Dramatic swings in exchange rates are currently having a noticeable impact on our raw materials markets. The Euro has weakened following the start of the Eurozone quantitative easing programme and the US dollar has strengthened on the back of an improving economy. The pound has dropped over 20 cents against the dollar in the last year but improved by around 15 Euro cents in the same period. One example of the impact is that we are paying at least £25/t more for soya than we would have been if the exchange rate had remained the same.
Despite low oil prices, cheap cereals and increasing use of ethanol within the EU means that demand for biofuels is likely to grow. Brazil is increasing the use of home produced ethanol for their road fuel leaving a hole in EU supplies which Vivergo and Ensus will be gearing up to fill during the course of this year. This is good news for cereal producers who have high stocks of wheat with dwindling values, however with ruminant feed demand soon to drop off this is probably a time to be patient before buying summer grain. After a strong early barley export programme which narrowed the gap between barley and wheat, barley exports seem to have stalled and the gap has widened out again towards double figures. Wheat is being attacked from the other side, too, with the premium for maize now less than £20/t thanks to falling US maize demand.
The Soya market is £100/t lower than the same time last year and big crops are on the way. However, Chinese demand is still growing every year so prices might not drop much further. Low rapeseed supplies will keep prices high until harvest but with Vivergo producing 1000 tonnes of product a day, distillers may become more attractively priced once ruminant feed demand more than halves when the grass grows.
Soya hull prices are easing gradually and there is plenty of sugar beet pulp available for those wanting digestible fibre sources. Palm kernel is attractive but contamination with metal means that we would recommend buying it in blends or compounds and not as a straight. Our magnets and screens can be relied upon to remove any contaminants.
Contact us today for advice on the best value raw material options for your farm this summer.