The start of the new year is good for many (agro) commodities. At the same time, the concerns about corona have certainly not disappeared. An overview of the latest state of affairs.
The potato futures market has taken off in 2021. Tuesday January 5, the second trading day of the new year, the futures market (April contract) rose to a closing position of €7,80 per 100 kilos, even breaking the level of €8 per 100 kilos during the day. The reason is a greater demand for free potatoes. Belgian industries in particular are currently buyers of potatoes suitable for fries, mainly because Belgium has lower coverage for the need for fries.
It should not immediately be assumed that there is a shortage of potatoes, because that is not the case. This mainly concerns a shortage of potatoes that are offered at a low price level. This, in combination with a limited supply of sales contracts on the futures market, causes the price to rise rapidly. Whether this sentiment can be maintained depends on the willingness to sell and what buyers in the market are able and willing to pay.
Soya maintains its upward trajectory
De quotation for soybeans at the CBoT in Chicago has been showing an upward trend for weeks and there seems to be no end in sight. The quotation is now $13,50 per bushel, which is the highest quotation since June 2014. The continuous increase in the price is mainly due to the enormous demand for feed raw materials, mainly from China. That country has been building up its pig herd for months and is importing large quantities of soy for this purpose.
At the same time, it is becoming increasingly clear that there will be less harvest in Brazil and Argentina due to drought in the country. The combination of high demand and (in all likelihood) smaller acreage in the major producing countries means that soybean prices have no reason to look down.
Wheat to highest point in 6 years
The wheat quotation has also found its way up. The quotation on the CBoT is now $6,54 per bushel, the highest level in 6 years. One of the reasons for the higher price is the export duties that Russia announced in December. To date, Russia's exports are having their best season ever, but fears of a high internal price have led to exports being regulated. That is why Russian arable farmers are reluctant to sell. Only when they have to incur cultivation costs (fertilizer and crop protection), there is reason to generate cash flow. The drought in various American wheat growing areas is also causing the CBoT rating to rise.
Oil price by $50 per barrel
The price of a barrel of Brent oil is at $53 this week, the highest level since March last year. Since October, the oil price has taken significant steps upward. According to analysts, the revival is mainly due to the vaccines that are now being rolled out, also in the Netherlands. The 'old normal' is thus coming closer. This is of course good for the economy, which will increase the demand for energy (and therefore oil). Another reason is oil production. Both the OPEC countries and Saudi Arabia are reluctant to pump oil with the aim of supporting the price.
Dairy market has 2 faces
It is difficult to paint an overall picture of the global dairy market. Voting varies considerably per production region (EU, New Zealand and US). There is currently little to cheer about for dairy farmers in the Netherlands, given that many milk prices will drop in January. Dairy producers appear to be preparing for weak sales in the first quarter due to corona, the growing milk supply and the strong euro against the dollar.
The trendsetting Global Dairy Trade in New Zealand has had an excellent start to the new year with big pluses for butter, milk powder and cheddar. In the US, the dairy market is supported by the government's food bank purchase program, but will that remain the case under new President Joe Biden? American dairy exports to China are also doing well, thanks to the weak dollar. At the same time, milk supply in the US is increasing. In short: various forces are working against each other, but the vaccine can provide a solution in mid-2021.
Pig price unchanged, piglet price rising
The dark days on the pig and piglet market are starting to fade into the background. The problems on the pig market are certainly not over yet, but prices are not under pressure at the beginning of 2021. A revival is also not likely. Meat sales were seasonally weak in the first quarter and this was exacerbated by the lockdowns this year. Piglet prices are rising as a result of a drying up supply, which is appropriate for this time of year. Although most of the price pressure has subsided, the markets need time to recover. The big question is how good the sales opportunities for pork in China will be this year.