Northern Ireland Grain Trade Association

NIGTA confirms significant strengthening in feed commodity markets

by: Richard Halleron

The past three weeks have been marked by a significant increase in international wheat and other feed commodity prices.
“The wheat market has strengthened by £25 per tonne during this period,” confirmed Northern Ireland Grain Trade Association Immediate Past President Garth Boyd.
“Normally one would expect other feed materials prices to follow this trend. And this is now happening.  Distillers, Citrus, Hulls, Maize, Palm Kernel, Gluten and Pollard prices have all risen over the past number of days. The average increase across this basket of commodities is in the region of £15 per tonne.”
He continued:
“On the protein side the Soya market has remained unchanged while rapeseed prices have increased by £19 per tonne. This latter figure can be partly explained by the recent fire-related loss of a European crushing plant with a 900,000 tonne annual capacity.”
Garth Boyd went on to point out that uncertainty about the outcome of the 2010 harvest is at the heart of the recent trends witnesses on the world’s grain and feed commodity markets.
“Investment houses have also taken positions, particularly with regard to wheat futures, over recent weeks. And where these institutions lead the markets tend to follow,” he further explained.
“The recent floods in Eastern Europe allied to the very warm and dry conditions in the South of the Continent  have forced analysts to downsize the size of the this year’s EU wheat crop by 30 million tonnes, compared with 2009. The poor Spring planting conditions in Canada have added to the current concerns about the magnitude of global wheat stocks over the coming months.”
Garth Boyd continued:
“The reality is that most of Europe’s animal feed manufacturers and bio-ethanol producing companies now trade short when it comes to sourcing the raw materials they need for their businesses. And I know that most local feed compounders have very little long term cover at the present time.”
He concluded:
“At some stage in the very near future we will all have to enter the market to source the commodities we need for the 2010/11 feeding season. And this is why the recent hike in cereal and other commodity prices could have such an important bearing on the compound feed trade here in Northern Ireland next winter.
“Local feed companies had to raise their compound prices at the end of June. But this increase was prior to the significant strengthening of the commodity markets that we have witnessed over recent days!”