Read our commentary on latest developments in the global cereals and oilseed markets.
For an outline of key trends in a range of farm input prices, please see the AHDB farm inputs overview. This document is updated on a quarterly basis.
For more regular updates on the cereals and oilseed markets, please see the Cereals & Oilseeds section of the AHDB website.
Prices of both feed wheat and feed barley (UK ex-farm, July delivery) fell considerably during July. In the five weeks to 25 July 2019 ex-farm UK feed wheat (spot) fell by £11.20/t, to fall below £135.00/t for the first time since September 2017.
The move lower in UK feed wheat prices has been driven by a large supply outlook, both in the UK and on a global scale. UK wheat production for 2019/20 could reach as much as 15.3Mt, this would leave the UK with a significant exportable surplus of wheat and will leave prices pressured.
Similarly, barley prices have been falling in anticipation of large supplies and an uncertain outlook for trade post-Brexit. UK barley production is expected to return to normal this season. However, with potentially high tariffs on UK barley exports to the EU beyond 31 October prices have fallen back.
UK exports of barley to the EU have averaged 975Kt over the past five years. With tariffs in place, UK barley will need to compete against other cheap origin barley. UK barley prices have dropped £9.30/t in the five weeks to 25 July. Spot feed barley prices are now at their lowest point since September 2017.
Some of the surplus of feed barley is likely to be used in the production of animal feed. US maize has become more expensive on the back of slow planting and poor conditions. Although the growing conditions have now improved in the US, barley still looks cheap relative to maize for feed production.
The first sign of increased usage of barley in animal feed production (compound and integrated poultry units) was seen in May. Usage of the grain increased 7% month-on-month, while usage of wheat and maize fell.
Soyabean prices have been volatile over the course of the past month. Uncertainty over the area planted to the crop in the US, combined with ongoing trade friction saw prices spike, before falling back again.
Shipments of soyabeans from the US to China have recommenced, albeit to a lesser extent than had previously been reported. The market lifted slightly on this news but 2018/19 soyabean ending stocks remain heavy and more US exports will be required.
For the new season, uncertainty over the area planted to soyabeans in the US is resulting in significant uncertainty. The International Grains Council currently forecast production and stocks to move to more “normal” levels in 2019/20.
The global rapeseed market continues to look tight and rapeseed prices have been climbing as a result. The EU is expected to produce its smallest rapeseed crop since 2006, Ukrainian yields have been lower this season and Canadian production is also forecast to be down year-on-year.
UK delivered rapeseed prices (November, Erith) have risen £11.00/t since the beginning of June, to £341.50/t on 26 July.
At the end of July, the value of sterling has fallen considerably against both the dollar and the euro. The formation of the new government, followed by the increasing likelihood of a no-deal Brexit has led sterling to two-year lows against the dollar.