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Frontrunner - 14th September 2018



  • USDA report sets a bearish scene;

Wednesday's much anticipated USDA report shocked the trade, with significant increases to US corn yields well above the average trade estimates released before the report. Global corn production was also increased to 1,069 million tonnes. Although not directly related to wheat prices, this 35 million tonne production hike year-on-year ultimately adds more 'feed grains' to the world trade complex.

The USDA report added 3.4 million tonnes of wheat to world production figures following larger than expected crops in Russia, Kazakhstan and India. The report also kept Russian exports unchanged at 35 million tonnes, which looks heavy given the ongoing rumours of an export cap coming into place around Christmas.

In summary, the 35 million tonne increase in world corn production could be viewed as something of a necessity rather than anything bearish, given wheat production is down 25 million tonnes year on year. This said, global markets reacted lower with corn and wheat closing down 12 and 14 cents per bushel respectively.

Russian exports and real-life US corn yields remain key watch-points going forward.

  • Defra releases crop estimates

According to Thursday's final crop areas report, the UK wheat acreage has increased for the first time since 2014. At 1.67 million acres this represents a 1% increase year-on-year. Apply this to last year's average yield of 8.1 tonnes/ha and it calculates to a 13.5 million tonne wheat crop, which is roughly in line with most of the trade's estimates. However, yields are still questionable this year.


  • Busy week for global feed barley

Saudi Arabia purchased half a million tonnes more than originally tendered at the end of last week for Nov/Dec delivery. As expected, European exporters picked up some of the business whilst Australian barley will meet some of the further forward positions. Further export demand also arrived this week in the form of Jordan and Tunisia.

Australia released its latest crop report on Monday, with the barley production forecast down 7% from 17/18 levels. Dry conditions have been widely reported in the east of the country, where New South Wales and Victoria both saw production estimates decrease by 36% and 21% respectively. These warm and dry conditions show little sign of changing and are forecast through into the new year.

  • Domestic malting barley continues to drift

Malting barley values continue to drift lower as the market waits for clarity around any changes in specifications. Prices also felt pressure from feed barley being pulled lower on the back of a bearish USDA report.

Harvest is continuing in Scotland at a slower pace; cutting days are becoming shorter as grain in the field takes longer to dry. Localised showers have had different impacts around the country with some of the later barley showing signs of being weathered.


  • USDA report results in neutral effect on soybean complex

This Wednesday saw the release of the USDA's monthly World Agricultural Supply and Demand report. The key data for oilseeds revolved around soybean yields, end stocks and crop size. All these factors were up at levels marginally higher than average trade estimates before the report. This should have made for bearish soybeans, however, other news regarding confirmation from Washington that a new approach has been made to China on trade talks offered some positivity to the market.

Initially after the release, CBOT soybean futures were up but on Thursday morning they gave back these gains, putting them at the same level as pre-report. China has also stated that they will only require 84 million tonnes of imported soybeans on the year compared with the USDA estimate of 94 million tonnes. Whether this Chinese figure can be maintained will be revealed in the coming months, however, it currently acts as a dampener on soybean prices.

  • Domestic rapeseed prices weaker

This week saw a fall in domestic prices, due to both a firm sterling and a weaker European market. In other world news, the French Ministry of Agriculture raised their production from 4.6 million tonnes to 4.8 million tonnes month-on-month. The Australian Agricultural Bureau came out with a decrease in their canola numbers at 2.7 million tonnes, down from last year's number of 3.6 million tonnes. Conditions for OSR plantings remain challenging across Europe due to continued levels of dryness across the area.


  • Firm market

The UK bean market continues to firm up as consumers still need to take on more cover. This demand has been increased following the planned closure of Vivergo, as the lack of Dried Distillers Grains with Solubles (DDGS - a mid range protein feed source) needs to be replaced with alternatives like feed beans.

We are also seeing some Baltic buyers trying to buy UK beans from East coast ports to replace their early cheap sales to Egypt and the Middle East. There is of course a limit to any rise; imported peas can be substituted in some rations and currently these are not too expensive.


  • Nitrogen

Activity in the UK-produced nitrogen market has been steady again this week, as the market slowly accepts the new levels published by CF Fertilisers and Yara (increased by £20/mt). This rise is in line with mainland European ammonium nitrate offers and, due to current exchange rates importing products into the UK, is still not a viable option for growers. Urea markets are also firm again, with more global demand activity and pressure on supply. Some supply is available in the UK at numbers that are lower than today's replacement. Growers should look at current urea prices or alternative N options, as we face a real danger of not having product in time for usage should we see more demand in the UK.

  • Sulphur grades

Nitrogen sulphur grades are tight in the UK. Very few imported options are available and we are now seeing pressure on the quality G3 ammonium sulphate. Please talk with your Frontier contact for sulphur options.

  • PKs

The current good weather has allowed some growers the opportunity to replace phosphate and potash removed at harvest. Talk to us for information on TSP/MOP and P & K options; these now also include PK plus compound (0.18.18 + 18so3 + 2MgO + 16CaO) and potash plus compound (37K + 3MgO + 24So3 + 8 CaO).

Borgeby Fältdagar 2018
Market report - 13th September 2018

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