October 08, 2014

08/10/2014: Big crops are putting pressure on prices i the EU

The European feed grain market is going to be a crowded place this season according to industry observers with both EU wheat and maize production revised higher by the International Grains Council last week, reports Farming Life in the UK.

Big crops are putting pressure on prices and are being reflected in lower feed costs to the livestock sectors. Significant reductions have been delivered by feed suppliers over recent months but there is inevitably a time lag in reflecting these price changes due to the long term nature of feed material contracts.

With the NI livestock industry consuming around 50,000 tonnes of compound feeds every week – virtually all of which has to be brought in through the ports – the industry is totally dependent on a global supply base and on well planned and co-ordinated shipping programs to ensure the continuity of supply.

The industry cannot be sustained on a hand to mouth basis - but rather on supply contracts for purchase of material and shipping which have to be set up months in advance.
These long term arrangements are essential for the industry to ensure a regular and reliable supply to the NI farmer.

They also serve a very valuable role in protecting him from the worst effects of price volatility in the global market and will save £millions every year for the industry.

The weakness of global grain markets is being reflected in reducing feed prices and the full benefit of these reductions will continue to work through as current contracts unravel and new lower priced purchases work through the system.

On the protein side there is no doubt at this stage of the season that the US is going to harvest a record crop of soya. Near perfect growing conditions have led analysts to increase production estimates time and time again. This will certainly put pressure on prices and the effect is already obvious in the forward positions.  Nearby prices remain stubbornly firm as harvest has not properly commenced yet and the US old crop stocks for this year have been the tightest in recent memory at 3.7% stocks/usage ratio.

Read more HERE.

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