March 29, 2010

UK's soymeal supply remain tight before exports arrival

UK faces a short-term supply of soymeal at present before the anticipated arrival of a record South American soy harvest in mid-May – predicted to be 30-million-tonnes higher this season.

As a result, spot prices are still high at about GBP270-290/tonne (US$405-435/tonne), with unpredictable availability, compared to just GBP235-240/tonne (US$352-360/tonne) for June-October delivery. Most buyers are holding off booking next winter's contracts in the expectation of further price reductions.

However, there is some risk of a price rise if sterling weakens or if soymeal exports from Argentina are yet again restricted by port blockades.

The bumper soy crop is also having an impact on rapemeal prices, which have already dropped GBP15-20/tonne (US$22-30/tonne) from recent highs of GBP190/tonne (US$285/tonne). Rapemeal stock levels and availability are also beginning to rebuild, and the upcoming European harvest is predicted to be another good one, at about 20.3 million tonnes (compared to 20.7 million tonnes last year and a previous five-year average closer to 19 million tonnes).

Prices for energy feeds remain flat, with the latest global cereal harvest estimated at 15 million tonnes down on last year (657 million tonnes versus 672 million tonnes) but still likely to increase world stocks by 15-20 million tonnes. Wheat futures for May are now about GBP95/tonne (US$142/tonne), with the weather and currency fluctuations likely to be the biggest influences over the coming months.
 

Soy crop still dominates the UK's summer markets for protein meals.