Feed market update - October 2016
Read our latest summary of developments in the animal feed market.
During October, UK grain markets rose, fuelled by the significant shifts in currency. Further support was added to global wheat futures by boosted export demand for US and EU wheat. During the month, AHDB released its first estimates of UK 2016/17 wheat and barley supply and demand. These indicate tighter supplies than in the previous couple of years. Lower production is largely behind this, with 2016 UK wheat and barley output provisionally down 12% and 10%, respectively. For wheat, the lower availability is compounded by increased demand, including from millers, bioethanol plants and for animal feed. The gap between UK average ex-farm feed wheat and feed barley prices has increased to nearly £19/t, larger than most of last season. This suggests that we could see higher proportions of barley used in animal feed rations.
Protein prices over the past month have also moved upwards, driven by higher oilseed values and weaker sterling. Oilseed prices tracked the movements of vegetable oil prices. Concerns over the impact of adverse weather on the rapeseed harvest in Canada and on early soyabean planting in South America were also factors. UK oilseed rape production in 2016 is estimated at the lowest level since 2004, according to Defra’s provisional crop areas. The lower production will come as little surprise, after reports of lower than average yields throughout harvest, in addition to the recorded drop in planted area. Potential reasons for the reduced yields include a high pest pressure, due to the mild winter, short rotations and a dull June which limited seed filling. All of this means that the 2016/17 season is looking tight, with prices already seeing the effect.
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