Global grain prices have fallen in anticipation of large global stock levels in 2020/21, said the analysts.
Wheat production is set to be lower year-on-year in the Ukraine, EU and US. Despite this, stocks in some of the major exporting countries are anticipated to rise, with strong southern hemisphere wheat production especially in Australia.
Major disruptions to global demand for maize and ethanol continue to be caused by coronavirus, finds the report.
“Demand for ethanol in South America has been showing signs of growth in June compared to the especially low levels seen in May. However, it is still likely to be a long time until ethanol production returns to the high levels seen before the pandemic. This is therefore likely to be a factor influencing maize markets and UK feed grain markets for some time.”
In June, global oilseed prices started strong, seeing rises over the first half of the month, said the team.
“This trend was largely due to two key factors, a significant increase in US soybean export sales to China, coupled with the easing of lockdown measures in the EU and US. Fuel use will increase as more countries reduce lockdown measures, benefitting biodiesel markets and supporting oilseed prices.
“However, recent increases in coronavirus infection rates across the US, Asia and the EU have pressured global oilseed markets. Favorable weather for soybeans across the US Midwest also offers a degree of pressure.
“As such, oilseed prices have fallen back from earlier month highs.”
UK rapeseed markets await the first confirmation of yield estimates, noted the analysts. Many growers across the east of England expect to start harvests later this week or the beginning of next, dependent on weather. Oilworld forecast the UK rapeseed crop at 1.12Mt, marking potentially the lowest production figure in over 20 years.
“What this means for UK feed markets is perhaps a greater reliance on imported protein meal.”
Furthermore, the temporary closure of ADM’s Erith crushing plant, following the recent explosion at the complex, could affect meal availability for surrounding feed manufacturers, they commented.
“With a decreased availability of domestic rapeseed, imports are likely to increase in volume to supply the deficit. As a result, UK rapeseed prices are more likely to price at import parity levels, with Ukraine and Australia likely origins.”
A forecast bumper US soybean crop and increased Brazilian stocks could pressure soymeal prices, with a knock-on effect for UK soymeal imports that feature in protein feeds, said AHDB, adding that soy cake and meal usage in GB feed production increased 3.9% year-on-year in the season to April.
Meanwhile, the US acreage report released on Tuesday increased the soybean area at 83.82Ma, above the March estimate by 0.31Ma, the analysts also reported.