Hopes of a period of stable market conditions for feed materials seem as elusive as ever as politics and weather in the key production areas conspire to create a period of uncertainty.

Supply concerns around grains from Ukraine, Soya from Argentina and the effect on logistics of low temperatures in Canada and rain in Brazil is making accurate forecasting impossible and keeping a firmness in the market for most commodities.

The crisis in Russia and the Ukraine have sent grain markets into a spin and with the Russian stock market dropping like a stone there is a rush of money into commodities such as oil & wheat. With a bumper crop of maize in store this region has been the principle source of supply for Irish shippers but new trades are drying up as the Ukrainian currency is falling like a stone. Sellers are disappearing from the market and will hold onto their stocks in the hope of a more stable economy in the future. 

 It is to be hoped that the political situation does not degrade towards war / blockades, which would bring ‘force majeure’ into play on international shipping contracts in and out of the Black Sea and possibly the Baltic.

The critical long term concern is that the Ukrainian and Russian planting seasons can progress as normal. Economic uncertainty and lack of working capital to finance planting of the new crop could be an issue if economic sanctions materialise. If that were to happen there would be a serious supply issue to contend with and markets would have more than a temporary reason to go up. A risk premium has been applied to the market, and no-one is prepared to put a timescale on when/if it might be reversed.

Proteins markets too are far from settled. The soya market is highly volatile with U.S. soybean futures surging upward last week after big export sales triggered investment fund buying. The sales were at the high end of analyst expectations and came amid rain delays to the harvest and congestion at ports in Brazil, a country that typically starts to dominate global soy export trade at this time of year.      The lack of investment in infrastructure in South America continues to hamper the movement of crop to the ports. 

In Argentina it is reported that crushing plants are running at one third of their capacity as farmers are reluctant to cash their crops for a very weak and devaluing currency.  With inflation running at 30% per annum a crop in store is seen as a better investment than cash in the bank. The high hopes that the elections in October would bring about changes in policy which would free agricultural trade and address Argentina’s serious economic issues are unfulfilled. As a result, contrary to market expectation, the Argentine farmer appears happy to withhold his 6 million tonnes or more of beans, and carry into new crop, exacerbating the impact of delays to new crop supply from Brazil and the demand on US supply.

Protein prices are also affected by the severe cold and snow in the interior of Canada preventing the movement of grains. The canola (rapeseed) crop is of particular concern to this part of the world as European crushers will source significant quantities from this region. Ships are queuing at ports as railcars remain jammed under snow. Similarly logistics issues for Canadian maize will do little to stem the upward pressure on global feed grain prices.

Overall, the indications are that feed ingredient prices look to remain firm for some months with the best hope of relief coming when the Northern Hemisphere harvests begin.