Feed market update - 23 September 2015
Read our latest summary of developments on global markets for cereals and oilseeds.
UK Nov-15 feed wheat futures have traded relatively flat on the week, closing at £111.40/t on Tuesday, down £2.10 from the previous Tuesday. During the week, the contract rebounded off the £110/t level for the second time in September, suggesting that this could be an important technical point of resistance to watch for – if the contract breaks below this level it could be a signal of further price weakness. EU wheat output in 2015/16 is forecast to reach within 1% of last year’s record high, according to Strategie Grains’ latest estimates. However, it cut its maize crop forecast to an eight year low of 57.4Mt, due to reductions in expected yields. The Chinese government confirmed on Friday its intention to continue maize stockpiling into 2015/16. This has led to surging imports of alternatives such as barley and sorghum. However, a reduction in the price offered to growers is likely to reduce the incentive to import alternative feed grains in the short term.
UK rapemeal (34%, ex-mill, Erith) prices continued to fall in the week to Friday, moving down £3 to £161/t – the lowest since October 2014. Soyameal prices also remain historically low, with hi-pro (ex-store, East Coast) down £2 to £264/t. Continuing concerns over the global economy, and resulting soyabean demand, maintained downward pressure on US soyabean futures over the week. The nearby contract closed on Tuesday at its lowest since March 2009. With the US harvest underway (7% harvested as of 20 September), the approach of renewed supplies is steadily removing the risk premium from soyabean prices. Markets were also surprised by the improvement in US soyabean conditions in the week, which may help the crop achieve the unexpectedly high yields forecast by the USDA earlier this month, adding to weakness in soyabean prices.
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