Currencies

For the first time since October 2020, the £ dropped below $1.30 sparked by concerns over the energy price rises and UK cost of living, and by Friday was below $1.29.

The concern is for long term economic health, with less disposable income, the industries which had just started to see signs of recovery post Covid restrictions, we undoubtedly be hit again.

Wheat

Markets continued their rise upwards after the largely bullish WASDE report. With little fresh fundamental news ahead of the easter break and increasing concerns over global stocks, the markets continued to push higher with their ‘risk premiums’.

The main headline stories remain Russia/Ukraine and the impact on export availability and new crop plantings, US poor crop ratings and the ongoing Argentinian haulage strikes over freight prices. Matif reached contract highs for both September and December contracts, as did Liffe for November 22.

The demand for UK old crop is weakening slightly now, more in the North, as imported maize looks better value. The price of wheat weakened during the week, a little more on old crop than on New, and the gap between old and New crop is narrowing, unfortunately because new crop is lifting.

Soya

Soya switched after initially dipping pre report on the back of news that US farmers would be increasing their plantings over corn this season.

The lower US end stocks and further lowering of Brazilian production this season was too much for markets to ignore. China have said that they are looking to sell circa 18.4 Mln Bushels of their national reserves this month which could be viewed as a profit taking opportunity?

Looking ahead to sunflower availability for the winter, it is looking likely that some of Ukraine’s sunflower processing facilities have not survived the effects of conflict which when combined with the likelihood of a much reduced harvest, it pushes more reliance on the much smaller Argentinian crop. This crop is traditionally more the lower protein end of the market which if is expensive versus soya, is going to potentially make significant costs to rations.

Organic

With a high proportion of organic raw materials coming from the Black Sea regions, there has been questions raised over the supply chain and if material will be available. We have assurances from our suppliers that material is being stored in large enough quantities to fulfil existing contracts in the UK already as there was time to prepare.

Proteins which largely come from India and China are not affected so their shipping programmes remain the same. The cost of storage and the limited amount of supply though, even before the Ukraine war has meant that prices have reached new highs with organic wheat trading circa £520 per tonne now (sub £300 18 months ago!). There will be significant rises over the coming months as we run out of our bought position, and have to pay the much higher market prices for, and we are doing all we can to communicate to packers and supermarket suppliers.

As we have said before, we understand that this is an extremely concerning time for our customers and we would encourage you to speak to your Sales Representatives to ensure you are getting the maximum 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