Weekly Feed Market Commentary
Published 10 February 16
The release of the latest USDA world supply and demand report brought a bearish sentiment to grain markets. UK feed wheat futures prices (May-16) closed down on the week by £2.90/t at £105.50/t yesterday (9 Feb). Similarly, May-16 Chicago wheat futures prices closed at $169.67/t, a decrease of $6.71/t Tuesday-Tuesday. Chicago maize futures prices (May-16) also recorded a decline ($4.53/t) week on week, albeit less than that of wheat, closing at $144.09/t on Tuesday.
Global wheat stocks were revised up once again by the USDA in its latest world supply and demand report. The latest forecasts were 7Mt higher than January’s estimates due to a reduction in demand forecasts in China and India. Global production of wheat also increased, albeit by less, due to increases from Argentina and Ukraine outweighing reductions from Kazakhstan. Total global production for 2015/16 is now forecast at 735.8Mt (10Mt more than 2014/15).
The USDA forecast global maize stocks to remain broadly unchanged from January’s report, despite an upward revision to production. Argentina and Brazil were behind the increase in production, which partially offset the reductions forecast for South Africa and Indonesia. Higher animal feed usage in China, Mexico, India and Turkey outweighed the rise in output.
Total animal feed production for the first half of this season (Jul-Dec) has increased by 0.4% compared to the same point last year at 6.59Mt, according to the latest usage data released by Defra. A rise in manufacturing of poultry and pig feed (both +2%) outweighed the decrease to sheep (-10%) and cattle feed (-3%) production, which has led to the slight overall increase – read more here.
There were also further shifts in the ingredients used to produce the feed. Season to date cereal inclusions have decreased by 1.52% year on year. Total year to date maize inclusions of have fallen by 8%, wheat by 0.1% and barley 1.1% year on year. Once again the inclusion of pulses (field beans and peas) in animal feed production increased in December compared to the previous month bringing season to date (Jul-Dec) usage up to 85Kt, 150% more than this point last year.
May-16 Chicago soyabean futures prices closed down on the week on Tuesday (9 Feb) at $318.66/t, a total decrease of $7.90/t. Following a similar trend, Paris rapeseed futures (May-16) closed down Tuesday – Tuesday by €12.25/t, settling at €355.50/t.
As at Friday (5 Feb), UK rapemeal (34%, ex-mill Erith) for March delivery was £145/t, unchanged from the previous week. Brazilian soyameal (48% ex-store Liverpool) for March delivery recorded a weekly increase of £2/t, at £261/t on Friday.
Currency continues to exert influence on UK rapeseed futures prices. On Friday, UK delivered rapeseed prices were reported broadly unchanged from 29 January, despite falls in international futures prices on the week. These falls were partly offset by a renewed weakening in sterling against the euro.
The latest forecasts from the USDA also recorded upward revisions to global soyabean supply and demand driven by a higher production forecast for Argentina. Nevertheless, Brazilian production was left unchanged. US stocks were increased due to reduced crush demand while export sales of soyameal were also down year on year due to competition from Argentina.