FEED INGREDIENTS Stratégie Grains analysts offer insight into harvest forecasts, demand, and price forecasts for cereals and oilseeds

Good decision-making relies on good data. Whether you are making decisions about capital investments or feed formulation, having insight into the supply and demand for corn, wheat, soybean meal, and other feed ingredients is essential.

Feedinfo’s sister company Stratégie Grains has 30 years of experience in analysing the effect that different factors, from the weather to the macroeconomic climate, will have on the production and price of agricultural commodities. Today, we are joined by Benoît Fayaud, Head of Grains Analysis; Hémeline Macret, Head of Oilseeds Analysis; and Rim Lazrak, Feed Analyst, for an outlook of key feed ingredients and a better understanding of the data that Stratégie Grains can provide to the feed industry.

GRAIN: MAIZE TIGHT, BOOSTING SHARE OF WHEAT IN DIETS

Overall, Fayaud describes the supply and demand balance of corn as “very tight, even [though] demand is not very high.” That particularly bad supply situation is a function of drought in Argentina, as well as a decline in production in the US (reduced acreage and dry weather) and Europe.

Of course, he notes, there could be one factor potentially pushing in the other direction, if the Brazilian crop to be harvested in July and August provides a big increase.

Still, Fayaud warns, for the campaign running through the end of September, “we do not expect a big decrease potential for corn prices, because of this problem in Argentina. And so [any] decrease in prices would be for the next campaign: 2023-2024, once we [will have some visibility on whether] the harvest will be good in the northern Hemisphere. We will know that in September.” ample local supply, but domestic demand has not gone up and on export markets, Europe’s supplies are competing with the Russianorigin wheat. “So very big stocks for the EU next year,” he notes. Next year’s wheat campaign will start in July. “We expect a good crop of wheat at the world level – of course, not at the record high level as was the case in Russia and Australia this year — but still very high, because, mainly, of very high area.” And once again, he says, the tepid economic situation will keep a lid on demand growth.

The takeaway for the animal nutrition market is that we should expect wheat’s inclusion rate in feed to reflect its competitiveness with corn in the coming months. “At both EU and global level, total feed demand should be higher than in 2022-2023 — but not very high. And in this slight increase, the share of wheat should again increase.”

Soymeal Prices Forecast To Remain High

Did Russia’s surprise decision to commit to a renewal of the Black Sea grain corridor lasting a mere 60 days, rather than the previous 120 days, upset Stratégie Grains’ forecasts? Fayaud says not so much:

Ample supplies are also a defining feature of the oilseeds situation. Macret describes the Stratégie Grains position as bearish on oilseeds. In soy specifically, she says, global production is decent, despite the “disaster” in Argentina; this was offset by very high areas and yields in Brazil. “Mato Grosso should harvest its highest soybean production ever and Brazil will be able to provide large soybean shipment volumes to the main importing countries,” she asserts. “The US and India also got a decent harvest in 2022, which helps supply the crushing industry right now.”

“Until now, especially for cereals, we have remained cautious regarding Ukrainian exports, because of this uncertainty around the corridor… we are on, I would say, the low side of the forecasts [which] make the assumption that the corridor is in place.”

The next campaign, they foresee, could ease that tight situation. “We expect a big increase of the [corn] crop, assuming normal weather, and rather low demand. So stocks should increase for 2023-2024.

Meanwhile, the situation is quite different for wheat. For one thing, he explains, remarkable harvests of wheat have been recorded in Russia and Australia. And for another, “the demand is not very high, even if wheat was competitive against corn in feed demand; because of the economic context, the total demand was not very high.” This means large stocks, with the potential for further decrease in prices until June, the end of the current campaign, accentuating its competitiveness against maize.

In the EU, he notes, Ukrainian wheat has contributed to the

However, oilseed supply is only one of the factors influencing the production of vegetable oil (and of the meals commonly used in animal nutrition); industrial margins also have a powerful influence. Therefore, in the next marketing year (October 2023-September 2024), she warns of a “tight situation” in the soymeal market, even amid oversupply in the soybean market thanks to presumed recovery of yields in South America and an increase in soybean areas around the world.

“The complex prices for 2023/24 deliveries indicate mixed crush margins for soybean. They appear good in the US and in Brazil, but not very profitable in Europe and Asia, especially in China. So soybean crush — and thus soymeal production — should not rise much in the next marketing year,” she explains.

The expectations for the prices of the two commodities are similarly disjointed. Macret believes soybean prices “should collapse as soon as the new harvests [are] secured and all climactic risks passed,” or in other words, in Q3 2023 in the Northern Hemisphere and early 2024 in South America. “But soymeal prices should not follow. We forecast that they should stay at a high level, given the deficit expected in the world and the main exporting country, Argentina.”

What could change this neutral outlook for soymeal prices would be the level of demand from the animal nutrition sector, Macret explains. Given that animal nutrition is overwhelmingly the largest application for soybean meal, if animal numbers take a hit because of anything from diseases like avian influenza or to financial shocks impacting the profitability of farming, then the price will respond accordingly.

Compound Feed Demand

Effectively, because the sector is such an important source of demand for both grains and oilseeds, Stratégie Grains also produces detailed modelling of animal feed consumption.

As explained by Lazrak, who is responsible for Stratégie Grains’ animal feed modelling, these are produced for the EU and UK each month based on livestock estimates (derived from data including the previous month’s numbers and forecasts about meat and milk consumption and export) and on estimates regarding feed composition (i.e. the