Monthly Feed Market Commentary

Published 2 January 18

Grains

Grain markets remained flat during December 2017. The UK feed wheat futures May-18 wheat futures contract closed at £142.60 on 27 December, up just £0.10/t from the start of the month. Furthermore, the closing prices for the contract had a range of only £1.45/t throughout December. Similarly, Paris maize futures June-18 prices also showed limited change. The contract gained just £0.12/t over the course of December and closed at £144.63/t on 27 December, again with a narrow closing price range of only £1.99/t throughout the month.

Feed Report 1

On a global level, production and supply estimates have largely been revised upwards this month. Global wheat production in 2017/18 is now forecast at a record 755.2Mt by the USDA (as at 12 December). This is 3.2Mt higher than was forecast in November and 1.6Mt higher than last season. Following this change, global wheat closing stocks in 2017/18 are also forecast at a record 268.4Mt, 5% higher year on year.

Closer to home, Defra, in their final 2017 UK crop areas and yields report estimate UK wheat production at 14.84Mt. This is 326Kt lower than the provisional production estimate published in mid-October. On a regional basis, the largest downward revision in production is that of the East Midlands, down 148Kt on the provisional estimate. 

Although Vivergo Fuels had originally announced a closure for planned maintenance, a subsequent release stated the bioethanol facility will remain offline for the foreseeable future. The shutdown in part prompted by a fall in bioethanol prices (read more here) and uncertainty regarding future policy. While UK feed wheat demand is likely to be impacted, the actual implications are as yet uncertain.

Proteins 

Global oilseed markets have in general, seen a decline through December. Paris rapeseed May-18 futures closed at £314.51/t on 27 December, down £11.17/t from the beginning of the month. Chicago soyabean futures (May-18) also fell through December, down £9.60/t between 1 and 27 December to £267.75/t. Palm oil prices also saw a decline during the month. The Kula Lumpur palm oil futures contract for Mar-18 fell £12.00/t during December, closing at £464/t on 27 December.

Feed Report 2

The downward pressure in oilseed markets has mainly been driven by increased global production estimates and more favourable weather in South America. Pressuring palm oil this month has been an increase in production combined with lower exports, following India’s import tax increase on edibles oils.

Global 2017/18 rapeseed production was projected at 72.9Mt in December by the USDA, 0.8Mt higher than in November and heavily influenced by the increase expected in Canada. 2017 Canadian canola (rapeseed) production is now pegged at 21.3Mt by Statistics Canada, compared with 18.2Mt in late August (read more here). This is 9% higher year on year and a new record.

Meanwhile, the French Agriculture Ministry expect the French 2018 rapeseed area to increase by 9.5%, with winter rapeseed plantings increasing to 1.54Mha. Although this is still below the oilseed rape planted area seen in 2011, 2012 and 2016, it is still a marked increase for Europe’s second largest grower of the crop (by area).

Brazil is the world’s second largest producer of soyabeans and planting of the 2017/18 crop is now generally complete. Although predications are on the whole for lower Brazilian soyabean production in 2017/18, analysts Safras & Mercado have predicted a record year for production at 114.6Mt. Additionally, although the government forecaster, Conab, has predicted that Brazilian soyabean production will be lower than last year, its forecast was increased recently by 1.6Mt to 109.2Mt (4% lower year on year).