Weekly Feed Market Commentary
Published 26 November 15
UK feed wheat futures prices (May 16) have remained relatively stable, closing marginally down on the week (£0.30/t) at £118.05/t on Tuesday (24 Nov). However, May 16 Chicago wheat futures prices closed up by $0.74/t on the previous week, at $181.04/t yesterday (24 Nov). Chicago maize futures prices (May 16) also closed marginally up ($0.49/t) on Tuesday at $147.54/t compared to a week earlier.
Demand for cereals used in animal feed is forecast down by 2% for 2015/16 compared to the previous season according the latest Defra UK balance sheet published earlier today (Wednesday 25 Nov). While overall cereal demand is expected to decrease, usage of wheat in animal feed rations is forecast to increase during 2015/16, due to its current price competitiveness compared with other feed grains.
The latest balance sheet also forecasts that barley usage in animal feed will be 1% down on the year for 2015/16. Barley usage in both compound and IPU feed production has declined so far this season (July-September) compared with the same period last year. In addition, maize usage in feed rations is also expected to decline as domestic feed grains are currently priced at more competitive levels than imported maize.
Some EU winter crops have received a much needed boost from warmer than usual conditions from the end-October to mid-November, according to the latest EU MARS crop monitoring bulletin. The main benefit was felt in countries in central and Eastern Europe where the drier conditions meant planting could be concluded after a wet October. While the EU-28 wheat area is expected to decline by 1% for harvest 2016, it will still be a historically high year. Overall, winter crops in the EU have got off to a generally favourable start with conditions through winter and the rest of the growing season being critical to final yields.
The International Grains Council (IGC) cut its forecasts for world maize production for 2015/16 by 3Mt to 967Mt on Thursday (19 Nov) in its latest Market Report. The 5% decrease year on year was driven by downward output revisions for China and South Africa, which more than offset increases for the US. It should be noted however that IGC approached their forecast slightly differently from the USDA in their latest supply and demand estimates, when they revised up opening stocks but kept the production outlook stable. The ICG also forecast a decline in global demand with a reduction in consumption for animal feed the driver behind decline. Total maize usage in animal feeding is forecast down by 2% on the year (but still the second highest ever). Decreases of maize usage in animal feed rations in the EU was reportedly where most of the decline came from.
Nearby Chicago soyabean futures traded at their lowest level (in dollar terms) in over six years for a time on Monday (23 Nov) following the Argentine election result, with a daily low around $310/t. Although markets closed higher around $318/t, (and at $320.46/t on Tuesday) they remain close to historic lows.
Paris rapeseed futures also came under pressure on Monday (23 Nov) and closed €2.50/t lower on the day. However, they remained above their level from early last week and around €10/t higher than in September. Paris rapeseed futures prices (May-16) closed slightly down (€0.25/t) week on week at €376.50/t yesterday. UK rapeseed markets have been under pressure recently from the weak euro, and in sterling terms, Paris rapeseed futures remain at similar levels to September.
UK rapemeal (34%, ex-mill, Erith) recorded no change on the week at £150/t, while Brazilian soyameal (48% ex-store, Liverpool) was down £10/t to £256/t on Friday (20 Nov) compared to a week earlier. Hi-pro (ex-store, East Coast) prices recorded a similar decline of £9/t to £244/t on Friday (20 Nov).
The International Grains Council (IGC) increased its forecasts for global soyabean production by a further 2Mt in its latest market report. However, global trade and consumption forecasts were also increased, offsetting the impact. With adjustments to opening stocks, carry-out for 2015/16 is projected to reach 47Mt, 2Mt less than last month but still 2Mt more than last season.