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13-05-2016

Funds activity rallies soya market

Although Brexit continues to hit the headlines, it’s worth keeping an eye on Chicago Board of Trade (CBoT) activity. UK soya values are vastly higher week on week as the funds have been active. It started with them covering in short positions, but quickly turned into frenzied buying as they strove to rally the market higher mainly on weather concerns. In a period of just 10 days, soyabean meal prices moved up £40/t and rapemeal £30/t, says ForFarmers’ Phil Watkins.

Brazil’s soya harvest is almost finished, but the recent heavy rains in Argentina have slowed harvest to a standstill and even ‘washed-out’ up to a million hectares.

Coupled with other problems, the trade feeling is that three million tonnes may have been lost, reducing the crop from 60 to 57 million tonnes. Looking forward, April to June and possibly July positions are expected to remain firm, mainly on the back of vessels being delayed out of Argentina.

Resulting ruminant compound feed prices could increase by up to £10/t during May. Other proteins such as rapemeal and wheat distillers’ have firmed in sympathy with the soya market. But distillers’ may still be available from some suppliers at very attractive values versus the other proteins.

Looking at energy feeds, the wheat and maize futures rally of late April, where cereals and byproducts moved up by between £4 and £7 per tonne, has eased off and traders are now focused on weather reports to provide market direction.

It is still worth considering alternatives, such as bread and biscuit meals, as they represent good value for money at the moment.