KW FeedCast - 13 October 2022

Today’s FeedCast is brought to you by Chris Davidson. This episode has been delayed due to the weekend events in Ukraine and the timings of the latest USDA report to give you the most up to date information possible. Two weeks ago we were dealing with the markets response to the government's mini budget, and we hoped that if we waited the markets would go back to focusing on supply and demand fundamentals. Sadly, whilst this happened to an extent, the financial markets remain nervous about the government plans. Then, over the weekend, we have seen increased tensions between Ukraine and Russia which has resulted in increased risk perceived in commodities coming out of the black sea region.

Wheat futures hit a 3 week high on the back of this instability before beginning to fall again. This fall is partly due to Russia not continuing to retaliate to the bombing of the Crimea bridge and partly due to the USDA report yesterday, suggesting wheat and maize stocks are better than expected. However, world wheat stocks are expected to fall year on year. The price also remains linked to the black sea export corridor continuing. This corridor deal is due to expire in mid-to-late November and negotiations could be tricky, as we are already seeing with Russia stating new demands to NATO. Whilst the corridor staying up will likely push prices lower in the end, we could see more spikes in pricing as those negotiations take place. Right now it is a wait and see situation, there is definite risk however and I would not advise anyone to enter winter with no cover.

From a soya perspective we are heading in to the US harvest but the USDA report yesterday has again reduced yield expectations. This is causing uncertainty in the markets resulting in higher pricing. The world view however is very different with positive numbers coming out of South America, we are also seeing a lowering in demand, especially from China. This has resulted in a risky but very high price, with markets again waiting to see what happens before buying or looking at cheaper alternatives such as NovaPro.

Mid proteins have followed the soya prices higher. Rape meal is struggling due to poor seed flows in Europe and the uncertainty around cost of production due to the energy markets. All leading to uncertainty over actual crush numbers and this is again resulting in high prices and people looking to cheaper alternatives such as Vivergo Wheat Distillers. 

In summary the last two weeks have given us shocks and surprises but the market situation has remained largely unchanged. In the nearby people are still focused on spot and filling gaps where they can. When looking forward the alternative products are the ones to watch right now.

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