There's Hope for Feed Grain Price Relief

CANADA - A Winnipeg based grain market analyst says the bright light for livestock producers right now is the anticipated large global wheat crop expected to be harvested during 2008, writes Bruce Cochrane.
calendar icon 25 June 2008
clock icon 2 minute read
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Erratic weather patterns, including flooding throughout parts of the U.S. midwest, have driven corn to record prices pushing prices for competing feed grains, including feed barley, wheat, oats and even peas higher.

Informa Economics vice president Dave Reimann says, in general, across western Canada and a lot of regions across the U.S. we have reasonable conditions so, if we see relatively average weather patterns from this point forward, we'll see decent production and prices should ease back.

Dave Reimann-Informa Economics

One nice thing is that we've seen a bit of strength on the livestock side of the equation where hogs and cattle markets have rallied a little bit from previous lows and giving us at least some opportunities on that side.

If I can find a good bright light at the end of the tunnel it's that right now the global wheat market looks to be into the beginning of a very large wheat harvest.

USDA last week pegged the global wheat crop at about 663 million tonnes and a huge chunk of that is going to come off here in the next several months.

As we see that big influx of wheat, it should start to work it's way down into feed rations and I think that will take some of the steam off the corn market.

But we should start to see that cheaper supply create a bit more competition for corn or for barley or for any of these other markets.

If that happens to a large degree that will put some pressure on corn markets, feed barley markets and the rest.

If we see good growing conditions at the same time in those other crops it will only add to that.

So, if there's a light at the end of the tunnel for a feeder, it's probably coming from the wheat market right now.

Reimann says, right now, there's a risk premium involved in these feed markets but what will be key is how things progress over the next six weeks or so.

He expects crop development between now and the end of July to set the tone for the next 12 months.

TheCattleSite News Desk

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