Mel's Market Report June 2019
UK milk production continues to be strong with record highs for Q1 2019. Although the number of dairy farmers and herd size has decreased, yields have improved. Butter prices eased slightly during March and have been fairly stable since with forward trading decreases expected. SMP has seen some upward pressure following rumours of a big tender in the pipeline with sales of stock coming out of intervention now drying up.
No much to report on this commodity. The Brexit extension has delayed the possible ‘no deal’ exit worry which in turn has removed the threat of upsetting the import dynamics of the UK market, for the time being anyway! Contracted volume taken in October 2018 allows us to maintain steady pricing over the coming months.
Adverse weather in the US Midwest had the potential to delay new crop corn planting and cause switching into soybeans. With 3 to 4 months of northern hemisphere weather to get through before harvest, adverse weather driven price spikes are likely to occur through the crucial crop development phases. In the UK, low carry-over stocks and uncertainty over planted acreage data will leave the UK wheat balance sheet tight again. An upward adjustment to a majority of our flour pricing will be implemented May/June.
OILS AND FATS:
PALM - Buyers took advantage in April of what seemed to be very low prices. One of the leading market analysts reported that Palm Oil was undervalued compared to other oils. This naturally caused some buying interest. There has also been some dry weather in both Indonesia and Malaysia, which could in turn effect yields but we will not see this until 2020. However, there has been a lack of rainfall in some key growing areas and this could hamper yield figures and subsequently support prices. In summary, stocks still remain vast but production and export figures could provide some short term
RAPESEED - The Rapeseed Oil market is clearly showing signs of a lack of direction. Going forward the focus will be on the next crop year and how this develops. We know it is going to be smaller in terms of acreage but as the plants start to flower, we should get indications on growth and subsequently yield.
Prices for USA products have started to ease in an attempt to win back market share lost to Turkey, China and other producing countries in the southern hemisphere. In Turkey, raw material prices continue to strengthen due to limited supply. A heatwave in Australia seriously reduced crop production estimations. According to the Dried Fruits Australia (DFA) industry group, prices are likely to be around 10-20% up year-on-year due to the rise on production costs. Shipments for South African.