Feed Market Update

Grain and Oilseed Market Report 9 January 2012

Having started the new year on an upwards trend, due to concerns over dry conditions in South American,  world grain prices had eased by Thursday, before showing some recovery on Friday and Monday.

Having finished the year at $257.8 per tonne, CBOT maize futures for May-12 delivery, rose on Monday reaching $262.6. Prices eased marginally on Tuesday to $262.5 per tonne before falling further on Wednesday when at the close of trading prices were $256.5 per tonne. By the end of the week prices were trading at $256.2 per tonne but were firmer again at $259.7/t when the US markets opened on Monday afternoon.

European wheat prices followed a similar trend, with LIFFE wheat futures, for May-12 delivery, reaching £155.5 by the end if Monday before falling to £151.0 on Thursday. From this point prices have increased reaching £154.5 by mid Monday afternoon. MATIF wheat futures, for May-12 delivery, reached a peak of €197.0 per tonne on Tuesday, up €4.50 from the previous Friday. By the end of Thursday prices had fallen to €191.0 per tonne, from this point prices had increased by over $3 per tonne to €194.3 per tonne by early Monday afternoon.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast 2011/12 winter grain production at a record 41.7 million tonnes in their December report. This is an increase on the 38.8 million tonnes forecast made in September. Beneficial weather during the Southern Hemisphere winter and spring is cited as the main reason for the record output.

Conditions in Western Australia are most notable. Rainfall of between 25-100mm per month through the spring has increased yield potential compared to last season’s drought issues. In Eastern Australia the key wheat producing state of New South Wales also received late season rains which, while beneficial, have not prevented a fall in production.

Higher rainfall may result in more of the wheat crop being downgraded to feed quality. The increased availability resulting from a potentially downgraded feed-wheat crop from Australia may have benefits for the global market. With strong demand for animal feed from East Asia, and a tight coarse grain global balance sheet, the poor quality Australian crop may find a source of demand.

UK FEMAS soyameal prices, ex-mill Liverpool, were quoted last week at £298 per tonne, up £15 per tonne on the pre Christmas figures. Rapemeal prices were over £15 per tonne higher to average £166.50 per tonne for ex-mill Erith. This rise is attributable to the dry conditions which have prevailed in South America which, as with maize, is causing supply concerns.

• "Nearby contract" price in the above graphs refers to the price for the next available futures contract (100 tonnes).
• "Change" quoted in the above tables is the difference in the market compared to the previous day’s close

 

Figures and commentary provided in association with HGCA for further information on the cereals market click here to link through to HGCA website.