Feed raw materials in abundance

While the commodity market showed a sharp price spike last season around and after the harvest, this year the opposite is true. The various grain markets are currently at a stable but low level. That is bad news for arable farmers, but good news for livestock farmers who can keep their feed costs within limits.

Demand from China is declining
Wheat and corn are important components in the ration, which can replace each other to a greater or lesser extent. Both are well stocked. China, which normally absorbs huge quantities, is clearly less likely to have a market share. The outbreaks of African swine fever are decimating the pig herd, and with it the need for feed. In addition, China has enormous reserves.

The South American countries Brazil and Argentina are the winners in the trade war between China and the United States. This entered a new phase on Friday, August 23, when China announced a... rate increase of 5% on soybeans and 10% on wheat, corn, sorghum, beef and pork. US President Donald Trump in turn presented new tariffs on imports of Chinese goods (worth $75 billion).

Positive news for South America
The South American grain market is now doing good business, partly due to the weak Argentine peso and Brazilian real. The smaller harvest in the United States therefore has no effect on the market. Argentina also expects a record wheat harvest.

After an extensive privately organized crop tour in the American Midwest, participants conclude that corn crops are in better shape than traders thought. Yield expectations are only slightly behind the figures recently published by the United States Department of Agriculture (USDA).

It is concluded that the soy crops are very late and have significantly fewer pods. However, South America does compensate for the lower production. Due to the late sowing date, warm weather is also required in September for the crops to ripen. That is why speculators hope for frost in September, because that could still affect the yield.

High demand for rapeseed
The European oilseeds market is on the move. The cultivation of rapeseed has decreased enormously in recent years. After the dry autumn of 2018, many plots came to nothing. Partly due to a tariff increase on palm oil, rapeseed imports in Rotterdam are at the highest level in 2 years. In mid-August, imports were 13% higher, while the busy months are still to come.

Due to the persistently lower wheat prices in Europe, the export engine is continuing well. However, it remains difficult for French traders to win back important North African buyers after switching to wheat from the Black Sea region in the previous season. Grain from this area is priced higher, but freight costs are lower. However, arable farmers in Russia and Ukraine are reluctant to sell at this price level. The quality is good, while this is sometimes an issue in Europe.

This is the case in the United Kingdom, although farmers are taking advantage of this new heat wave to complete their harvest. However, the wheat did suffer from the heavy rainfall in August. It is striking that the price there is more than €22 per tonne lower than on mainland Europe. As a result, the island exports a lot of wheat and barley. Since British feed traders purchased a lot of corn and wheat at the end of last season, domestic demand is low. The experts expect that Brexit will continue to have an impact on the pound, which will have a positive effect on grain exports.

Wide range, low price
A large corn harvest in the United States and South America, sufficient wheat and persistently low prices are positive topics for the feed market. A large supply, with reduced demand, ensures that the current price level can be maintained. Now that the wheat harvest in the Northern Hemisphere is almost over, the focus is mainly on Australia. Everything depends on the rain that must fall now to bring the harvest to a successful conclusion.

Is this the time to order chunks? The Compound feed price indicator van Boerenbusiness helps you make a choice. A forecast for the coming weeks is issued based on the price history.