- Wheat prices continue to rise
Demand for wheat supplies to UK ports saw prices rally to a near six-week high on Friday. This performance was matched by French wheat futures which were reacting to the fast EU export pace and a continued flow of tenders held by the world's major importers. Helped by continued euro weakness which hit a 28-month low versus the US dollar, the EU had shipped over 5.6 million tonnes of wheat by 22nd September – over a million tonnes more than last year.Egypt bought 300,000 tonnes mid week made up of five Russian cargoes but also one from France. French wheat was the cheapest offered loaded onto vessel but they were only able to secure one cargo sale due to their freight disadvantage. Shipping costs from France were above $21 compared to Russia which ranged from $15 to $17 per tonne.
In line with analysts, the European Commission recently raised their monthly common wheat crop estimate from 142.7 to 145 million tonnes.
- Australia stays hot and dry
Weather forecasters expect at least three more months of hot, dry weather impacting on the east coast of Australia and they see the whole country experiencing hotter than normal conditions. It seems likely wheat crop estimates will continue to fall as a result, with some suggesting they could drop down to 17 million tonnes. This is a significant reduction on their record wheat crop in 2016-17 which reached 35 million tonnes. In Argentina, which has also been reported as needing rain, the Buenos Aires Grains Exchange stated this week that they see their country's wheat crop reaching a record 21 million tonnes.
- Russia increases wheat crop
This week, the Russian Agriculture Ministry increased the country's wheat crop from 75 million tonnes to 78 million tonnes. This is referred to as 'bunker weight' and should net back to 72 million tonnes; close to the United States Department of Agriculture's estimate of 72.5 million tonnes.
- IGC make no changes
The International Grains Council published their September world balance sheet estimates this week but made minimal changes. World production was left unchanged at 764 million tonnes, up 31 million tonnes on last year. Consumption increased 1 million tonnes, leading to an increase of 1 million tonnes in carry out stocks to 272 million tonnes. This is 6 million tonnes up on the year.
- Feed barley
Exports are continuing throughout the UK at a high pace before the current Brexit deadline at the end of October. With sales already on the book for this month and limited berth space restricting any further trade, the market is focused on execution. Demand away from the ports is limited, with few domestic markets beyond October and into the new year.
Global demand does exist with the world's largest barley importer, Saudi Arabia tendering this week for 1 million tonnes of feed barley for Dec/Jan delivery. However, the UK is unlikely to supply into this slot which is expected to be dominated by Black Sea origins. Volatile currency is having a significant impact on the competitiveness of UK exports with the parliamentary uncertainty spilling into the UK barley market.
- Malting barley
The malting barley market is still being dominated by Brexit uncertainty. Much like feed barley, exports are continuing at a high pace from a range of UK ports before the end of October.Harvest is complete in the UK with the domestic maltsters now assessing malting barley quality, which has generally been good throughout the country. Fresh demand for UK malting barley is unlikely to come forward until the outcome of Brexit is known.
- Improving weather in South America
There has been no change in domestic price levels this week and limited fresh news in international markets. In recent days, improving South American weather forecasts have put pressure on US soybean futures markets. However, this has been counterbalanced by confirmation of larger than expected US bean export numbers to China, along with President Trump's comments at the UN earlier in the week that a trade deal with China could happen sooner than previously expected.
- UK prices capped by imports
- Samples tested for human consumption
Bean values have remained largely static this week with the main emphasis on establishing whether farm samples are suitable for human consumption.
What is clear is that the majority of winter beans are not suitable due to too much staining and they should certainly not be blended with spring beans.
Spring beans further north are much brighter and more uniform in both colour and size but the level of insect damage is key when determining suitability for human consumption. Many samples have high levels of internal Bruchid damage that is only identifiable by cutting open 100 seeds to calculate the percentage damage. As a rule of thumb if the combination of visible holes and internal Bruchid counts are less than 10% and the samples are bright in colour, they should be okay.Human consumption premiums are trading in a wide range from £15-£30/t depending on quality and location but, with some political and financial unrest in Egypt, traders there are not currently making any fresh purchases.
The world urea market saw very little activity this week, with only a few small sales made from a couple of relevant suppliers to the UK. Prices remained flat with no real appetite from buyers who are watching currency and the news coming from Westminster.
As the week progressed, sterling headed weaker against both the US dollar and the euro as world news channels tried to make sense of events in London. Some deals are offered but, again, these are for immediate movement and shed space is currently taken up by wheat. Thursday and Friday saw a firming in ammonia levels in the US so this may need watching.
CF Fertilisers remained quiet this week, likely watching currency and developments around if/when Brexit might happen. There has been no change from the national AN suppliers this week other than to say that October is almost finished and that November is likely to be more money.
Blenders' levels remained mainly unchanged, with some weakness in ammonium phosphate markets. Given blenders have high UK stocks, this may be slow to come through to the market but there is still plenty to do. Please speak to your Frontier contact for more information and offers.
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