Currencies

Currencies were in the same very small range bound positions, although slightly on the stronger side week on week.

The first data from hospitality businesses post Covid restrictions has filtered through and showed positive results helping to support the £.

Having said that with the energy caps now lifted and the inflation levels hitting what disposable income UK households have, this may not be repeated in April.

Wheat

Wheat markets had a split week, taking a dip towards the back end of last week of close to £10 per tonne pre USDA report. This shows the level of fund and speculative money invested the wheat market currently, where any news of a potential positive report sees big waves of profit taking, giving us these dips.

The report itself kept US quarterly stocks largely inline with trade expectations, however, looking at this season’s crops, they put 30% as good/excellent, against a trade expectation of 40%, making it the second lowest ratings on record. On the flip side, the same week, French crops have been rated 92% good/excellent which is a 5 year high.

The report and continued situation in Ukraine sent market back sharply higher as we closed this week. Peace talks appear to have stalled and reports would suggest 90% of Mariupol is now destroyed with concerns over Russia refocussing efforts on the second port city of Odessa. This of course increases doubts further on what export capabilities Ukraine will have for this season and next. Egypt, Russia’s largest buyer, has also actively begun tendering for wheat out of other European markets. This will add further pressure to already tight old crop stocks.

Soya

Soya dropped post USDA report after the report suggested that farmers will favour planting soyabeans over corn this coming season because of the lower cost of inputs and less demand on fertiliser.

There are still issues with Argentina’s soya crop this season though with their transport union threatening strike action over freight rates, which given 86% of Argentinian beans are moved from farm to port by truck, will have significant impact on vessel loading. Coupled with this the fact that the Panama river is still at an historically low level.

Looking ahead to sunflower availability for the winter, it is not looking likely that Ukraine’s crushing facilities have survived the conflict and if this is the case, this 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 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