Poultry farmers continue to buy proteins on a hand-to-mouth basis, with few market signals to prompt them to seek long-term cover, say traders.
Relatively high grain stocks in many parts of the world are having a generally bearish effect on markets, with futures prices for November wheat struggling to make £104/t.
The US Department of Agriculture’s June forecast pegged world wheat production for 2010/2011 at 668m tonnes – 12m tonnes down on the year – but still the third-biggest crop in as many years.
Traders say feed buyers have adopted a “relaxed approach”, buying piecemeal instead of hedging against sudden price hikes by taking several months cover.
Delayed wheat plantings in Canada and speculation over the degree of winter kill in Black Sea cereals means the threat of price volatility is not far away.
But Gleadell Agriculture’s managing director David Sheppard says there is plenty of wheat on EU, US and world supply-and-demand balance sheets. “Unless we hit major production losses into and through harvest, wheat will continue to lack fundamental support.”
Meanwhile, prospects of large soya bean harvests in South America and the USA mean supply is expected to outweigh demand in the coming season, according to David Eudall of the HGCA – although aggressive buying by China has helped to edge world markets up in recent weeks.
“The soya meal market has followed the increase in demand for soya beans, and crude oil markets have also improved, bringing the oilseeds complex with them.
“But large supplies this summer are expected from Argentina and Brazil, and Chicago soya futures have been falling steadily throughout the summer months. US crops will be harvested in November and crop conditions are currently good,” he said.
However, China’s efforts to strengthen its currency could make imports of US soya more attractive and help to underpin world soya markets, Mr Eudall added.