This week, UK wheat markets have continued to focus on export trade flows in the south and east coast ports, with the north and west seeing limited fresh consumer demand. The port pull remains strong, with lorry freight significantly under pressure as vessels continue to arrive for wheat (and barley) ahead of the potential Brext deadline.
- USDA report
This week's United States Department of Agriculture quarterly stocks report showed a small decline in corn stocks. The market did not expect this and it added a small amount of support to global values.
- Wheat crop pressure
Southern Hemisphere wheat crops remain under pressure with less than ideal weather. In particular, Australia is under the spotlight following the prolonged heat and dry conditions reducing potential crop size. Overall, predictions for the Australian wheat crop now look nearer to 17 million tonnes.
Currency remains the short-term key market driver with the Brexit debate failing to give any certainty. A 'no deal' or a change in government would likely give a weakness to sterling which would be supportive to UK values, however, making that judgement remains impossible to call.
- Feed barley
Feed barley markets have firmed this week on nearby merchant short coverings with plenty of export execution to be done before the end of October. The uncertainty around Brexit continues to be the most dominant factor – for both feed and malting barley – and the situation is still far from clear.
- Malting barley premiums
UK maltsters remain largely absent from the market and appear to be well covered in the pre Christmas position. With a large exportable surplus and good quality, malting barley premiums remain under pressure.
- Frontier contracts
- Australian crop in trouble
Crush margins continue to be good in Northwest Europe, with no signs of price rationing in markets prior to the end of 2019. Domestic prices remain capped by the price of imports following the sharply lower EU production numbers coming out of the recent harvest.
EU imports are set to be at record levels for 2019/20 at around 5.5 million tonnes, with Ukraine expected to be the largest supplier and Australia, with deteriorating crop prospects, likely to see a reducing share for the third year running. Its 2018 harvest was at a nine-year low at 2.18 million tonnes and Oil World is forecasting only a marginal improvement for this harvest at 2.25 million tonnes. Some observers are already talking of a crop closer to 2.0 million tonnes. Buying interest from China, given the ongoing trade dispute with the US, is expected to limit EU imports of Australian canola to only 1.1 million tonnes. This would be a five-year low.
- Buoyant US soybean exports to China
- Feed markets
Feed bean markets have remained largely unchanged this week although, as the nearby vessels get covered, there is less spot demand with limited new buying interest. With prices lower inland, away from the ports there is some new interest from feed compounders. However, the volumes are very small and unlikely to make any significant impact on improving values.Overall, we need to see some significant export sales made forward for the new year but prices will need to fall in order for beans to become more competitive in compound feed rations – both home and abroad.
Despite the threat of higher prices due to increased ammonia levels as a result of tight supply, as well as higher natural gas prices in the UK, there has been little activity with ammonium nitrate and urea markets this week.
Yara have posted a new November price at £5/t over their current October terms. It's very likely that CF Fertilisers will make the same move soon.
For October, logistics are very tight so we recommend that you discuss requirements with your Frontier contact very soon.
MOP/TSP and PKs are seasonally busy, with activity across the country. Blenders are keen to get product out before the Brexit deadline, avoiding the risk of potential import tariffs on replacement TSP and PKs stocks in November should we see a 'no deal'. With that in mind, taking product in October to manage risk is advisable.
View markets, set price alerts, manage contracts and take advantage of extended trading hours with MyCropMarketing, Frontier's online grain marketing platform.