Commodities Update – (11th November)

Over the past month the pound has strengthened against the dollar (10/11) 1GBP= $1.1564.  Against the Euro, the pound has been volatile, however it has rallied in the last couple of days to 1GBP = 1.1455 EUR.

Bank of England base interest rate has hit 3%, following the biggest single rise since 1989, with the Bank of England preparing to increase rates further to help tackle soaring inflation.

Gas – After soaring gas prices over the summer months (875.14pp/therm), the cost of wholesale gas in the UK and Europe has fallen dramatically in recent weeks. Gas is trading today at 270.87pp/therm. Prices are expected to rise again as the weather gets colder and there is an increase in demand.

The GDT fell for the third consecutive period by -3.9%. (Skim Milk Powder -8.5%, Anhydrous Milk Fat -1.7%, Whole Milk Powder 3.4%, Butter -7.0%).  A lot of this is down to reduced demand from China due to its current Covid policy.  In terms of production both New Zealand and Australia have had slow starts to their seasons.  The US is seeing a slight increase due to larger herd sizes and high yields, but production in the UK and EU still remains below average.

Brent Crude has been volatile over the past month, following a peak during the first week of November it has settled back to $92.73/barrel.   

Milk Powder
The milk powder price has stabilised over the past couple of months, with no increases expected from our suppliers in November and possibly December.   

Fertiliser
The fertiliser market has softened in the last couple of days - plese call for current prices. 

Nitrogen production has been restarted in parts of Europe with the recent softening of the European Natural Gas prices.

The volumes of European Nitrate production will be significantly reduced.  Not much is expected in the way of exports, as their domestic market’s requirements will take a priority. Europe still faces significant risks to its natural gas supplies this winter, after Russia cut off most pipeline shipments and are now reliant on more expensive liquid gas that comes in via ships. Markets are expecting higher gas prices once temperatures fall & demand increases.

International Urea prices have generally softened recently due to the lack of trade, however Egyptian prices remain relatively stable even with the lack of activity. European demand is still well behind, with France only at 15% of the market covered. This indicates market recovery in Q4 2022 to Q1 2023 as buyers have to step in, this could cause logistical issues with potential delays getting product on farm.

Feed
With the US dollar weakness and the downturn in world economies, the markets have taken a slide this week to date.

The main impact of this has been seen in the protein market with Soya dropping £17/t over the week.  This has not fed through to the rape meal market which still remains strong.  The general feeling amongst buyers at the moment is that protein prices are still strong and there are further drops to come.

The cereals market has benefited less with the currency moves and only dropped around £6/t.  This is because the main influencer on this market is the war in the Ukraine.  There are positive noises come out suggesting that the grain corridor will be extended for a further 12 months and that the EU and NATIO are talking about easing sanctions on Russia to encourage more grain onto the market.

Seed
Now is the time to start thinking about Maize Seed for next spring.  Due to the summer drought some varieties will be in short supply, so order early to avoid disappointment. Our booklet with varieties and prices is now available, please contact us if you would like a copy.  We also have our maize starter fertiliser MaxiMaize available.

For up to date prices please contact Louise on 07943 684215 or e-mail louise@dblbuyinggroup.co.uk