to push Chicago soyabean futures to their lowest levels in the last year. Nearby Chicago soyabean futures have fallen considerably since mid-January, dropping by more than $47/t between 18 January and 18 April.
The movements in US soyabean futures have echoed around wider oilseed markets with nearby Paris rapeseed futures falling by €11.25/t (3%) over the month to close at €396.50/t on 18 April. Similarly UK delivered rapeseed also recorded declines over the past month with spot prices falling £10.50/t to £349/t on 13 April (Erith delivery), this represents a £23/t fall since mid-January.
With oilseed markets falling, oilmeal feed prices have also fallen over the past month. Soyameal prices (spot, Brazilian 48%, ex-store, Liverpool) fell by 2% to £311/t on 13 April.
James Webster, Analyst
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