Compound feed prices set for imminent hike

Compound feed prices are set to increase by as much as €15 per tonne over the coming days, grain trade sources have revealed to AgriLand. This follows an increase introduced by many millers prior to Christmas.

Numerous factors have combined to strengthen feed markets since the turn of the year. These include a decision taken by the Russian government to put restrictions on exports of wheat from the middle of February in an attempt to halt rising food inflation.

In addition, the government of Argentina has halted any new export licences for corn until new crop is available. 

These restrictions will serve to shift demand to the likes of mainland Europe for wheat and the Black Sea for corn. Both regions have had very poor harvests in recent months compared to initial projections. As a result, they do not have the grain to satisfy further demand.

Grain markets rally

According to Agricultural and Horticultural Development Board (AHDB) senior market analyst, James Webster, global grain markets have rallied significantly over the past fortnight.

He commented:

“As we move into the New Year, grain markets have continued to rally. Since Monday (January 4), old crop UK feed wheat futures have gained £3.90/t, closing yesterday at £204.90/t.

“Equally, new crop futures have gained £3.50/t over the week so far, reaching £167.00/t yesterday.

Webster points out that the latest rally has been driven by many factors. He continued:

At the tail end of 2020 we saw export restrictions for both Russia and Argentinean grains. These export caps have tightened the global market, and elevated global prices.

The AHDB representative confirmed that much of the grain market tightness, evident during the latter part of 2020, will have been factored into current market pricing.

“It is still possible that we will see future support for values. With South America still dry we could still see the size of the crop fall in forecasts,” he continued.

Weather impact

“The next significant forecasts for grain markets are due next week, with the United States Department of Agriculture (USDA) supply / demand estimates and Brazilian crop forecasts published on Tuesday and Thursday respectively,” Webster added.

Moreover, while data from the European Centre for Medium-Range Weather Forecasts, does show improved rainfall prospects for South America in the coming fortnight, beyond this conditions are dry. This has the potential to further harm crop prospects.

“Another key theme for grain markets in 2020 was food security, which saw a number of Asian and North African nations boost grain and oilseed import programmes.

“With global health and political instability still at the forefront of markets in 2021, this is a theme which will need to be watched closely this year,” Webster concluded.