- The Trump factor
The recent market trend for higher prices has reflected concerns for global wheat where adverse weather has been hurting crops in North America, Russia, North West Europe and Australia.However, the beginning of this week saw all this discarded as the Trump administration ramped up its trade dispute with China. Talk that the US would apply tariffs to $200 billion worth of Chinese imported products triggered a notable wheat futures sell off. At their low on Monday, CBOT wheat futures had lost almost 8% of their value on the previous week before making a small recovery.
- Russian wheat crop lower again
French consultant Agritel published their Russian 2018 wheat crop estimate yesterday, with the lowest forecast we have seen to date and less than the USDA recent estimate. Following drought in the South trimming winter sown yields and excessive rain and cold in the North preventing spring planting, they see Russia producing 67.4 million tonnes of wheat. This would be 17.6 million tonnes below this season's record, although still the third largest produced. Russia has dominated the world's wheat export trade this season, shipping about 40 million tonnes, but this significant fall in annual production will leave them less of a force in global trade, which is supportive for the market.
- UK old crop wheat peaks
The UK seems set for a prolonged period of hot dry weather which will accelerate the ripening process for the 2018 wheat crop. With a strong import programme in place meeting the needs of consumers in the North of the country, the window to market remaining supplies of old crop feed wheat is narrowing. Prices have reacted accordingly and are expected to fall back toward the harvest value. Meanwhile bread wheat supplies remain tight and premiums are the highest we have seen all season.
- UK feed barley market quiet as harvest approaches
Feed barley trade has been very quiet this week, as political uncertainty dominates market sentiment. With UK winter barley harvest now in view, remaining old crop supplies are coming forward but struggling to find a market as most buyers appear well covered. New crop harvest values appear in the doldrums due to export values declining this week, with buyers into Spain and Portugal absent from the market place. UK domestic values remain a premium, as growers remain reluctant sellers for the time being with harvest getting closer by the day and feed wheat values remain firm.
- Scotland receives much needed rains this week
With the current weather situation across Europe a big focus recently, with too much rain in France and too little in Northern Europe, the Scottish spring barley crop received much needed rain this week. A little rain further south would have been welcome, as some areas of the UK missed recent showers and late drilled spring barley needs regular moisture.
- French winter barley harvest begins
With first reports of winter barley being harvested in France the market will be keeping a close eye on the yields and quality that are reported. Next week should see enough activity and information to start influencing markets on both sides of the channel. Malting barley markets across Europe initially dropped this week as rain fell across Denmark but have since firmed again as the chance of any further rain in the forecast appears scarce.
- Soybean fall halted
A fierce sell-off by fund traders has pushed soybean futures on Chicago down to multi-year lows due to a combination of fair weather and ongoing strife over trade tariffs and barriers. The largest agricultural product affected is soybeans, which would normally flow from the US to China, and is being hit with import tariffs in retaliation for the same imposition on steel and aluminium. Naturally this has impacted negatively on the whole oilseed sector, including MATIF rapeseed futures although to a much lesser degree.
- Crop prospects
European crop prospects look mixed, with areas under stress following dry conditions in Northern Europe and the East. Canadian canola crops are receiving adequate rain and sun in equal proportion, with expectations for a crop above 20 million tonnes. Australia has also received some much needed precipitation and while it has been welcome, it has only been able to stabilize their crop to between 3-3.5 million tonnes currently.
- Farmer activity
Activity remains very low for the time of year. Undoubtedly as harvest approaches we will see greater activity again, which could add further pressure to local markets. Current weather conditions have allowed the UK crop to catch up from the prolonged winter, with estimates now slightly ahead of normal harvest dates. Old crop oilseed prices are being pressured as a result of harvest expectation and the annual slow down in crushing rates, coupled with ample old crop stocks.
- Pest threat
As the high temperatures continue, pests are an increasing threat for pulse crops. Of growing concern are the black bean aphid and bruchid beetle, both of which can thrive and quickly multiply in warm weather.
The bruchid beetle has the potential to be particularly problematic. Based on the simple criteria of pods now present on the lowest node and temperatures surpassing 20⁰C across two days, beans are now at risk and action should be taken quickly if they are present. If yellow eggs are already on the bottom pods, efforts to mitigate any risk are futile.
Last year the pest presented significant challenges due to higher-than-average temperatures and was responsible for 80% of all downgraded beans. After colour, it is the main reason beans fail human consumption. Speak to your Frontier agronomist for advice.
- Continued price increases
Next year's nitrogen market started on the 8th June and since then we have seen four price increases. Prices are now being offered for October at £20 per tonne over the starting price!
This comes on the back of continued increases in the urea market. North African producers have very full order books well into August and recent sales have seen FOB prices over $280/ tonne. This combined with continued weakness in the pound means the effect on UK prices has been significant and many importers are still waiting to see where the market settles at before quoting. Talk to us for the latest offers.
- Keep an eye on pricing
Very little imported AN is available and values for new cargoes are being quoted close to £250 for Sept/Oct which is at or above the current Nitram price.
Whilst we have all been concentrating on the nitrogen market, currency has pushed phosphates, PKs and to a lesser extent MOP higher. Our advice is to look at securing a load or two at these values for use later in the year.