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Frontrunner - 29th June 2018

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WHEAT 

  • US markets slide further

US wheat closed the week slightly weaker, as fund selling pressurised futures lower. Focus remains on trade issues between the US and China as they continue to make headlines. Despite this, the US remains overvalued as an exporter compared to the likes of Russia and we could see further devaluation in the coming weeks to encourage new season export business. Weather for the US harvest has been favourable, allowing them to push on at a pace 8% faster than the five-year average. Winter wheat is now 41% complete, versus 39% last year and 33% on the five-year average.

  • UK roundup

The old crop domestic market continues to see offers from farmers and merchants looking to empty stores before 2018 harvest. This has depressed old crop values to the tune of £5.00/tonne in the past few days. However, new crop values remain strong and are currently trading at a premium to French prices. Forward farmer selling stalled slightly this week, as an air of nervousness around crop yields crept in due to the recent hot/dry weather. Consumers on the other hand are looking to fix new season values, keeping domestic demand sharp. 


BARLEY

  • UK barley harvest begins in the south

With high pressure firmly in control over much of the UK, winter barley harvest has begun in the last few days in the south. It is too early to get a feel of yields but quality looks mixed – as you would expect for early cut crops that have succumbed to disease or drought. Next week will see volume harvested and give us a better idea of what the winter barley crop should give us.

  • Malting barley market firms again

With lack of rainfall on the spring barley crop across northern Europe, plenty of uncertainty still exists about the size and quality of the malting crop. The French winter barley crop is reported 40% cut, with good proteins and reasonable specific weight. With uncertainty over the spring crop and little tonnage offered in the market, malting barley values have firmed again this week as end users look to take cover.


OILSEED RAPE

  • Unstable markets

Rapeseed markets have seen another volatile week of trading. The crosswinds are strong but the market remains anchored by the ongoing US/China trade disputes and the excellent crop conditions in the US. The good to excellent ratings for US soybeans were reported by the USDA at 73% - A record for this time in the growing year. The MATIF futures rallied €6-7 on the week, supported by a weaker euro but with ongoing concerns over production in Northern Germany and the Baltic states due to the warm, dry spring weather. Production in these areas is declining but this could well be offset by increased production in Ukraine, Bulgaria, Hungary and Western Europe.

  • Weather

Weather flags for rape/canola are there. While Australia has seen some much needed rain in the cropping areas, the view is that more is needed and, if forecasts turn drier again, yields could well be marked back further. Canada is warm but has received some timely rains.

Rain in South Eastern Europe has led to a stop-start affair with farmers in Bulgaria, Romania and Hungary harvesting in-between showers. Yields are reported as generally good but back a little on last year. 


 PULSES

  • Warm weather impact

Despite the recent hot weather, winter beans are holding up well as most crops were well established in the autumn with strong root systems and able to withstand the heat. Spring beans are more vulnerable, especially as they were late drilled into poorer seed beds.

  • Demand falters for new crop

Market values remain largely unchanged but it's worth noting that, following recent big falls in the value of soya meal, rapeseed meal and other vegetable protein, UK feed compounders will have less demand for new crop beans. Beans have a protein content of 23%, whereas rapeseed meal is 35% and is almost the same cost per tonne as beans delivered to a feed mill. 


 FERTILISER

  • Liquid fertiliser

This week has been all about the liquid market. Supplier's terms became available on Monday and so we have been able to offer summer and autumn tank fill, along with spring deals. The headline offer matched CF Fertilisers' early Nitram terms and so liquid users received it with similar commitment to that seen for the solid product. However the first Terms for the early tank fill have now been withdrawn as currency has once again moved against imports.

  • Solid fertiliser

The solid market was quieter this week, as farmers come to terms with the higher forward offers. Supplies of imports remain tight with limited offers – some are higher than Nitram thus keeping volumes low.

  • Urea

Fallout from the on-going trade sanctions being imposed by the US on Iran means that the urea produced in Iran, which is often bought by India under a tender process, may not be available. As a result India will be forced to look for higher priced alternatives, further underpinning the view that urea values will remain high for the remainder of 2018.

  • AN

Nitrates remain in tight supply across Europe, as can be seen by the reduced volumes of CO2 (a by-product of ammonia production) that has been widely reported in the press. This is due to a number of planned (and in some cases unplanned) plant closures in Europe and the UK. All of this leads to further upward pressure on fertiliser prices.

  • Nitrogen sulphur

The supply of nitrogen sulphur fertilisers also remains tight. Alternative offers and systems are available. Please speak to your Frontier contact for more information.

  • NPK

NPK prices have been adjusted by both major compound suppliers and many blenders are also indicating higher forward values for straights and blended product. Again, talk to your Frontier contact for the best available offers.

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