Feed Prices and Markets

Published 27 June 19

Grains

Grain table

The UK ex-farm price movement throughout the reported period differed considerably for UK feed wheat and UK feed barley. Both commodities saw a large drop in price on 23 May and UK feed barley has continued to climb back up since then. In contrast, UK feed wheat jumped back up from 23 May and took a tumble again in June, ending the period lower.

The GB animal feed production statistics (AHDB) released at the beginning of June, showed that for the month of April 2019, GB animal feed production was down across all sectors compared to April 2018; sheep (-36.4%), cattle and calves (-11.3%), poultry (-4.0%) and pigs (-1.7%).

While overall use is back, we see variability in this when split by feed type. Maize usage is over double that in April 2018, whereas wheat, barley and oats all saw a drop in use in April 2019, compared to April 2018. The price discount to maize would be a major driving factor at this time. However, the spread between new crop maize and wheat has been narrowing somewhat throughout June, which could see a switch from maize usage to wheat this year, increasing demand for domestic feed wheat for 2019/20. 

US weather remained a driver of global grain prices throughout May and June. The wet weather was not only causing issues with corn planting, but also raised concerns around wheat conditions. As rains persisted, US Managed Money funds closed their net-short positions at a rapid rate for both corn and wheat throughout the reported period. This helped support Chicago grain futures.

Although dryness concerns were raised in June for Europe, the Black Sea region and Canada, so far they have not made any major effects on the market. All three regions, all key suppliers of global grains, are still set for bumper wheat crops for 2019 harvest. Prospects for maize production in the EU and Black Sea also remain favourable. 

With grain availability prospects currently good for 2019/20, UK grain prices will likely remain pressured.  However, if dryness does become more prominent, grain prospects could be dampened potentially lifting prices.

Proteins

Protein table

UK rapeseed prices delivered into Erith peaked at the end of May to £325.50/t, but have since come down. As at 21 June, oilseed rape delivered into Erith was £323.50/t, reversing some of the losses seen during June, but not returning to end of May levels.

European (Paris) rapeseed futures have been following quite closely to US soyabean futures, rising and dropping at the same time. This said, more recently the European market has not been moving as dramatically as the US.  Both Paris rapeseed and US soyabean nearby futures ended the period up from the close of the last reporting period.

US Managed Money funds were in an all-time net-short position for soyabeans in May when planting concerns from wet weather became apparent. As money managers bought back contracts to close their short position, the futures market was pushed higher.

With EU oilseed rape crop prospects still subdued, the global market is driving European prices. The latest EU Commission balance sheet, released at the end of May, pegs the EU to be in a rapeseed deficit of over 3Mt. The overall oilseed deficit for the EU was pegged at over 16Mt. This shortfall, if realised, highlights how reliant the EU is going to be on imports of oilseeds this year and the importance of global supply.

Both rapemeal and soyameal usage for the season (July-April) are up compared to 2017/18. Rapemeal usage has seen the biggest increase - 12.6% to 549.5Kt. The imports of both these feed products are also up year on year to meet the increased demand.

Currencies 

Currency table

Sterling continued to lose value throughout the reported period against both the euro and the US dollar. As at the 21 June, the value of sterling against the euro was the lowest since early January, at £1 = €1.118. Although the sterling-dollar exchange fluctuated significantly, it ended the period down. The pound sunk to the lowest value against the dollar this year on 18 June, at £1 = $1.251.

The euro strengthened slightly against the US dollar over the reported period, however there was a degree of volatility throughout.