Our latest Farm Inputs Overview document, published in early December, gives information about the feed outlook, labour prices, straw costs and the weather. A summary of key feed market influencers is shown below:
Our monthly feed market commentary is found below. For more regular updates on the cereals and oilseed markets, please see the Cereals & Oilseeds section of the AHDB website.
At the start of January, UK grain prices continued the increases from the end of last year buoyed by planting difficulties for new-crop cereals. However, towards the end of this month, global wheat markets have recently seen declines.
The short-term picture for old-crop barley and old-crop wheat is well-supplied both domestically and continentally, keeping a lid on any significant prices rises. Also, the price level of imports, particularly Black Sea maize into the UK has somewhat capped price rises in feed grain markets.
Improved weather during parts of January has allowed for increased field work, although progress is heavily dependent on location and soil type. With that in mind, a sizeable increase in spring crop area on last year is anticipated, with winter acreages this season heavily affected by persistent rainfall across the UK in the latter part of 2019.
On the continent this month, ongoing labour strikes across French ports have restricted their export capabilities. With France a major wheat exporter, this strike action has resulted in increases to European grain prices. However, there remains the possibility that the strikes result in a build-up of grain that could pressure markets later into the season once the strikes are resolved.
Maize markets have fluctuated over the past month, responding to trade developments between the US and China. The signing of a phase-one deal between the two nations led to no guarantees of trade, pushing markets lower. More recently, US exports of maize have picked up supporting prices. Trade will continue to be important to global maize prices going forward.
The latest monthly release of GB animal feed production data (including integrated poultry units) details that production was down 2.3% for November 2019 compared with last year. This is partially to be expected due to the high level of feed production during the 2018/19 season. Much of the decline stems from decreases to ruminant feed demand, with a better year for pasture growth and silage production. Overall pig and poultry feed production saw increases, benefiting from cheaper grain prices.
With a record barley crop this season, it is no surprise that season-to-date inclusions of barley in feed production remain strong, up+9.3% year-on-year. Inclusions of wheat (-3.0% YoY) and maize (-7.5% YoY) have declined so far this season.
Oilseed prices ended December strong. However, throughout January markets have been under pressure. Chicago soyabean futures (May-20) have felt the pressure of large supplies and lacking Chinese purchases, falling $22.22/t from 2 January to 28 January. The ongoing coronavirus outbreak in China has pressured soyabean markets as concerns surrounding reduced demand develop.
Oilseed rape prices had strengthened on firm vegetable oil prices earlier this month, however, since then prices have fallen back from highs.
Parts of Brazilian and Argentinian soyabean growing areas continue to face dryness concerns, with rainfall needed. The ongoing harvest of Brazilian soyabeans is slowed by these dryness concerns, leading some to anticipate a smaller South American crop. However, as harvest has only just begun, markets await the release of initial harvest estimates.
With plentiful supplies of soyabeans globally, imports of soyabean meal into the EU have increased on last year by 1.8Mt as of 19 January. Soyabean meal prices are likely to be pressured by the recent declines in soyabean markets.
Imports of rapeseed into the UK are reportedly continuing from Baltic regions and Canada, enabling crushers to likely be sufficiently stocked in the short term. The supply of rape-meal will likely benefit from this.
With growing economic optimism for the UK so far this month, sterling has strengthened against the euro and dollar throughout January. However, Bank of England interest rate adjustments released at the end of January may likely affect the currency. Sterling closed on Friday 24 January at £1=€1.1857. As sterling strengthens further, domestic markets will continue to see pressure.