There is a good chance that maize and soy growers will already have the latest tractor and combination brochures on their desks. Both raw materials are very expensive. An American or Brazilian farmer who has an over-the-counter product cannot be lucky. If the soybean harvest in Brazil continues to slow down, that price can go up further. In the Netherlands, the negative consequences of this price movement are particularly visible. Feed raw materials are rising sharply in price.
The slow soybean harvest in Brazil - the world's largest producer and supplier to China - is causing many headaches for traders this year. While China is rapidly building up its pig herd, and in the meantime has to compensate for a poor domestic harvest, it cannot afford supply problems. American farmers are now gaining momentum.
Sector disrupted
47% of the soybeans have now been harvested, which means threshing is still well behind previous years. A year earlier the counter stood at 59%. This also means that ships are not fully loaded as quickly, which in turn causes delays in ports and on the water. An entire sector is being disrupted by it.
The weather is not improving everywhere in the country. In Mato Grosso, the large soy state in the South American country, a lot of water fell again. In the large town of Sorriso, a state of emergency was even declared after 800 millimeters fell in 45 days. The country is located in the soy region of Brazil, which covers 620.000 hectares.
Double cultivation slows down
Many Brazilian arable farmers sow a crop of grain corn immediately after soy. This so-called 'safrinha maize' is also delayed due to the weather. Three quarters of the area is in the ground compared to 90% a year earlier.
In Argentina the news is also full of weather reports. It was very dry there for a long time, which cost yields. Last weekend a lot of rain fell in some of the arable regions. This probably comes too late for crop development and actually results in lower grain quality.
Huge export from USA
While South America cannot supply, American companies take advantage of this. Figures from the USDA show that last week an export record dating back to 1989 was broken. 2,2 million tons were exported in 1 week. In addition, 519.000 tons of soy and 683.000 tons of wheat were exported. This means that soy exports are also three quarters higher than last year. It is striking that only 16% of the corn and 31% of the soy were destined for China. This shows that there is a broad demand for these feed raw materials worldwide.
The international soft commodity market (grains and oilseeds) is undergoing a transformation. After a period of high prices in 2010 and 2011, years of economic downturn followed. As a result, investors such as hedge funds said goodbye to the commodities market. With inflation becoming increasingly threatening, interest in agro-commodities, but also hard commodities such as gold and silver, is increasing. Now that more players are taking positions, the movements of the market are becoming more extreme. The peaks higher and the valleys deeper.
The consequences for the Netherlands
What does all this mean for the Dutch farmer? Arable farmers can benefit from a stable and positive wheat price. There is pain and especially risk for dairy farmers and intensive livestock farmers with pigs and poultry, for example. The feed raw materials are expensive and there is a good chance that a strong price level will continue for the long term. Not only because of global monster demand, but also because stock exchange traders see it as a safe haven. Prices and risks are increasing. Good risk management of your price risks therefore becomes even more important.
The fact that animal feed raw materials are expensively priced also shows Compound feed price indicator see well. The forecast for A-pellets and pork lumps is strongly increasing, with a peak in mid-August.