Reader TTS

AFTER RISING STEADILY FOR A WEEK OR SO, SOYABEAN MEAL PRICES NOW SEEM A LITTLE MORE FAVOURABLE AS FORECASTS FOR BETTER WEATHER IN SOUTH AMERICA BRING A LITTLE CONFIDENCE TO THE MARKETS.

However, the situation hasn’t been helped by rumours that China is looking to replenish soyabean stocks, and confirmation from the United States Department of Agriculture (USDA) that

soyabean carry-out stocks are down to 130m bushels. It appears that only consistently good – and confirmed – reports from South America regarding the condition and progress of the new

soyabean crop will produce any long-term reduction in prices. Although the current good news has allowed prices to ease, that situation is easily reversed if the good weather doesn’t

continue. Any negative news could see summer prices will react quickly. There’s currently no ‘weather premium’ built into those May-Oct contracts, so booking at least some cover forward

looks to be a wise move given the potential for prices to rise if the South American crop looks under threat. The spot market is facing different challenges, with shipments of soyabean meal

under threat of being held up by low water levels in the Mississippi. In addition, the investments funds are watching nervously as the United States moves ever closer to the deadline for an

economic deal to head off the ominously-named ‘fiscal cliff’. We could yet see a substantial sell-off by the funds if the situation looks to be deteriorating, with a knock-on effect of a

potentially significant dip in soyabean meal prices. If this does happen, it’ll be a great opportunity to secure any remaining requirements for the rest of the winter. At present, however,

there are limited options for any livestock farmers still looking for a good deal on protein. Rapemeal remains in tight supply, with the UK crushers generally sold out until March, and only

very limited quantities being offered into the market at the moment. The resulting firm price is making rapemeal look expensive compared to soyabean meal, but securing supply might be the

bigger issue. Anyone needing deliveries in the next few months needs to get them booked now, definitely through until the end of February, and probably into April to guard against the supply

situation worsening. Summer rapemeal prices are very much in line with soyabean meal. As a result, there’s been good interest in May-Oct contracts, particularly given the current

availability issues and the potential for soyabean meal supplies to tighten further before the South American harvest. Securing perhaps 40-60% cover could be a sensible move at this point.

And it’s against this backdrop of limited supply and strong demand that we’re also anticipating the arrival of new bioethanol wheat distillers’ feeds from the Vivergo Fuels plant near Hull.

Any additional protein feed volume is going to be extremely welcome, and there’s already strong interest, particularly for the summer when compared to the price of wheat and protein meals.

For energy feeds, the outlook for UK cereal production is currently looking poor, with UK crop plantings just 75-80% complete at the time of writing and crop development well behind the

norm. Nothing will be clear until after the spring, but it’s a situation that will need to be watched closely, and the price of all energy feeds is likely to be affected. The USDA has

increased its estimate for wheat carry-out stocks on the back of lower than expected export demand, but as there are still very few countries with any significant volume of wheat to sell,

this could change as time goes on. Physical supply is the key issue at present, with transport over the Christmas period becoming difficult – get requirements for the next few weeks booked

immediately to avoid getting caught out. Soya hulls availability continues to be limited as shippers bring in soyabean meal from the US rather than South America, where it’s typical for soya

hulls to also be loaded onto the same ships. Summer contracts, however, do look good value and worth consideration, particularly given the lack of sugar beet feed. Wheatfeed supply has also

tightened as UK mills switch to processing imported wheat and the need to mill excessive volumes of low bushel weight domestic wheat falls away. With availability on nearly all feeds less

than encouraging, booking contracts now could be the only sure way to secure supply.    FEED MARKETS AT A GLANCE  Soyabeans:  Rapemeal:  Energy feeds:  • Steady rise in prices has now eased

off  • UK crushers now sold out until March  • UK cereal crops suffering in poor conditions  • South American weather improving  • Rapemeal relatively uncompetitive as a result  • Soya hulls

and wheatfeed supply now limited  • US financial woes could trigger fund sell-off  • Book now to secure supply through to April  • Good interest as distillers’ feeds for the summer Read

more on the dairy feed markets on our dedicated page