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Frontrunner - 15th November 2019

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WHEAT

  • Russia takes back Egypt trade

Russian wheat exporters regained their competitive edge this week, securing significant sales to Egypt for delivery early January. Egypt bought 465,000 tonnes at just over $232 per tonne including freight and, although the two cheapest cargoes were from Ukraine, all the remaining 345,000 tonnes were of Russian origin. Russia was clearly determined to maintain their status as the leading supplier to Egypt, after having lost out to France in the previous week's tender.

  • US wheat prices continue to slip

This week, US wheat futures prices continued their recent decline and have now lost 5% of their value over the past four week period. US exporters are losing out to the more competitive supplies from Ukraine, Russia and the EU. Brussels' latest data shows this season's shipments now up to 9.67 million tonnes which is 47% ahead of the same period last year. Analyst, Stratégie Grains, increased its EU wheat export target to over 28 million tonnes, clearly expecting the current shipping pace to be maintained. US wheat exporters are still hoping to see a resolution to the China/US trade dispute having been encouraged by comments from a White House economic advisor this week that there had been constructive discussions.

  • Rainfall continues

Heavy rain has continued across much of the UK this week and the resulting extensive flooding has been headline news. Best estimates put UK winter wheat planted at between 40 and 50% so far. Understandably, little progress has been made this week although some drilling activity was reported in East Anglia.

Domestic wheat prices have continued to rally, with market forces reacting by closing off old crop exports and taking new crop prices towards import parity. November 2020 London wheat futures hit £160 this week which is £20 above the low they fell to in August and a premium to French wheat futures. France is also behind with their winter wheat drilling on the back of October rainfall which was 40% higher than usual. However, they did progress by 5% this week to 72% complete but this is low compared to the 92% seen last year.

BARLEY

  • Feed barley values well supported

A combination of continued export activity; as ships continue to arrive and domestic demand picks up a little, has seen good demand for feed barley. As feed wheat prices strengthen, barley looks good value at current discounts to wheat which helps UK demand. Despite the high rate of exports from the UK so far this season, the overriding factor when it comes to barley is the large size of the 2019 harvest crop. Demand domestically and for exports will need to remain high if we are to avoid a large carry over at the end of this season.

  • Malting barley exports slow

The extension of Brexit to the end of January has done little to lift malting barley exports from the UK to mainland Europe. More competition for Denmark – and end users having already taken a significant amount of cover – means new export business is difficult to find.

Premiums for malting barley are being squeezed, as we see good demand for feed barley for the next few months. Malting premiums are also limited for next season, as continued disruption from the weather to autumn cultivations has the potential to lead to an increase in the UK spring barley area.


OILSEED RAPE

  • EU rapeseed markets

The February '20 MATIF futures market closed at a season high of €392.25 on Monday 11th November but has since dropped back on a mixture of profit taking and falling vegetable oil prices. The recent drive up from the autumn lows of a few weeks ago had been mainly driven by demand for vegetable oils – primarily palm – which lifted the entire vegetable oil complex with it.

European crushers are carrying large stocks of European and Ukrainian origin rapeseed and, as we head towards the end of 2019, the market feels reasonably balanced. With the imminent arrival of around 1 million tonnes of Australian origin canola from the ongoing harvest, and with record volumes of imports from Canada now traded and arriving into the EU, markets currently feel well supplied.

  • USDA

Since the latest United States Department of Agriculture (USDA) report was published on 8th November, we have seen soybean and soy oil markets retracing on the recent gains as we once again look at a bearish outlook for soybeans. Whilst the USDA did make a small cut to US production, they also made a significant cut to US crushing demand which actually took ending stocks up by 15 million bushels.

  • US/China

Over recent weeks there have been talks amongst the market about the US and China finally coming to a trade agreement. However, as we write, the feeling is very different. With the cancellation of the meeting between President Trump and Xi Jinping in Chile and with no new proposed date, it looks highly likely that the trade dispute could rumble on into 2020. This is hurting US exports of soybeans to China and, with the main shipping window of November - January now ominously slipping by, it once again looks like the main Chinese demand will be for South American Soybeans from January 2020 onwards.

  • Summary
The bearish data from last Friday's USDA report has prompted a selloff in soybeans and soy oil and the latter prompted other vegetable oils to fall back. With rapeseed oil standing out as the premium product, the competition from palm, sunflower seed and soy oil should not be underestimated from this point onwards.

 FERTILISER

  • Nitrogen

This week saw new terms from CF Fertilisers followed by Yara, with offerings from both for January delivery. It is no surprise that demand remains low due to the continued weather conditions and the effect it is having on drilling. Production across Europe is very low due to the lack of demand and reasonable stock levels held by some mainland suppliers (mainly CAN). The January offer should be considered by growers, as pressure on spring logistics is already cause for concern.


  • Urea

The Indian tender announced last week is due to be concluded, with suppliers offering 3.1 million tonnes. They are expected to purchase 1.5 - 2 million tonnes for shipment by mid-December. The UK and Europe are still a long way behind with buying, with time now running out to receive shipments in time for usage.

  • PKs

As with ammonium nitrate, demand is low due to drilling. Suppliers are still looking to move stocks so growers who are buying and can take delivery have been getting product at good levels. Consideration should be given to the new competitive NPK compound prices from CF Fertilisers and Yara to meet nutrient requirements. Please contact your Frontier specialist to discuss options. 


Alongside its divisions, SOYL and Kings, Frontier is hosting a series of 17 winter training events. Open to all farmers interested in learning more about the use of digital technology to improve crop production performance, the events will include valuable insight into MyFarm and its role as a complete farm management platform.

You can find your local event and book your place by visiting our website. 

Market report - 21st November 2019
'Precision conservation'

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