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.
February 2019 Update
UK feed grain prices drifted towards the end of January. Sterling started to withdraw from its rises seen earlier in the month, exposing UK prices to global trends. UK barley prices struggled to find a floor amidst Brexit export tariff uncertainty and cheaper imported maize.
The restart of the US government enabled the release of January US export data, which fell short of anticipations. This then weakened US grain markets, with a knock on effect on EU prices. In addition, US supply data highlighted their current wheat stocks were up 7% compared to last year. These factors have contributed to a ceiling on global prices.
Since February began, feed barley prices have fallen becoming closer to feed maize. AHDB feed usage data released earlier this month (7 February), puts the use of maize in feed at an increase of 66% for July – December 2018 from 2017, while barley usage fell 13% in the same period. The lowered demand has discounted feed barley, with many buyers opting for the cheaper maize alternative.
UK delivered rapeseed prices gained slightly in the month supported by a weaker sterling. A strengthened euro has recently lowered Paris (nearby) rapeseed futures, with falling soyabean markets exerting pressure also. Soyabean markets dropped with the recommencement of US government. January US data showed US supplies remained at high levels.
While the overall mild winter in the UK had led to a prevalence of light leaf spot developing, the recent cold snap has had a positive effect on the crop, clearing up incidences of mildew. Yield expectations may be impacted, though it is still too early into the season. Mild weather forecasts are ideal for nitrogen applications. EU and Black Sea crops were unthreatened by the bout of recent extreme cold weather.
Although the ongoing Brazilian harvest estimate was revised 5Mt lower, the final estimate remains higher than trade estimates. Plentiful US soyabean stocks will compete with a fresh South American supply potentially creating lower prices. That could impact on rapeseed futures.
Sterling’s rise in early January has eased slightly but remains up from December. Renewed optimism in avoiding a ‘No-Deal’ scenario gave reason for the euro to be up further on the month. Increases were seen most in the dollar as the President moved to rule out a restart of the US federal shutdown and confirmed trade talks with China had progressed productively. The euro-dollar exchange fell again over the reference period.
Alex Cook, Trainee Analyst
Alex.Cook@ahdb.org.uk, 0247 693 5746