Grain supply levels set to offer respite to livestock farmers

By Jane BYRNE

- Last updated on GMT

Grain supply levels set to offer respite to livestock farmers

Related tags: Agriculture

Bullish US data on the global crop outlook means livestock farmers can expect to be enjoying some respite following a particularly tough few years of high prices and lack of quality fodder, said UK brokerage house Shore Capital.

Grain supply levels for 2013/14 present a more positive input cost environment for the global livestock farming industry, said the analysts, citing the latest crop report from the US Department of Agriculture’s (USDA).

The USDA released its World Agricultural Supply and Demand Estimates (WASDE) yesterday (10 February) looking at the southern hemisphere harvest as well as data from key production countries such as Russia and Ukraine.   

Shore analyst Phil Carroll summed up the situation for the livestock farmers as: “improved supply and hence more favourable pricing.”

He told FeedNavigator.com that in the UK, for example, lower demand and a more relaxed environment on potential supply has resulted in feed wheat prices coming down from "around £220 (€268) per tonne just over a year ago to around £150 a tonne currently so it has to be more favourable for the livestock farmer."

"Then if you take into account the UK dairy farmer has seen an improvement in farmgate prices for milk, too, then the outlook certainly is more positive in my view,"​ said Carroll.

Ukraine cold snap

The USDA report, in particular, notes positive production figures from Ukraine. However, that country has experienced low temperatures in the last week.

Speaking to FeedNavigator.com yesterday, Olivier Bouillet, the Kiev office manager of French consultancy Agritel said the recent cold snap – with temperatures as low as -20 degrees Celsius in some parts of Ukraine - has not yet had a critical impact on crops there.

“The Ukrainian Meteorological Office said that, in one region, 25% of the wheat area was damaged but this represents only a small percentage of the winter crop overall​,” he said.

“However snow cover is decreasing over the next 10 days. Whether winter crop is affected remains to be seen - if there is another freeze in that period, farmers in the south and centre could be hit due to greater exposure to the cold​,” added Bouillet. 

USDA key crops outlook:

Wheat

The US agency estimates world wheat production in FY2013/14 to be 711.9m tonnes, slightly down on the previous estimate.

Overall, supply levels have been reduced by 1.1m tonnes reflecting a combination of lower opening stocks in Russia and Argentina accounting for 0.3m tonnes of the decline alongside a 0.8m reduction in the global production forecast.

This reduction in output is mainly due to a 1.6m tonne reduction for Kazakhstan based on the latest data available highlighting a raised harvest area being offset by sharply reduced yield expectations from early harvest reports.

Official data has also reduced expectations from Algeria by 0.3m tonnes but this is offset by more positive news in southern Brazil where a better yield performance has increased estimates by 0.6m tonnes, reports the USDA.

The US report said Ukraine production has also been increased by 0.3m tonnes on current government estimates.

A combination of lower wheat supplies and higher use expectations, said the USDA, has resulted in a 1.7m tonnes reduction in its end stocks forecast of 183.7m tonnes.

Corn

The USDA said world corn production is expected to be slightly down (0.4m tonnes) on January’s estimate; to a level of 966.6m tonnes but this is more than offset by a 1.0m tonnes increase in opening stocks.

Shore notes that within the small decline in the production estimate there is a 1m tonne decline for Argentinean output as dryness in January has reduced planting and yield expectations.

“However, this decline is offset by official data from Ukraine, which has led to 0.9m increase in its output forecast,”​ said Carroll.

Soybean

Contrary to corn and wheat expectations, end stocks for soybean are forecast to be 0.7m tonnes higher at 73m tonnes, reports the USDA.

This expectation is driven by record global production expectations which have been raised by 0.9m tonnes to 287.7m tonnes, said the agency.

The increase in the estimate is driven by a record Brazilian harvest of 90.0m tonnes, up 1.0m tonnes on the previous estimate due to higher yield expectations.

 

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