Feed market update – July 2016
Over the past month (23 June – 20 July), markets have been reacting to the outcome of the EU referendum.
From 23 June to 19 July, the value of sterling fell by almost 9% against the euro, reaching its low point on the 6 July of £1 = €1.17, the lowest level since October 2013. However, sterling had recovered slightly by the end of the period, to £1 = €1.19. Feed wheat futures have followed a similar path to the currency, climbed by £4.80/t in the immediate aftermath of the Brexit vote, before falling back after peaking on 27 June. Throughout July, they have remained largely stable.
Over the past months, concerns have also arisen surrounding the quality of the French wheat and barley crop, leaving crop conditions in 2016 substantially behind where they were a year earlier. These concerns have added bullish measures to an otherwise bearish grain market.
The 2016 AHDB Planting and Variety survey shows an overall decline in the area of cereals and oilseed rape (OSR) across England and Scotland. This has been driven by a sharp fall in the OSR area for the second consecutive year, in addition to slightly lower winter barley and wheat areas. However, strong GB spring barley, plus higher oat levels have restored some balance.
The proteins market across the past month has been driven by weather concerns in the US, with weather patterns reiterating concerns of a La Niña event. UK delivered rapeseed prices have followed a very similar trend to the global oilseed futures markets. Since 24 June, prices for delivered rapeseed have jumped £18.50/t, reaching £291/t on 15 July.
To read more about developments in the markets affecting animal feed over the last month, click here.
James Webster, Trainee Analyst
James.Webster@ahdb.org.uk, 024 7647 8844