June 18, 2009

Weather over the next few weeks will determine the cost of feed ingredients heading toward winter, according to the Vice-President of Informa Economics, Dave Reimann.

Feed ingredient prices started rising through the winter after plummeting last December, but the momentum has picked up over the past month due to seeding delays in North America, Reimann said.

A disappointing South American soy crop, which translates to less soymeal, is hitting the global feed market, he said, adding that there are also complications with South American corn crops.

In North America, low temperatures in Canada and very dry or wet conditions in some areas had resulted in slow planting and the crops weren't progressing, leading to much speculative demand in many of these markets, he said.

Reimann said the idea of the US dollar continuing to lose ground against currencies like the Canadian dollar has many speculative funds buying commodities again as they did one or two years ago, which added fuel to the fire in the feed grain market by buying soymeal, corn and others.

Reimann said this is a critical time frame on the Canadian prairies and if there will be a market shift, it will happen within the next two to three weeks.

Reimann noted the weather has improved in the past few days including scattered showers in Canada's western prairies where moisture is needed while the wet eastern prairies are now getting some heat.

However, the improvements are a long way from producing a good crop, according to Reimann.