The latest episode of Feedcast brings you Chris Davidson and James Barker discussing the effects of the latest Covid variant, Omicron on the markets. As well as an expected boost to the mid-protein market come early 2022.
As the latest Covid variant begins to threaten lockdowns and travel restrictions, the markets are reacting to the volatile outlook but seeing prices drop. Obviously the demand is still there, but in this environment supply and demand fundamentals cease to apply, as risk to fund money mean investors start to pull out of the markets.
Wheat for example, recently at a market high of mid £240’s has dropped back down to high £220’s, highlighting the huge volatility in the market, and likewise the majority of commodities have been affected.
Wheat is interesting at the moment due to bearish news from Australia, with the Agricultural department raising their forecast to 34mT. However severe concerns remain around the quality of this wheat due to the late rains they are experiencing. As price is driven by lack of quality milling wheat in the markets, this may not help immediately. We have also seen the EU remove the 25% import tariffs on US maize. This would give them access to a new market and all eyes turn to the UK to see if they will follow suit. This has all resulted in a potential opportunity for wheat right now, but beware as the price may rise again just as rapidly as it fell depending on what happens with the world reaction to Omicron.
The most stable market continues to be soya. While the nearby is still tight, we could see some prices falling due to the early South American crop. US total soya sales are down 30% YoY creating an opportunity here with excess crop available. However, should the dryness continue in South America this could impact the crop and push prices back up as world stocks fall. It is well worth taking cover now if you haven’t done already.
Finally some good news from the Vivergo plant re-opening. This appears to be on track to start producing come early 2022, with prices released this week. The plant can produce up to 300,000T a year and could provide much needed relief to the mid-protein market.
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As the latest Covid variant begins to threaten lockdowns and travel restrictions, the markets are reacting to the volatile outlook but seeing prices drop. Obviously the demand is still there, but in this environment supply and demand fundamentals cease to apply, as risk to fund money mean investors start to pull out of the markets.
Wheat for example, recently at a market high of mid £240’s has dropped back down to high £220’s, highlighting the huge volatility in the market, and likewise the majority of commodities have been affected.
Wheat is interesting at the moment due to bearish news from Australia, with the Agricultural department raising their forecast to 34mT. However severe concerns remain around the quality of this wheat due to the late rains they are experiencing. As price is driven by lack of quality milling wheat in the markets, this may not help immediately. We have also seen the EU remove the 25% import tariffs on US maize. This would give them access to a new market and all eyes turn to the UK to see if they will follow suit. This has all resulted in a potential opportunity for wheat right now, but beware as the price may rise again just as rapidly as it fell depending on what happens with the world reaction to Omicron.
The most stable market continues to be soya. While the nearby is still tight, we could see some prices falling due to the early South American crop. US total soya sales are down 30% YoY creating an opportunity here with excess crop available. However, should the dryness continue in South America this could impact the crop and push prices back up as world stocks fall. It is well worth taking cover now if you haven’t done already.
Finally some good news from the Vivergo plant re-opening. This appears to be on track to start producing come early 2022, with prices released this week. The plant can produce up to 300,000T a year and could provide much needed relief to the mid-protein market.
Continue reading...