26 January 2015 | Online since 2003



Maize decline linked to Brazil selling below US prices


It is fair to say that that the commodity trade is baffled, bewildered and bemused. Every fundamental indicator points to a global scarcity of cereals and proteins.

There is virtually no carry-in stock from last year, therefore rationing has to take place. So prices, even at these dizzy heights, should be going up to ration demand, and the economists suggest that livestock farmers worldwide will be the major casualty because the bioethanol boys have deeper pockets. Instead prices have been coming down until the last two days. Why? Does the world believe that the US has more maize and soya despite all the drought horror stories? Does it believe that everyone will be saved by massive Brazilian crops?

Brazil is struggling to fill boats with its current 66mt soya crop; and one of our suppliers has had a boat waiting to be loaded for two months, can you imagine how it will cope with next year’s estimate of 81mt?

Apparently the reason for the soya decline appear to be better rain in South America (for soya planting); the maize decline appears to be linked to the fact that Brazil is selling its maize at $55/t below the US and demand destruction – US cattle farmers are losing $300/head and some bioethanol plants have been mothballed.

There are also discussions in the US that the forthcoming US election (Nov 6th) or the new Frank Dodds Act which limits fund speculation (Jan 2013) are making investors cautious, so they are exiting agricultural positions en masse. There is also a ‘disconnect’ between fund traders who bet on screen movements, and the agricultural trade who depend on wheat and soya for a living.

So we believe that this could be an opportunity to buy commodities forward – we are not saying this is the bottom – but that against the fundamentals of the next six months’ supply and demand, prices appear to be good value. Please read the disclaimer below carefully.

At the FAO meeting in Rome, EU Farm Ministers agreed that less volatility in food commodity markets would be ‘a good thing’. They could not agree ‘how’, and struggled with the concept of strategic grain stocks, and skirted around biofuels.

It is mid-October and all we hear is the ‘wailing and gnashing of teeth’ from the UK grain trade. Every farm has to be visited to determine what quality wheat they own; normally a job given to students, but the harvest was so late that the kids had to go back to school.

So the executives had to borrow the run-down car pool car to visit farms (taking their own 4x4’s would be a red rag to a bull).

On the last day of September the trade could only give us 29t of 68+ bushel to collect for October, even though we had more than 10,000t of wheat purchased for this quarter, because they are not coping with this situation. November is the busiest month simply because it is easily hedged with futures, but the feed trade have already bought, so the grain trade are ‘stuffed to the gunwales’ – with much of it below 65 bushel, and therefore unfit for (our) purpose.

A few boats would ease the congestion, but with poor quality and high prices that is unlikely.

Consequently there are lots of spot sellers but no buyers, and lots of buyers for Q1 next year but no sellers; spot wheat has lifted towards the end of the week to about £200 delivered to the mill following the anticipated news from the Ukraine that they would be banning any wheat exports after 15-11-12. This could firm cereal markets. AO soya is about £389 on the same basis. Non-GM soya is not freely available so difficult to price.

This Commodity Report is distributed by Humphrey Feeds Ltd and is provided for information purposes only. While all reasonable care has been taken to ensure that the information contained is true and not misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. This report is prepared for the information of BFREPA members who are expected to make their purchasing decisions from a variety of sources without reliance on this report. Neither Humphrey Feeds Ltd nor its officers accepts any liability whatsoever for any direct and consequential profit or loss arising from use of this report or its contents. This report may not be reproduced, distributed or published by any recipient for any purpose without the prior express consent of Humphrey Feeds.

Download



Comments


No comments posted yet. Be the first to post a comment

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


19 January 2015
Herdsperson, Surrey
We seek a keen, enthusiastic herdsperson to join a family team on a very well run dairy farm near Dorking. The highest levels...

6 January 2015
Support Workers
RESIDENTIAL CARE THE NEW BUNGALOW, ALDINGTON, KENT HOLLY/IVY COTTAGES, WOODCHURCH, KENT HOMELANDS/HARRINGTON, ALDINGTON, KENT...

9 January 2015
Production Operative
An opportunity has arisen for a Production Operative to join our client’s dairy manufacturing site in Severnside, Gloucesters...

24 January 2015
SOLICITOR - PRIVATE CLIENT
Develop the firms’ and their own profile as a market leader advising owners of farm businesses and landed estates;...

7 January 2015
Dairy Production Operative
Dairy Production Operative - Crewkerne. Acorn is looking to recruit for 3 dairy operatives for a local based dairy facility i...




Top stories you may have missed
12 November 2014 | Arable
GM crops 'good for farmers and the envir...

GM crops 'good for farmers and the envir...

GM crops are good for the economy and can reduce the amount of pesticides u...


6 November 2014 | Cattle
Smaller European markets drive beef expo...

Smaller European markets drive beef expo...

Demand from smaller European markets has helped drive strong growth for UK ...


6 November 2014 | Agri Safety
Lack of engineers a 'ticking time bomb' ...

Lack of engineers a 'ticking time bomb' ...

A lack of engineers, not enough people promoting the land-based industries ...


4 November 2014 | Bees and Beekeeping
Bee action plan due: Last chance for bee...

Bee action plan due: Last chance for bee...

Environment Secretary Elizabeth Truss is launching the National Pollinator ...


4 November 2014 | Arable
Experts welcome financial boost for youn...

Experts welcome financial boost for youn...

Agricultural specialists have welcomed a potential financial boost for youn...


3 November 2014 | News
Supermarket competition on prices 'risks...

Supermarket competition on prices 'risks...

As retailers continue to participate in a highly competitive race to the bo...


31 October 2014 | Arable
New Defra farm figures 'underline volati...

New Defra farm figures 'underline volati...

New farm business income data from Defra, which focus on income from March ...


30 October 2014 | Agri Safety
Agriculture remains one of UK's most dan...

Agriculture remains one of UK's most dan...

Agriculture has remained one of the industries in which workers are most li...


29 October 2014 | Finance
UK farmland prices see 'substantial grow...

UK farmland prices see 'substantial grow...

Prime arable land in the UK has seen a substantial year-on-year growth in p...


27 October 2014 | Arable
Satellites to help farmers pinpoint dise...

Satellites to help farmers pinpoint dise...

A new mobile app for farmers able to pinpoint and identify disease, pests a...