KW FeedCast - 13 March 2023

The latest episode of FeedCast is brought to you by Chris Davidson, our raw material expert. As usual he provides an outlook on the protein, mid protein and cereal markets.

Starting with Cereals, we had the USDA report last week, with the wheat point of view relatively bearish. We saw increases in production estimates across numerous countries and world end stock projections move higher . Although we are in market slowly trending lower due to the fact that those stocks are increasing, there’s still a lot of risk around the world.

Ukraine is continuing to dominant the news, we are seeing conversations this week about extending the grain support corridor which is due to expire in just over a weeks’ time. Alongside that uncertainty, looking forward we are seeing major decreases in Argentinian crop on the maize front and potential downsize in Brazilian maize crop. At the moment this isn’t a game changer but could be a key concern in the market.. Whilst we are at recent lows, it’s a great opportunity to get some forward cover.

On the protein side of things we have seen a small break in the Soya price however ultimately soya still remains very expensive. We are starting to see demand destruction taking place both from a UK and Global point of view. The challenge will be that we don’t know how big of a destruction it will be and also what the South American crop will be at the end of the harvest. Brazil are about 53% harvested now which is roughly 10% lower than what they were last year. In the USDA report we saw a much bigger cut in the Argentinian crop than the USDA would usually make in a single report, we saw them cut their productions estimate from 41mil tonnes down to 33. We are seeing estimates coming out at lower than 30, the lowest so far being 27mil tonnes. 

In mid proteins we are seeing tightness again in products such as Distillers and Rapemeal. However summer prices have started to ease back towards recent lows the further forward you go, increasing demand for May-Oct.

Summer prices for Vivergo distillers have now hit the market, there is a May-Sept run available which looks good value especially against Soya.

Fundamentally there hasn’t been a huge shift in where we were a couple of weeks ago with cereals continuing to ease, Soya has remained relatively firm with the lack of progress in Brazil and the losses in Argentina. On mid proteins, summer is starting to ease with NovaPro being the stand out product over the last few weeks. We have seen a really strong demand particularly in the spot market with this carrying through to the summer. 

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