No rush to forward buy straights as prices fall

18 July 1997

No rush to forward buy straights as prices fall

By Tim Relf

LIVESTOCK farmers should be able to buy their straights about 25% cheaper than last year.

Driving the market down has been the strong £ sterling, sharply lower grain values and the prospect of a bumper US soya harvest.

With farmers increasingly turning to hand-to-mouth buying, forward purchases of straights are well down.

As Dalgetys Hugh Spencer says: "There is no mad rush. Farmers certainly are not filling their wellies up at the moment."

High yields of decent quality silage have also taken the heat out of the trade, says Mr Spencer.

A couple of years ago, 60-70% of business was done forwardby this time. Now, farmers have only taken about 50% cover inthe maize gluten market. Andin the case of soya it isprobably 20% or less, he suggests.

KWs Andy Tucker says the market for cereals and maize gluten has fallen to an all-time low. With it have come some "cracking deals". Maize gluten, for example, has been available at £88-£95/t.

Facing low grain prices, farmers may feed more home-grown grain this winter, adds Mr Tucker. If that happens, protein will be needed to complement the diet. There has, for example, been a good trade in rape meal, available at between £105 and £110/t.

KWs new-crop HiPro soya is now available at about £172/t for November delivery, compared with £238/t in 1996. But which way the soya market will go now is, as always, a difficult one to call.

It can be a market with no trend, says Mr Tucker. "Thereis so much volatility, withbig funds speculating in the Chicago market." For this reason, farmers should at least takesome cover now, he advises.

Cargills Wes Ewing also reckons prices have bottomed out and farmers should book some now.

Most of the good news regarding soya has already been factored into the market, he says, including the USDAs estimate of a 10% bigger sown area of 28.7m hectares (70.8m acres).

But prices will continue to fluctuate in the run-up to the US harvest in September, he reckons. But, despite the drop in milk prices, the feed-to-margin ratio is now more favourable than last year, adds Mr Ewing.

&#8226 Agrilines has acquired Continentals feed-mixing business at Grimsdyke Granaries, Salisbury, a year after it was launched. The new outfit, Agri Blends, expects to mix about 20,000t this year, servingcustomers in Hampshire, Dorset, Wiltshire and adjoining coun-ties.

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