The feed market (maize and soya) is less influenced by the tension around Ukraine than is the case with wheat. The soy market in particular has a strong undercurrent due to disappointing revenue figures in South America. This means that the feed raw materials will also remain firmly priced in the coming period.
When it comes to the possible escalation of the conflict in Ukraine, the wheat market is mainly mentioned. This one also has the most to lose, should it come to that. At the same time, Ukraine is also the third largest exporter of grain corn worldwide, so that also applies to this market. Analysts and traders fear that the Black Sea ports will no longer be accessible if Russia invades the country.
In the grain market it is noticeable that trade is being brought forward now that the trade routes are still open. Ukrainian grain exports are almost 40% ahead of last season, partly due to a very good harvest. It was the only country on continental Europe to have an almost flawless growing season with sufficient rainfall.
Rising soy price
The latest Wasde report from the USDA resulted in the price of soy in particular being pushed up after a smaller harvest in South America. In mid-February, the price level on the CBoT moderated somewhat, before rebounding again. In particular, a 5 million ton smaller soy harvest in Brazil has resulted in higher scores. Argentina and Paraguay also received a reduction. Due to extreme drought, the latter country - the fourth largest exporter of soy beans in the world - may have to import soy. Compared to the previous harvest, the yield has been halved, the Ministry of Agriculture says.
More American demand
Meanwhile, the US is seeing its exports of soy and corn increase again. The world – and China in particular – expected a good South American harvest, but at second glance this is disappointing. Last season the harvest there partly failed, which sent prices sky high. The US Department of Agriculture has left exports unchanged for now, but expects ending stocks to decrease. The EU imports slightly more soya, according to the USDA. The volume amounts to 17,7 million tons. China imports less soy: 113,7 versus 116,7 million tons. Yet global inventories are down 2,4%. Mainly due to smaller production in South America.
The biggest problem for the US now is that there is simply not enough soy available to meet world needs. The acreage is expected to increase this year, but the question is whether this is sufficient. Analysts expect that the soy price in America could reach a record. This partly depends on demand from China and possible new yield reductions in South America.
Consequences for the Netherlands
What does this mean for the Dutch livestock farmer? In any case, there will be no breathing space in the sky-high feed costs. Corn prices are also relatively high in Europe. The Matif rises again to a level of €250 per tonne or higher. If there is a confrontation in Ukraine, a price increase will be the rule rather than the exception. Although the first shock reaction can be the most intense.