WHEAT 

  • Market reactions

UK markets fought back this week with £5/t gains on London wheat futures, reversing the downward trend seen for the majority of the past month. Global markets galvanised support from the less-than-ideal harvesting conditions in the Russian spring wheat area, as well as dry and unseasonably cold temperatures hitting the western Australian wheat crop. The latter is potentially compromising an output already predicted to be low.

  • Russian exports

The key factor that stopped the markets dropping further this week was the renewed confirmation that Russia's current export programme is at a fast pace, with 10.2 million tonnes having already been exported by the 13th September in this campaign. With quality certificate hold ups reportedly hindering the supply chain, this could be a possible indication that – from a political view point – a slowdown in Black Sea supply is more likely than a month ago.

  • Milling demand

As a consequence, in the short term market support looks to be in place for base values. However, the same cannot be said for domestic milling. Demand has fallen away, with quality premiums diving £5/t in the week as the oversupply struggles to find buyers this side of January.

From this point, UK prices will be dictated by domestic trade while current levels sit well below import parities and far above recent international tenders for quality wheat. Over the coming months, we may see the UK supply base narrow premiums to quell domestic demand within a tighter national balance sheet. 

BARLEY

  • Further feed barley tenders as Australia battles drought

More export demand in the form of Algerian – met by Black Sea origins – and Turkish tenders arrived this week, whilst Jordan cancelled its tender ahead of returning to the market next week. The trade continues to watch Australian weather conditions, where frosts have hit crops at the critical heading stage in their growth cycle. There remains little sign of rain in the ten-day forecast.

Domestically, the pace of farmer selling has slowed as the barn door shuts on harvest 2018. Farm prices have settled at current levels, meaning new market information will be required to create any price movement. Harvest of maize is now underway, with lower yield expectations as a result of the summer drought and its impact on all crops across Northern Europe. This will only add to the fodder deficit, with early yield reports suggesting 10-30% reductions.

  • Malting barley market waits patiently

The Scottish harvest is almost complete, with only with a few small parcels still to be cut. Storm Ali has brought strong winds and heavy rainfall across the country this week and will have had a negative impact on the quality of any standing crops.

The trade has had another quiet week as both brewers and maltsters continue to sit-out the market. 

​OILSEED RAPE

  • Four weeks of falling prices

Prices have continued to trend lower this week and it is now four weeks since the UK oilseed rape market peaked. The benchmark Liverpool market hit the season's high on 21st August and today sits £19/t lower, which is a drop of 6%. As a comparison, the wheat market hit contract highs a little earlier on 9th of August and, by 9th September, it was £22.00/t lower which represented an 11% fall.

  • Chinese demand dropping

Volatility in oilseeds markets has generally been less than in cereal markets. This has largely been due to increased world production in most oilseed crops (apart from OSR/canola) and the ongoing trade dispute between the US and China. This week, China announced that their pig heard shrank by 1.1% in August compared to July, and that pig producers are dropping soy in their rations from 20% on average to what European producers would regard as a more normal 12%. This equates to wiping out 27 million tonnes of demand.

  • Currency difficulties

Australia continues to struggle with unfavourable weather but it is increasingly difficult to find bullish stories in the OSR market. A firming pound has also not helped recently and, as Brexit negotiations head towards the end game, we should expect further price volatility driven by this factor.

 PULSES

  • Feed buyers opting for rapeseed meal

The bean market continues to rise, as east coast shippers find it harder to cover their old export sales which are now below the current market value. However, it's now becoming apparent that some compound feed buyers are switching out of beans, as they no longer represent good value in some ruminant rations with rapeseed meal relatively cheaper.

The market is still watching to see what the Baltic shippers will do as they try to cover their short portions of human consumption beans sold to Egypt. If any of these contracts are cashed out, we may see some easing of forward market values. 

 FERTILISER

  • Likelihood of price rises

Fertiliser markets are very quiet this week with most people focussed on drilling next year's crop. However, the international market continues to trade and recent indications are that we are in line for another series of price rises. Urea remains firm and this is causing a headache for many traders/importers, with farmers looking to hold off in the hope that prices will fall later in the year.. Time is running out for such a drop and as such, any firm offers at or below £300 per tonne should possibly be considered.

  • Nitrogen

Ammonium nitrate is being heavily affected on the continent by high gas prices. Yara announced a further increase in Europe this morning for their flagship granular product, Extran, by €10 per tonne. We expect Yara – and possibly CF Fertilisers – to follow suit here in the UK across the next few days. Again, the message remains the same as that at the start of the new season; don't delay in booking your nitrogen and nitrogen sulphur products. Talk to your Frontier contact for best current offers.

  • PKs

There is some fluctuation in the TSP /MOP markets, with one large blender reflecting replacement values and introducing a £10/tonne increase on MOP pricing. Meanwhile, others are still selling off old stock values – again talk to us for the best offers depending on location and product.

  • Nutrient requirements

Now that cropping plans are being confirmed, it is a good time to look again at nutrient requirements particularly bearing in mind replacing P&K taken off in straw and looking at needs for sulphur. We have a unique PK+S granular compound available that is ideally suited for many systems while providing all three essential nutrients in one pass. It also decouples sulphur from nitrogen, potentially enabling further savings to be made.


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