Weekly Feed Market Commentary
Published 2 September 15
Tuesday’s (1 Sept) Nov-15 UK feed wheat futures closing price was £114/t, which the contract trended around for most of the past week. On Friday (28 Aug), the contract reached a new low of £113.65/t, reflecting harvest pressure and the bearish sentiments in the grain markets at the moment.
The International Grains Council (IGC) added further weight to grain markets in their latest grain report released on Thursday (27 Aug). They forecast global grain production to reach a record of 1,988Mt, up 18Mt on their previous forecast. The uplift to their estimate was driven by increased wheat production forecasts in the Black Sea region and Europe.
UK wheat stocks climbed 71% in June (excluding on farm stocks in Scotland and N. Ireland), compared with a year earlier, according to the latest figures from Defra. The volume of wheat held on farms in England and Wales and at Ports, Merchants and Coops at the end of June amounted to just under 2Mt, the highest tonnage since 2009. With a substantial level of stocks in place at the end of 2014/15, and another big wheat harvest expected, 2015/16 is likely to be another year of large supplies.
In Europe, provisional survey results from FranceAgriMer revealed varying wheat quality for the French soft wheat crop. Results from the report showed that 98% of the soft wheat crop had a Hagburg falling number above 220 seconds and 96% of the crop had a specific weight of 77Kg/hl or above. Protein levels were slightly more varied, with only 51% of the crop expected to be at 11% or above, compared with 57% of the crop last year.
Market anxiety over the impact of the Chinese economic slowdown on global oilseed demand has moved in and out of focus throughout the last week. Concerns eased towards the end of last week following Chinese government measures to boost demand. However, this week indications have shown that demand from manufacturers contracted in August, which has capped gains for oilseed prices.
As such, oilseed futures prices have moved up and down throughout the week. Nov-15 Chicago soyabean futures closed at $321.11/t on Tuesday, slightly lower week-on-week, but up on the mid-week low of $317.80/t last Wednesday. Nov-15 Paris rapeseed futures have witnessed a similar trend but have shown more resistance to the downward pressure, closing at €361.50/t on Tuesday, up €6.75/t on the week.
German winter rapeseed output is expected to be 20% lower in 2015 than last year, due to a combination of reduced area and adverse weather conditions. The German Agriculture Ministry have stated that pests could have also played a role in the lower estimate.
In contrast, last week, the IGC increased estimates for the 2015/16 Brazilian soyabean area to 33Mha, up 3% year-on-year and a new record. While the outlook for yields and production is as yet tentative, the weakening of the Brazilian currency is reported to have likely boosted domestic values and so is encouraging farmers to sow more land to soyabeans
Soyameal prices (Brazilian, 48%, ex-store Liverpool, spot delivery) increased by £5/t to £288/t on Friday (28 Aug), compared with a week earlier. Rapemeal (34%, ex-mill, Erith, September delivery) prices however were unchanged on the week, at £172/t on Friday.