Currencies

Currencies in general have seen slightly more support this week now we are 4 weeks into the war and city funds appear to have got back some of their risk appetite, looking to invest more back into currency and equities. For the £, the increase in interest rates last week up to 0.75% has been seen as positive and pushed the £ back up to $1.36 and €1.20.

Wheat

Wheat markets continue to trade around new highs with May futures this week pushing back up to £316 at one point having falling back sub to£300 last week. That £316 figure is the highest wheat futures price ever achieved, and £81 above the previous high in 2012 – 35% higher! Frighteningly, even at these high prices, the daily swings do seem less volatile now. We are seeing moves of £3-4 in a day, instead of the £20+ swings at several points in the same day two weeks ago.

The main reason for sharp move upwards this week was the appeared breakdown in peace talks. For one, that pushes questions again about just how much of the material still due for export this crop season from both Russia and Ukraine will be available, but also now, how will the war impact next seasons crops from those areas. This is looked at from both the physical drilling in Ukraine but also the high fertiliser prices or potential issues in supply if Russian sanctions continue.

Looking outside the Black Sea, the UK feared drought appears to have reversed in time to give the dormant winter crops a much needed boost. Across the UK and Europe the story is the same, good warm sunshine and showers at the right intervals. The Northern Hemisphere cannot afford bad spring crops now though so until more is known about those, the market does not have any real drive to move lower. Buying opportunities are very much going to be politically driven and should be taken advantage of to take cover.

Soya

Soya week on week has come back, despite bullish news stories. This again shows how much protection is built into these markets over Ukraine and how easily they could fall back at any sign of a ceasefire, to a point.

Argentina have announced an increased export tax from 31% to 33% on all mean and oil exports in a bid to curb their food inflation which currently sits at 50%. On top of that, the Parana River which runs through the heavy export region of Rosario is at its lowest level for 78 years making vessel movements impossible.

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 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 £500 per tonne now. There will be significant rises over the coming months which 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