For the second year in a row feed businesses have returned from the Christmas break only to find events during the Christmas period have caused commodity prices to bounce. With Wheat prices rising £10 and soya rising $39 per tonne from their mid December low, hopes for feed price reductions early in the New Year have been stifled.

The causes, unfortunately, are as much to do with the knock on effects of world politics and the Euro Debt Crises as to the fundamentals of supply and demand for feed commodities, which over Christmas have started to reflect concerns over drought worries in Argentina and Brazil.

Gunboat diplomacy by Iran, threatening oil supplies into Western Europe has pushed oil prices up 9% to $113 from the mid December low, making bio ethanol once again, a more attractive market for cereals. In parallel, sellers of wheat are more reluctant to switch from a commodity which protects them from exposure to the Euro Debt Crises. Their decision to hold rather than sell, has been reinforced over the last two months as the Euro has fallen 9% against the Dollar and over which a great deal of uncertainty currently hangs over its future value. Both factors have combined with drought worries in Argentina and Brazil, to put upward pressure on both Wheat and Soya over the Christmas period

A spokesperson for the NI Grain Trade Association said. “The industry is hopeful that this is a short term bounce in the market and is stepping back, as best it can, in the hope that markets will revert to their pre-Christmas downward trend. However even if this was to happen, it would take time. In the interim, to ensure material is physically available over the next few months requires much of it to be bought now, frustrating pre-Christmas hopes of price reductions on feed in the early part of the new year. “

Given the highly volatile situation that exists in the world today and the domino effects they tend to have on commodity prices, it is still very much a wait and see approach by the industry as to what pricing might turn out to be by the end of the winter season.