The impact of the Covid 19 Pandemic on trade and the global economy has been significant and will be felt across every aspect of our daily lives.

It is hard to believe that crude oil is trading at less than 20 dollars/barrel with demand for fuel collapsing as the world’s population cancelled their flights, parked up their cars and went into lockdown at home. The impact on agricultural production is felt across a range of sectors as food service winds down and retail sales patterns change to reflect the home - based lifestyle.

Changes caused by the Coronavirus Pandemic include a major increase in home baking and bread making.
Changes caused by the Coronavirus Pandemic include a major increase in home baking and bread making.

Demand for wheat has benefited as flour sales reflect more baking and breadmaking - and the fact that humans rather than farm livestock consume the vast majority of the world’s wheat.       The wheat market remains strong and is trading at a premium of around £30 per tonne to the other cereals in response to continued demand and some dry weather concerns about the 2020 harvest. While feed formulators will look to maximise the use of maize and barley in their diets many rations will require a base level of wheat to deliver the required performance. This along with supply issues for some of the main protein materials and the weakening of sterling against the dollar is a driving a firmer tone to feed prices for the summer months.

The vast majority of the global wheat harvest is for human consumption and the demand for bread making flour has grown in recent weeks.
The vast majority of the global wheat harvest is for human consumption and the demand for bread making flour has grown in recent weeks.

Soya is the principal protein source and following supply issues and a price spike in recent weeks the market is settling back to within £20 to £30 of the pre Covid-19 levels although renewed buying activity from China is likely to limit further reductions. The flow of material to the ports in Argentina has improved but the water level at the river berths is low, reducing the draught available for vessels and hence the tonnage which can be loaded. By-products from the oil and ethanol industries such as Rapeseed meal and Distillers Grains are major protein sources particularly in ruminant feeds but availability is reducing, as these plants have to wind down production as global oil demand plummets. With close to 40% of the maize grown in North America going to produce ethanol the scale back on production makes more maize available for livestock feed and prices have eased.   With supply far exceeding demand, maize has become the best value grain for livestock feeders but at current prices, it is triggering a tariff of $5.27 per tonne on entry into the EU. This is despite the fact that US maize is not used in the EU because of GM regulations but it is the Chicago price, which is used in the EU tariff calculation. 

Barley is also over-supplied with big stocks and demand from the malsters falling as the breweries reduce production in line with the wind down of the hospitality sector.

These disruptions to supply chains and trade flows are inevitable and always add cost - among the essential materials affected are vitamins and amino acids, largely sourced from China, and these have suffered significant price increases in recent weeks.