Weekly Feed Market Commentary
Published 27 April 16
As of today (27.04.16), this page will now be updated with a new improved monthly report from the 26 May.
Both European and US grain markets rose last week as weather concerns in South America once again dominated headlines. Furthermore, fund activity helped to support prices during the first half of the week, before slowing on Thursday.
UK feed wheat futures (May-16) closed down on the week Tuesday-Tuesday by £1.05/t, settling at £104.65/t yesterday (26 Apr). Nevertheless, on Thursday it was at £107.50/t, the highest price on that contract since the beginning of February, before falling by £2/t at Friday’s close.
A similar trend was recorded in US markets. May-16 Chicago futures also closed down ($2.39/t) on the week on Tuesday (26 Apr) at $176.28/t, down $9/t from Wednesday’s price of $185.28/t. Chicago maize futures prices (May-16) also closed down on the week, albeit by a lesser amount ($0.89/t), as US prices rallied somewhat from Monday-Tuesday, settling at $150.48/t yesterday.
On Tuesday (19 Apr), the Brazilian government announced plans to scrap its import tax on maize shipments due to concerns over tighter supplies (read more here). The current tax (of around 8-10%) applies to those countries outside the Mercosur trade bloc (Argentina, Brazil, Paraguay, Uruguay and Venezuela) who already don’t have an import tax applied to maize shipments. The change in policy follows the recent concerns over dry conditions in Brazil which could potentially hinder its second/winter maize crop.
On Thursday, Statistics Canada released the results of its intended plantings survey. From a grains perspective, the area intended to be planted to wheat and oats were forecast to fall while the area planted to barley and grain maize is expected to increase.
The intended area planted to all wheat in Canada (the world’s second largest wheat exporter) is forecast to decrease by 1% year on year to 9.7Mha. Historically, the area that is intended to be planted to wheat in March is above the actual area sown to the grain. If actual plantings of wheat in Canada follow a similar trend to previous years (of 2% lower than intended plantings), then this would be the lowest area planted to wheat in Canada since 2011. Combined with lower intended plantings in the US, global supplies of wheat for next season could become tighter.
Chicago soyabean futures prices (May-16), closed at $373.96/t, an increase of $11.85/t Tuesday-Tuesday. On Friday the price was at $362.66/t, but on the back of weather concerns in Argentina, the prices rallied one again to similar levels recorded last Wednesday. However, Paris rapeseed futures prices (May-16) closed at €372.00/t on Tuesday, a total decrease of €4.25/t week on week. Hi-pro soyameal for May delivery into the east coast was at £294/t on Friday (22 Apr).
Results from Statistics Canada’s March Farm Survey on Thursday were also bullish for the oilseeds complex, with intended plantings of canola (rapeseed) pegged 4% below last year. At 7.8Mha, the intended area, if realised would be the lowest since 2011. It’s important to note however that these are only intended plantings as of March, therefore a lot could change between now and when the majority of plantings get underway in May.
Oilseeds markets are still very much focussed on the potential impact of South American soyabean supplies, due to weather concerns. In Argentina, heavy rainfall in north-eastern regions has continued which has stalled harvesting. At 21 April, only 16% of the national area had been harvested, compared with 46% at this point last year. The impact of 20 days of uninterrupted rainfall in key growing regions led the Buenos Aires Grain Exchange to reduce their forecasts for output by 7%, to 56Mt (61Mt in 2014/15).