Headlines

There was good news for egg producers at the Pig and Poultry Fair, with a prediction of lower soya prices in the year ahead. Producers will be hoping it has a positive impact on the price of feed following the high price of soya over the last 12 months.

The prediction was made by Alex Miller, senior soya merchant at Cargill, who reported good crops from South America and indicated that soya arriving in the UK this summer could be down in price. He did, however, warn that fluctuations in Sterling could still potentially affect prices badly – soya is priced in dollars – and he said there were still a number of other issues that could affect his prediction. There was the possibility of poor weather affecting the United States soya crop and there were slight concerns about the affects of a trade dispute in Argentina.

There was also the possibility that drought in China could result in increased corn imports – something that would lead to an increase in the price of all commodities.

The indications so far, though, were good, he said. Supplies of soya this coming year looked promising. He said that the high price being paid for soya over the last 12 months had encouraged South American farmers to plant as much soya as they could. "We are at the end of the South American harvest for this year, they have had no weather worries and we have seen a huge increase in production. So now we have got plenty of material available. The harvest is done in Brazil, it's virtually done in Argentina. We are talking about a Brazilian crop of 68 million (tonnes) and a 50 plus crop in Argentina. Some people are revising those numbers higher. What this means is that the South Americans are going to have a lot of material. There is a lot of demand at the moment so they are going to be increasing the crush significantly over the next couple of months. From that side, it should be pushing prices lower."

He said that although there was increased demand from Asia – particularly from China - in the West demand had been affected by the recession. People had been going out less and eating less, and this had reduced demand. There had also been a trend in the West to take soya out of the diet where possible and replace it with alternatives.

"The fundamentals suggest that we should be going lower on prices. On the medium term we are very much dependent on what is going to happen with the US crop in the ground at the moment – outside of the weather worry – but we should be looking at a bearish outlook; lower prices from here."

He said, "Once the South American crush gets going full whack we should be seeing lower prices on soya bean meal for the end of June shipment and July shipment, which is going to be end of July and August arrival, barring any particular problems we have in the States with their crop."

Asked about the threat of currency movement, he said that it would affect the price of soya. "Soya is priced in dollars. If the pound drops, that unfortunately moves prices up. We have seen that in the last few days with large swings in Sterling against the dollar. Currency has a massive impact. It will have an impact on the price of soya."
Alex was also asked about the availability of non-GM soya. He said supplies would be available if people wanted it. Of course, it would be available at a price.

Simon Christensen of Frontier provided visitors to the fair with his view of the prospects for wheat and corn. The news on corn was particularly optimistic. He described the initial planting season for corn in the United States as "fantastic." He said the United States had had dry conditions and the crop had been planted in record time. "That would point at this stage that we are going to have a very good year." He said, "This time a year ago we were 50 per cent planted and worried whether they would get the rest of it in, whether the weather would allow it. It's completely different this year."

He said the wheat crop in the United States was slightly down – six per cent - although in South America the crop was 20 per cent up on last year. There were no significant concerns in Europe. In Australia, the seeding process was under way. There were some dry pockets, but that did not appear to be an issue at the moment, he said. "Today, looking at everything we know, taken from a production perspective, things look pretty good for feed grains, particularly wheat."

He said that in the United Kingdom an extra 2.5 million tonnes of wheat would be produced in the year ahead, as a much bigger area had been planted with the crop. He said, "We would expect UK prices to fall further to stimulate a bit more new crop interest in our wheat." He said demand was edging up but because of the increase in production he could not see that increased demand biting over the next 12 months. Take-up from new ethanol plants had not been as high as expected. One of the plants had had some production issues. A second plant was due to come on stream next year.
He said that wheat was cheap and the outlook remained reasonably flat.

Hugh Burton, raw materials manager at ABN, provided his outlook for a number of proteins and listed his prediction for the prices over the coming 12 months. He suggested that rapemeal would perhaps be about £118 per tonne, wheatfeed £82 per tonne, wheat distillers £128 per tonne and sunflower meal £134 per tonne, although he said that if anything forced up the price of soya these prices were likely to increase too.