- Old crop supplies tight in the North
We continue to have a north/south divide in our domestic wheat market. We are seeing reasonable supplies in the south of England and heavy demand in the north of England and Scotland but with rapidly diminishing farm stocks in these areas.
With no easy way of moving wheat over long distances from south to north, all the talk is therefore about the likely timing of the new harvest and the cost of imports. There is plenty of time for crops to chase on but, after a very late spring, not many in the trade are expecting an early start to combining.
As for imports, you can start with a reasonable wheat price on arrival at the port of discharge but the on costs are surprisingly high by the time wheat arrives at an inland intake. We could be in for an interesting final quarter of the 2017 crop marketing season.
- Firming new crop markets
New crop futures prices have moved up £5 per tonne in the last week. With both of the UK ethanol plants currently running, next season's supply and demand balance looks similar to the campaign that we are just completing. We are likely to see the same north/south divide, with prices in the north and Scotland trading at a considerable premium again.
Wheat crop conditions are below average for this time of year and the expectation at this stage is for average yields at best. This has limited the amount of farm selling recently, just at a time when consumers have been looking to step up their cover.
- FAO report released this week
It is not only our domestic situation that is supporting prices. The FAO (Food and Agriculture Organisation) released its latest global cereals report yesterday and it predicts a 1.6% reduction in total cereal production in 2018/19 against the near-record harvest of 2017. Within this, they expect Russian wheat production to be down nine million tonnes and foresee falls in production in two of the world's wheat power houses – the EU and India.
Against this, the FAO see wheat consumption up for the third year in a row by 0.8% to 743 million tonnes. Global stocks remain high but the report highlights the large inventories held in China. Excluding China, world wheat stocks are set to decline for the seventh successive year.
- EU markets
EU malting barley moved up this week due to brewers entering the market looking to cover malt - a simple case of more buyers than sellers. On paper, the EU market still looks over supplied with malting barley, but the weather forecast over the next few months will be the determining factor to both quality and quantity of the EU malting barley crop. The market remains cautious due to the large amount of late-sown spring barley and the impact this will have.
- New crop
New crop malting barley premiums are at attractive levels, but we would urge caution selling at these prices unless you are confident of achieving the malting specification. Other, lower-risk marketing options are available, such as base pricing feed barley and adding premiums as applicable when quality is known, or marketing barley in the Frontier Barley Pools.
- Old crop
Old crop feed barley continues to have strong demand, with a big drop down to new crop prices. As a result, any old crop feed barley looks a sell. Please contact your local Farm Trader for current prices.
The oilseeds market has seen more bearish activity this week due to increased complexity with US-China trade negotiations. China are purposely sourcing their soybean from anywhere but the US, as the two countries go into further talks. Right now this void in US exports is being filled with demand from the EU, the Americas and South East Asia but how this export flow will play out is uncertain.
Heavy rain in Argentina is set to damage soybean crops and decrease their yields further in an already disastrous year. Next Thursday (10th) sees an updated USDA report giving an almost final verdict on the Argentine soybean crop. Estimates are ranging from 30-40 million tonnes, anywhere near the lower end of these predictions could lead to support in the domestic oilseed market.
Dry spells in the Black Sea and Australia are causing issues with crop developments. While the extent is currently unknown it's fair to say that these yields are likely to be suboptimal. There is potential here for support in the market.
UK new crop rapeseed is currently looking underwhelming on the whole; it's unlikely we will match the yields of last year. The EU rapeseed crop is under reasonable uncertainty right now, a lot of delayed crop development means crop may not produce big numbers.
This week, UK/EU rapeseed values have seen more sideways movement with Matif rapeseed values unchanged from the same time in the previous week (at the time of writing €349.00)
The week also saw further blows for the biodiesel market, as European consumers opt for cheaper Argentinean exports instead of sourcing local produce. This has caused some suppression on EU values.
- Human consumption values fall
Old crop bean prices have continued to firm over the past week, with domestic compound demand strong and continuing enquiries for export. The human consumption premium has all but disappeared from the market, with quality beans now being switched into feed homes where there is less danger of price deductions.
- Planting progress
The recent improvement in our spring weather has allowed bean planting to finally progress at a reasonable pace. Most crops have gone in the ground later than is ideal and we are seeing growers hold back on marketing until crops become established. Demand for new crop beans remains good.
It could have been the slight improvement in the weather or the reduction in the UK ammonium nitrate price, but this week spot buying for both the arable and grassland sector has increased. Many more spring crops have finally been drilled and so final orders can be sorted for this season. Grassland customers have an eye on new season prices, which last season happened in the middle of May. At this stage, no one seems to know if this will be the case this time. Some imports are expected mid-May so this could force CF Fertiliser's hand.
A little more interest this week for next year's granular urea with offers for July-Oct delivery, seller's option. But, with currency not helping, the market remains higher than last year at this point. Delivery will be earlier this year on current offers and looks likely to be in the middle of harvest, so that is not helping with decision making. Please speak to you local Frontier contact for more information.
- Silage grades
With the recent reduction in nitrogen price, the blenders are trying to find a level that works versus the compound silage grades. Again, speak to your Frontier contact for more information.