The turbulent tone of grain markets in recent weeks has abated somewhat with the recent USDA reports allaying concerns about the American maize crop.
Predictions of a major reduction in planting due to persistent rains in the main corn belt had driven prices up to 4.85 $/bushel – recent crop surveys reporting 90 million acres planted with a predicted yield of 1.69 bushels per acre would indicate that these concerns have been overstated and the market has slipped back to the pre – rains level at around 3.60$/bushel.
Weather could still deliver a sting in the tail however - with much of the acreage planted late it will require a longer growing season to come to maturity and early autumn frosts could reduce yield before harvest.
At a local level a big wheat harvest in England has weighed heavily on the markets in recent weeks. With a 16 million tonne crop to be marketed farmers discounted to gain export business to Europe before the threatened no deal Brexit on the 31st of October. Spain and Holland were substantial buyers as English growers offloaded surplus wheat. The mood changed as the threat of a no-deal deadline receded and harvest pressure eased – farmers are now more confident to hold on to their grain and wheat prices, supported by a slight strengthening of sterling, have rallied by £7 to £8 per tonne. The market is still well supplied with both wheat and barley and this has brought the price of these grains into closer alignment with maize.
Wheat and maize are very similarly priced at the minute with barley lagging £7 to £8/tonne behind. At these prices wheat and barley will displace some of the maize in feed formulations.
US maize products play a significant part in the supply of high protein materials to the Irish market. Ethanol, biodiesel and starch production consume a major portion of the US maize crop and by-products, such as corn gluten and corn distillers are widely used in ruminant rations here. Poor margins in ethanol production and maize supply concerns have resulted in plant closures and a reduction in the availability of the by product. This reduction in supply has been compounded by increased purchases of maize by-products in Turkey and prices have firmed by around 15$/tonne in recent weeks.
The world protein market is focussed on soya and in particular the level of demand from China and their ongoing trade war with the US.
The African Swine Fever epidemic which has devastated the national pig herd in China has significantly reduced the demand for soya in this region and President Trump’s tariffs have redirected this reduced tonnage to Brazil. America’s soya growers are less than happy with the loss of a major customer and the downward drift in prices which has seen soya drop below the 300$/bushel in recent days.
This weakness in the global markets has been largely reflected in current ration prices but there is always the potential for volatility if the current manoeuvres in Westminster further undermine an already weak sterling.