Currencies
The £ continued to drop down this week, and the election results pushed Sterling to a new short-term low of $1.23 (!) this week which technically makes it `over sold’ from a trading perspective, indicating there will be a small rebound at some point but the longer term outlook still looks bearish for the £.
There does not appear to be any short-term solution to the conflict in Ukraine which will continue to therefore have an impact on the cost of living.
Wheat
Wheat markets have continued to rally with the New Crop November futures breaking clear of £300 for the first time up to £307. Prices did ease back slightly from the highs but it does mean that old crop wheat is now circa £335 delivered for this month.
Old Crop futures hit a new high of £340 for May this week, that is £105 above the previous historical high achieved in 2008!
Looking at the US they have a major split in weather with some areas too dry, and some too wet, particularly across the Kansas area. US weekly ratings remained unchanged at 27% good/excellent but as stated before, this continues puts them at a 5-year low.
India had been viewed as a potential solution to what the global market had lost from Ukraine and Russia, however, they are now also in a drought scenario, reducing their crop projections by 15 MlnT in a month. This has led to discussions around a wheat export ban in order to curb domestic food inflation.
In Ukraine, reports this week have suggested that Russia is now actively ‘stealing’ Ukrainian grain, possibly to sell to China but they have also been targeting grain stores with air strikes, destroying anything which was stored there.
For the UK, crops have had a good start but we do now desperately need rain in the very near future or we will likely see crop projections reduced further.
Soya
Soya markets have continued to ease back as the market switches its focus to the US. Argentina are still looking at a crop size circa 40 MlnT, down from their higher average of 50 MlnT, and Brazil circa 125 MlnT, down from their higher end average of 140 MlnT.
In the US however, soil temperature and moisture are currently favouring planting soya over corn, that’s on top of the already favourable projections for soya planting because of the lower input costs.
We are now beginning to see some offers of high grade sunflower material and low grade come to the market for the winter period, albeit from Argentina rather than the normal Black Sea areas. This means that material will likely be short and therefore the price will reflect this in winter rations.
Organic
With a high proportion of organic raw materials coming from the Black Sea regions, and there have 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 the UK in large quantities to fulfil existing contracts 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. 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.
Celebrating the Queen’s 70 Years on the throne
As the sense of celebration rises across the nation, there are some increasingly unusual ways to mark our monarch’s illustrious achievement. However, have Heinz really hit the mark with this one:
Heinz’ marketing gurus stated that "Releasing limited-edition bottles in time for the Jubilee felt like the perfect fit. We hope our customers enjoy these celebratory designs and that they add a squeeze of fun to the Jubilee celebrations, however one is celebrating." Hmmm? Really, a perfect fit? Really?
Regards,
Kay Johnson & Martin Humphrey
