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and rising urbanisation, Singapore is a country looking to take control of its own food production with measures designed to reduce that country’s reliance on imports. The UK is hardly facing a famine. But with increasing inflation pushing up food prices and cost uncertainty ahead of us, it is likely the UK’s food security will come under the spotlight in the coming months and years. The new report provides what may appropriately be dubbed food for thought.

LATEST USDA UPDATE The Foreign Agriculture Service (FAS) of the United States Department of Agriculture has recently updated its brand-new website to give its latest predictions of the world supply and demand situation for wheat and maize during the 2016-17 marketing year. Total wheat production, at 748.24 million tonnes, has been

reduced downwards by 4.45 million tonnes compared to FAS’s January projection. This largely reflects reductions in Kazakhstan and India, although production in Turkey and Ukraine has also been revised downwards albeit by smaller amounts. Indian wheat production has been reduced by 3 million tonnes or 3.3 per cent to 87 million tonnes, which is ‘well below the latest government of India estimate’; no further information is currently available. The Kazakhstan wheat crop has been reduced by 1.5 million tonnes or 9.2 per cent on ‘updated government statistics’. The sole upgrade is a 538,000 tonne increase in estimated EU wheat production. Taking projected consumption into account leaves world end-of-

season stocks at 123 Days Consumption Equivalent (DCE), two days less than in FAS’s January projection. Global production of maize has been increased by 2.28 million

tonnes or a marginal 0.2 per cent in FAS’s February projection; this largely reflects increased output in Mexico and Ukraine. Maize production in Mexico is projected at a record high, as government data indicating a ‘higher planted area and a lower level of abandonment following a favourable summer growing season’. FAS has increased its projection of Ukraine maize production on ‘a forecast record-high yield, based on the latest harvest results to date’. Albeit that the ratio of end-of-season stocks of both wheat and

maize have been revised downwards, the latest estimates put DCE at relatively high levels; no dramatic upwards shifts in prices seem likely. However, FAS’s first estimate of the 2017-18 marketing year starts in May and it is likely that attention will increasingly shift to prospects for supply and demand in the next twelve-month period. By the time that this notebook is read, the International Grain

Council will have published its latest prognostications as regards the 2017-18 supply year. These will be analysed and commented upon in due course.

COMPOUND FEED PRICES DEFRA have recently issued the results of their survey of compound feed prices during the last quarter of 2016. This particular set of data was of potential interest because, following the Brexit Referendum back in June of last year, of the effects


of the devaluation of sterling in succeeding months. In May 2016, the average spot rate for sterling against the Euro was €1.2846 and against the dollar, $1.4518. Subsequent to the referendum result, sterling lost ground against both currencies, a feature that became more noticeable, particularly in October. By February 2017, taking an average figure for the first 23 days of that month, the pound stood at €1.1728, while the rate against the dollar was $1.24935, slightly above the October rate but with clear implications for anybody purchasing goods and services from abroad including, of course, raw materials for the feed industry. Financial Directors may not recognise the euro and dollar

exchange rates referred to above and that is entirely understandable in that contracts will be negotiated against a set of assumptions as regards future values of raw materials, currencies and so on. However, there has been sufficient comment from the industry already to indicate that companies have felt and continue to feel the effects of sterling’s fall against the two major trading currencies and that, given current market conditions, the effects have, in many cases, impacted upon profitability. There are a number of ways that the effects of sterling’s fall against

the euro and the dollar can be measured but, unfortunately, the data to support such an evaluation is not easily forthcoming. If indicative exchange rates are easy to derive from the available data, then the cost of raw materials to UK feed manufacturers is much more opaque. While data does exist, albeit in a very broad-brush form as regards world prices, such as the International Grains Council’s Grain and Oilseeds Index, what UK feed manufacturers are paying for their raw materials, besides being a closely-guarded secret for obvious reasons, will reflect a wide variety of provisions including specific contractual arrangements. However, there are some clues, albeit that Sherlock Holmes would likely have little success in deciphering them. Take an obvious example, soybeans or their derivatives. Brazilian 48% soybean meal ex-store Liverpool was quoted at an average of just over £300 in 2015; this figure fell to £287 during the first six months of 2016 albeit there were signs that the markets were tightening during the run-up to the referendum. Since then, the quoted cost of the soybean meal in question during the July – December run has averaged £336, compared to £280 during the corresponding period of 2015, suggesting that the feed industry’s cost of high-grade protein has risen significantly following the result of the UK’s Brexit vote – but, perhaps, not solely due to the referendum’s outcome. A further assumption that can, not unreasonably, be made is that

finished product prices will tend to reflect the costs of raw materials involved in their manufacture. As readers will know, DEFRA collects survey data which are used to compile average quarterly prices for the main categories of feeds: cattle and calves, pigs, poultry and sheep and lambs. The data on poultry is collected from sale compounders only. Prior to June 2016, the principal influences in play were the

unwinding of a period of very high prices caused by poor harvests and falling end of season raw material inventories in a number of key markets. For example, looking at the data year-on-year saw feed prices in the third quarter of 2011 soaring above year earlier levels: £42 in

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