Currencies

The £ this week has lost ground after initially holding at the start of the Ukraine invasion. This was inevitable as the concern over ‘dumping’ of high risk stocks, including currencies in favour of safer homes.

The reality of the sanctions and commitment to not buy Russian oil and gas, ultimately adds costs to the average UK household which will mean a drop in consumer spending outside of necessary items which then indirectly impacts the value of the £.

As we currently stand we are £/$ 1.30 and £/€ 1.19.

Wheat

Wheat has continued to push through historic highs and May futures hit £315 – a record £80 above the previous high set in 2012 (that is how exceptional these markets are!

The USDA report took a largely cautious approach only reducing Russian and Ukrainian exports by 6 MlnT combined, far lower than trade expectations. Following the report, the markets did ease back slightly which would have been profit taking by fund money and futures are currently sat at £294.

There are now various different export policies and loosening on cropping rules on certain land types being released now across Europe in a bid to secure their food supply chains. Currently in the UK we have not officially released any yet and as of this week, UK wheat was still being sold for export into Northern Europe because is was sat circa £40 discount to Matif wheat! This unfortunately does mean that wheat prices need to push higher to stop that export demand, certainly in the short term.

Yara have been seen across the press networks this week sharing their fears that fertiliser production will be hugely impacted by Russian sanctions and this will inevitably mean that yields across the world for this coming season will not be as high if they do not have access to fertiliser.

Having said that, if you can take a step back and think about new crop, there will be a huge amount of protection built into these levels currently and any form of resolution or move forward will likely give the market a chance to pause for breath and give us lower levels than we are seeing today, although not likely back to pre war levels.

Soya

Soya although not directly impacted physically is being driven by the veg oil complex in general. Offers at origin for soy beans and meal seem to have tightened this week and some of that will be because no body is sure where to value it given that some of the traditional competing products are no longer being traded.

We do still need good harvest data from South America. The USDA report further cut figures down from 134 MlnT to 127 MlnT from Brazil and 45 MlnT down to 43 MlnT for Argentina.

For now our focus is primarily on securing the supply of raw materials for feeds for the coming quarter, because any further forward than that, there is no real true market information or trends to work off.

We understand that this is an extremely concerning time for our customers and we would encourage you to speak to your Poultry Specialist to ensure you are achieving the optimum performance out of your flocks or if you wish to speak about the raw material markets in more detail, our Procurement and Formulations Manager, Kay Johnson is also available.

Regards,

Kay Johnson & Martin Humphrey