- Spring is the season of risk
Market support has held in wheat markets since the lows of the previous week. Speculators have large bearish positions laid on in grains for crops that are still very exposed to adverse planting and growing conditions as dormancy breaks. The strength of rebound in wheat futures has been largely led by corn as markets react to the current wet US field conditions. In the meantime, EU wheat markets have drawn support from a surging export pace from French ports, keeping originators on their toes.
- Interesting end of season
From a grain perspective, old crop wheat seems to have found a level of support locally in the UK where farm sales are only just keeping up with demand both on milling and feed. With the summer months' demand still to be written for many consumers, coupled with a finely balanced supply line, the outlook could become fiery towards the end of season as we transition into far cheaper new crop supplies.
- Little development on old crop values
Old crop feed barley continued to drift this week, although it is still a premium to new crop. As a result, tonnage has continued to flow from farm rather than being carried forward into a discounted market. Fresh demand remains limited, despite a widening price gap to feed wheat.
- Malting barley
The malting barley market has been very quiet this week on the back of old crop continuing to drift lower on lack of demand. In addition, the uncertainty surrounding Brexit has stopped any fresh export business. New crop EU values have been stable but premiums over feed barley remain at attractive levels. Sowing progress has continued at a good pace in near ideal conditions.
- Volatile markets
With plenty of uncertainty in the next year and an expectation of considerable volatility in the barley market, pools will continue to be a viable option to help manage the risk of marketing crops. Frontier's feed and malting barley pools remain open – please contact your Farm Trader for more information.
Rapeseed markets seem to have finally found some support this week and OSR has been in good demand. The volatility in sterling continues and this week we have seen better prices at the farm gate as currency markets continue to trade wildly around the ongoing Brexit situation. It is highly likely that we will see further volatile moves in currency markets.
MATIF futures are ending the week on a positive tone and we have also seen a large crushing plant in France re-start activities again. This has slowed the flow of French seed into other Northern European crushes and better demand has been reflected in prices.
With a large fund short in Chicago soybeans, the market is cautiously watching developments and tweets from US officials to try and get some insight into the ongoing US-China trade disputes. Next week brings the USDA report on the latest stocks and planting forecasts which will be interesting given the heavy global politics and far from ideal weather conditions in some key states.
- Positive outlook for new crop
While it may be too early to be sizing up prospects for the new crop bean market, there are already grounds for optimism for both crops and prices. Beans sown in the autumn have come through the winter well, while the spring beans in the ground have gone into good seed beds and have benefited from the rain and snow that fell earlier in the month.
- Crop size lower than 2018
Bean plantings are likely to be down on last year, partly due to shortages of seed but also because of strong autumn plantings of all crops limiting the supply of land for spring work. The AHDB Early Bird Survey indicated wheat and barley plantings were up 4% and 13% respectively, while the Scottish December survey reports an increase of 13% for all autumn sown crops.
- UK bean demand high
Demand is set to remain strong, with human consumption export markets and the fish sector likely to be hungry for UK beans again. These factors are reflected in the availability of forward buy-back contracts on much better terms than for harvest 2018.
- Demand expected after second N applications
Markets are generally quiet as farmers catch up with applications of fertiliser following the recent inclement weather. Forward looking crops may require additional nitrogen and the trade feels that there will be further demand for top up tonnes once second application starts in the next couple of weeks.
Uncertainty around the proposed 6.5% tariff in the event of a no deal on fertiliser imports from Europe is a hot topic for discussion with European based suppliers. There has also been an announcement in Europe this week regarding anti-dumping levies being applied to liquid fertiliser. This and the suggested tariff will be dependent on what sort of deal, if any, we come out with over the coming weeks or months.
Blenders are reporting better stock levels than in recent weeks but it is advisable to place orders in plenty of time as we head into the main period of spring application.
View markets, set price alerts, manage contracts and take advantage of extended trading hours with MyCropMarketing, Frontier's online grain marketing platform.