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Frontrunner - 11th October 2019



  • USDA dampens grain markets

The United States Department of Agriculture (USDA) published their October world supply and demand estimates on Thursday. Trader focus was on an expected cut in US corn yields given the delayed planting, plant maturity and harvest progress. However, the USDA actually increased yield albeit marginally on the previous month from 168.2 to 168.4 bushels per acre and this triggered a sell off on CBOT corn futures. The speculative funds sold over 20,000 corn contracts and this pushed wheat values lower also.

The USDA made minimal changes to the world wheat balance sheet. Small cuts in production for the US, Australia and Canada were offset by increases for the EU. Overall, production slipped just 300,000 tonnes from the September report at 633.23 million tonnes. However, reduced consumption has resulted in yearend stocks increasing 1.3 million tonnes on the previous report at 287.8 million tonnes, which is over 10 million tonnes above last year.

  • UK wheat crop up 20%

After prices rallied during September, the UK wheat market paused and eased lower into the weekend as the size of the UK crop, negative USDA and firmer sterling all started to weigh.

Earlier in the week, the Department for Environment, Food and Rural Affairs (DEFRA) published their first 2019 harvest wheat crop estimate which was broadly in line with most trade estimates at 16.283 million tonnes. This is the largest for four years and a notable 20% above last year, pointing towards a surplus to export of up to 2.5 million tonnes. Latest official data put wheat exports to the end of August at 151,000 tonnes which was below expectations, highlighting the need for the UK to remain competitive. With Brexit news suggesting a 'deal' can be reached, sterling rallied on Friday and pushed down London wheat futures.

  • Rain delays field work

Ongoing wet weather has not only hindered winter wheat drilling in the UK but also across the English Channel. Latest data from French agricultural office, FranceAgriMer, estimates 4% of the soft wheat area is now drilled, advancing only 1% on the previous week. This is in comparison to 15% drilled at the same time last year. Maize harvesting is also struggling, with only 14% complete compared to 65% at the same time last year.

In contrast, Black Sea conditions have been more favourable with winter drilling in Ukraine now up to 69%.


  • Feed barley

Thursday's USDA report had a bearish impact on global corn markets which saw UK barley values fall as a result. Barley values also lacked support from currency, which made up for losses earlier in the week on the back of discussions between the Prime Minister and his Irish counterpart.

DEFRA set its first estimate of UK barley production for crop '19 at 8.18 million tonnes, 25.6% greater than 2018. However, the value was 200,000-300,000 tonnes greater than trade estimates. As a result, the UK faces a greater exportable surplus than in previous years, with a good volume already exported to the EU. Despite the Brexit deadline at the end of October, the UK has export trade on the books for November into Northern Ireland as well as to third country destinations from some of the larger ports.

  • Malting barley

UK barley production numbers also include a large malting barley crop which has seen less quality issues than in previous years. Much like feed barley, exports are continuing at a high pace from the UK to the EU which could reach 160,000 tonnes by the end of the month. The UK has capacity for more malting barley exports but this will depend on the direction of Brexit discussions.

With harvest '19 now all but complete, attention is starting to shift to next year's crop. We are offering a range of different contracts including pools, min/max and distilling for a range of locations. Please get in touch with your local farm trader for more information.


  • Imports rolling into Europe

DEFRA's provisional crop estimate for the 2019 harvest came with few surprises other than a marginally higher planted area compared to the Agriculture and Horticulture Development Board's (AHDB) summer survey findings. The 529,000ha from the June census combined with a below average estimated yield of 3.3tonnes/ha gives us a UK crop of 1,750,000 tonnes. This leaves the UK and the rest of the EU heavily deficit in rapeseed and markets are already handling significant volumes of imports. EU data for July and September reveals record volumes at just under 2 million tonnes which is more than double the five-year average for these months. Ukraine accounts for over 80% of this total.

  • Currency and politics supporting prices

The other notable feature in markets this week has been the weakness in sterling. At the time of writing its value sits 2% down against the euro, making imports more expensive and thereby supporting domestic values. US soybean markets also got a boost to a three-month trading high on the news that China is prepared to increase their imports from the US by 10 million tonnes to 30 million tonnes; conditional on a deal involving no new tariffs. 


  • Higher yields in spite of reduced bean planting

Key news domestically this week has been confirmation from DEFRA that their June survey has shown a sharp drop in bean plantings for harvest 2019, down 11.4% to just under 134,000ha. However, yields were up by around 2t/ha at 5t/ha, producing a sharply higher crop production figure of 650,000 tonnes. Pea plantings have moved in the opposite direction, with an increase of 7.3% to just over 40,000ha. 


  • Nitrogen

This week saw little activity with nitrogen products as the focus remains on drilling. Nitrogen sulphur grades have been slightly busier in the few areas where drilling has been active.

All eyes are on the week to come with regard to the weather and what will happen in Westminster. As we move towards the current Brexit deadline, October order books and the available lorries to execute deliveries are now full for most areas. November and beyond prices are expected soon and at a likely premium to current terms. Growers are advised to check with their Frontier contact early next week to determine what is possible for straight nitrogen/nitrogen sulphur deliveries in October.

  • PKs /MOP/TSP

There has been increased activity this week, with many enquiries from growers looking to replace nutrients taken off with the large harvest. Suppliers are still keen to get product out before the Brexit deadline and avoid the risk of potential import tariffs on replacement stocks.

Buying straights and PKs over the next seven days is advisable due to the weaker prices as a result of high stocks and to secure product ahead of the next political outcome.

As with nitrogen and nitrogen sulphur grades, your P and K requirements, delivery plans and the options available should be discussed with your Frontier contact early next week.

View markets, set price alerts, manage contracts and take advantage of extended trading hours with
MyCropMarketing, Frontier's online grain marketing platform. 

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