Straights go slowly while buyers wait
FORWARD buying of straights is slow, as farmers opt for hand-to-mouth deals in the face of rock-bottom incomes.
Falling straights prices have also encouraged some to delay, hoping for further drops. As Cargills Ken Fletcher says: "Nobody really knows where the bottom of the market is."
According to David Clark of KW Alternative Feeds it is mainly spot-business and cover to the end of October that is sought. "People are not willing to part with their money." And, as harvest unfolds, sourcing straights could get relegated down the priority list.
It is a similar pattern to last year – but a very different one to previous ones when many farmers would already have taken cover through to April, says Mr Clark.
Soya is a good buy at present, with Sept/Oct Brazilian costing about £123/t. This compares with a value nearer £200/t this time last year. But prices are volatile – so potential buyers should follow the peaks and troughs of the market, says Mr Clark.
According to Ian Tremain of Mole Valley Farmers, people should source at least 50% of their needs to avoid over-exposure later in the season. Current soya prices are, he says, very attractive at about half last years peak.
But dont take too much cover without first knowing your exact needs, warns Mr Tremain. Some people have done this – only to have to buy their way out of contracts later.
Andrew Galling of Intermol says molasses are priced about £85/t, which marks a fall of about £10 on 12 months ago. Supply has been fairly strong and European feed demand – traditionally a big "sink" for molasses – is lower.
• A trade war is brewing in Brussels as the EU commission plans to impose a £3.40/t tax on imports of US corn gluten.
At their meeting this week, commissioners called for the duty on the 2.73m tonne trade in direct retaliation for last months US decision to impose a quota on EU exports of wheat gluten (Business, June 5).
The US maintains its action is justified, because EU wheat gluten is effectively subsidised by high grain support prices and state aids to starch producers. But the EU complains the quota will cut its sales in half.
Permission for the new duty still has to be granted by EU ministers and there could be further delays due to WTO rules concerning such retaliation.