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Frontrunner - 2nd November 2018

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WHEAT

  • Russian rumours rumble on

The world's leading wheat exporter has played a major part influencing prices this season. Wheat yields slashed by adverse weather saw their crop drop more than 15 million tonnes on last year's record 85 million tonnes. In August, rumours of a possible Russian export ban sent the world's wheat future markets soaring to contract highs and, although the Russian Agriculture Ministry haven't acted yet, the fear that some restrictions will be applied is never far from traders' minds. With it likely that more than half the export target of 33-34 million tonnes will be shipped by the end of the first quarter of the year, exporters are having to source further inland for their supplies, sending prices higher. This week, it also became apparent that some loading points have suspended operations because of quality problems, triggering a jump in US futures.

  • US bread basket struggling

Kansas is the primary winter wheat state in the US and planting there was expected to jump 10% on last year's 7.7 million acres. However, untimely rainfall in parts of eastern and central Kansas (two-to-three times the normal October level) is likely to prevent this from being achieved. Up to nine inches has been recorded during the month. As of 28th October, US winter wheat planting reached 78%, with Kansas at 76% compared to the five-year average of 89%.

  • UK market feeling heavy

Despite US futures rallies this week (helped particularly by tweets from President Trump alluding to a more positive outlook for the US/China trade issue), London wheat futures have continued to come under pressure. A renewed enthusiasm to buy sterling increased its value versus the euro. The US dollar is also not helping wheat prices. The full impact of imported wheat and maize supplies is now being felt, with consumers having good cover into the new year. With the decline of the UK bioethanol industry it is encouraging to see reports of a record use of wheat in domestic animal feed production for the month of September, reaching 457,000 tonnes. 


BARLEY

  • Feed barley markets remain firm

Feed barley values have been under pressure this week, as barley struggles to keep its place in domestic rations due to feed wheat looking a competitive substitute. However, feed barley values remain strong and we would encourage growers to take some cover at current levels.

  • Low river levels continue to impact exports

It has been a quiet week in the malting barley market with little fresh domestic or export interest. However, plenty of malting barley export vessels have been executed due to the continued low river levels across Europe which are causing problems with the normal barge freight logistics. There still remains plenty of uncertainty about the stance of both domestic and European maltsters with regard to spring barley above the standard maximum 1.85N level.

  • Frontier pools for 2019 now open

This year's Frontier harvest barley pool produced a base price result of £143.40 ex farm, with location premiums and quality premiums for malting grades added. The pools for crop 2019 feed and malting barley are now open. With plenty of uncertainty in the next year, we can expect volatility in the barley market and pools will continue to help manage the risk of marketing crops. 


OILSEED RAPE

  • Plentiful supplies

It's been an interesting week in the oilseeds markets, however, most of the talk is about politics and not about crops. World oilseed markets are generally well supplied this season and therefore have typically underperformed compared to cereal markets over the last six months. Attention has recently been focused on the US/China trade dispute and the value of sterling.

  • Possible thawing in US/China relations

This week, President Trump tweeted that he has had "a long and very good conversation with President Xi of China". US futures markets have since reacted with a strong surge in prices. Any easing of tensions, which could lead to a full resumption of US soybean exports to this key market, would have an immediate impact on the values in all of the world's oilseed markets.

  • Firm pound

Pushing domestic markets in the opposite direction this week has been a firming pound that is making imports cheaper and any exports less competitive. Financial markets like certainty and in recent days a deal on Brexit negotiations has looked more likely. Sterling has firmed 1% against the Euro in the last couple of days and the fear is that it might still have further to go.


 PULSES

  • Falling feed bean demand

Old crop feed bean values have levelled out this week, as more peas from France and the Baltic states continue to be imported as a replacement for feed beans in compound rations. As this trade looks set to continue we would soon expect to see values fall a little, as demand for feed beans continues to wane.

  • Human consumption beans

Demand for human consumption beans still remains firm, with Australian prices rising another A$50/tonne this week. Some of this rise has been seen in the UK market but, with limited supplies of very variable quality and sterling rising against the dollar, it has had very little market impact.

  • New crop

New crop bean prices are following wheat down but at such a significant discount to current crop values we expect to see a few consumers looking around for good value, domestically grown protein.


 FERTILISER

  • Nitrogen

It's been a quiet week for the fertiliser trade as both CF Fertilisers and Yara withdrew prices ahead of a key trade conference in Athens last week. With drilling being the main priority on many farms, fertiliser buying is taking a back seat.

Indications are that new prices will be released next week and many are predicting that November will already be sold out and prices will only be offered for December/January movement. The message therefore remains the same - book requirements now to ensure timely delivery and also to avoid any further price rises. NS grades are looking to be in short supply this spring. If changes need to be made to cropping plans and nutrient requirements, we recommend booking NS fertilisers to ensure supply of the right product for your system.

  • PKs

Studies of soil sample results are showing an alarming number of soils at sub-optimal pH as well as low indices for P & K - talk to your Frontier contact about the options for correcting these yield limiting factors this autumn/spring.




View markets, set price alerts, manage contracts and take advantage of extended trading hours with
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