Commodity markets in flux as coronavirus uncertainty continues

Almost all markets are more volatile than usual, with a heady mix of crop areas, logistical strains, massive changes in demand and consumer trends. Speculative activity is also driving further uncertainty.   

Wheat

Global wheat futures were pushed slightly higher midweek by a US Department of Agriculture report revealing the lowest reported US planted area since records began in 1919. Stocks were also put at lower levels than the trade had expected.

However, the pound gained strength, pushing the UK domestic market down by about £2.50/t on last week, and putting ex-farm wheat for April in a range from £147/t to £157/t and averaging £153/t on Wednesday
(1 April).

An important factor in cereal markets is the reduction in demand for fuel during the coronavirus pandemic.

This has led to the closure of about 15% of US ethanol production capacity, for which the main feedstock is maize, with a consequent depressing effect on maize prices. This in turn influenced wheat values.

Oilseed rape

Low oil use through the economic slowdown affects vegetable oils as well as crude prices, which have dropped to just above US$20 a barrel.

Biodiesel demand has in turn fallen dramatically, resulting in lower EU rapeseed crushing volumes. This has lowered oilseed rape prices, which averaged about 50p/t down on the week to Wednesday (1 April) at almost £306/t spot ex-farm and ranging from £294/t (north-east Scotland) to £311/t.

Oilseed rape in flower

© Tim Scrivener

See also: Coronavirus – advice for managing and keeping staff safe

Straights

The feed price rollercoaster ride continued this week, with some useful reductions in soya meal prices as markets calm down after last week’s talk of South American port closures drew speculative futures trading. Hi-pro meal (20t bulk load April delivery) fell by about £12/t to between £375/t and £382/t on farm.

The drop in OSR prices has been limited by the tightening of rapemeal supplies for feeding as a result of the lower crush, pushing up values.  

Lower US maize demand as ethanol production capacity closes is feeding through to cheaper maize-based feed ingredients, with maize gluten for April falling by £10/t on the week to between £215/t and £222/t for April deliveries.

Two tractors and a forager working in a field of maize

© Tim Scrivener

Beef

Deadweight prime cattle prices for the week ending 28 March remained similar to the week before, with the UK steer average gaining 1.3p/kg to stand at 337p/kg, while heifers and young bull prices were flat.

Cull cow prices dipped across the UK, with the biggest falls occurring in northern England, where values dropped by 10p/kg on the week to average 234.5p/kg.

Marketing group Meadow Quality said cull prices had been hit by an oversupply of mince on the market following the closure of fast-food outlets such as McDonald’s. 

Beef carcasses hanging in a chiller

© Tim Scrivener

Pigs

Pig prices remain flat on the week and are still well up on year-earlier levels, with the GB standard pig price (EU spec) at 163.39p/kg for the week ending 28 March.

Market analyst Peter Crichton said it is still business as usual for the sector in most cases, but concerns persist among some abattoir operators about if they will have enough staff.

He added the rising cost of inputs, particularly protein, would erode margins to an extent.

Weaner pig on straw in tent

© Tim Scrivener

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