According to DairyCo, the first USDA World Agricultural Supply and Demand Estimates report for the new season crop suggests this year’s soya harvest could result in another strong harvest.
This is on the basis of there being no significant weather event. While the USDA projects an increase in demand, it is not expected to be significant enough to outstrip supply. If these preliminary forecasts are recognised then it is unlikely soya prices will rise significantly any time soon.
For grains, the forecasted supply and demand would suggest a marginal surplus. However, as this is the first report and the margin is quite tight, it is too early to determine what the impact on prices could be. Once more information is released in the coming months there should be more clarity over any potential price movements.
Meanwhile, US milk production is expected to grow 2.4% in 2016 compared to this year, according to the latest USDA forecast. Better forage availability and moderate feed costs are expected to support yields, taking annual production to 94.1 billion litres.
However the USDA has trimmed 0.7% off its forecast for this year, reducing it to 91.9 billion litres. This is largely due to drought conditions in parts of the west continuing to affect yields, but despite this production is still expected to grow 1.3% from 2014.
This projected trend resonates to a large degree with the output levels now being predicted for Europe. EU milk production in 2014/15 was strong with some key dairying nations showing significant growth, according to year-end data available so far. Production across Germany, France, UK, Netherlands, Poland and Ireland grew around 2.6% from 2013/14, an increase of nearly 2.5 billion litres.
EU production growth is expected to continue at around 1% in 2015/16, according to Commission estimates. However, a large jump in production during the first year without quota looks unlikely because low milk prices are expected to hamper growth to some extent.