- UK markets look to new crop
A week is a long time in politics and it seems even longer in the grain trade with old crop markets fading again this week. Remaining markets are focused on sourcing final July cover; the last stop for consumers before significantly cheaper new crop supplies are available.
Attention is now turning to new crop for consumers for both feed and milling grades. With crops reported to be in good condition, UK prices are starting to look vulnerable if production estimates are realised. With UK prices considerably ahead of EU and world markets, the possibility of export demand remains pounds away from current new crop farm-gate prices.
- Weather concerns subside elsewhere
Worldwide, northern hemisphere crops appear to be on track with recent dry weather concerns slightly eased as timely rains reach crops in Spain and North Africa.
- Oil markets give support to rapeseed complex
Oilseed markets have found some support as dry weather in the Black Sea region and wet weather in the US have prompted buyers to take cover. Outside influences are strong drivers at the moment with oil markets giving some support to the rapeseed complex. MATIF futures are likely to end the week €4-5/mt higher.
- Global politics
High level politics continue to be a dominating theme. With the long and drawn out US/China trade war looking like it could find a resolution in the near future, we now have another issue in that China appears to have banned imports of canola from Canada. This is significant as Canada grows around 21-22 million mt annually and typically exports 40% of that to China. At the moment European crushers are seeking to take advantage of cheaper canola and therefore European rapeseed markets will need to stay competitive, despite an anticipated smaller crop.
- UK market
Brexit continues to create a great deal of uncertainty in the UK market. We are used to seeing wild fluctuations in sterling but now we are faced with a new risk to demand. UK crushers export rapeseed oil to mainland Europe and without a trade deal we could well see UK rapeseed oil exports encountering a €50/mt import levy. Given the uncertain outlook, new oil business from the UK is unlikely and, as biodiesel demand has switched to summer specifications, it is likely that May-September crush demand could well reduce.
- Old crop market declines
Old crop feed bean values have fallen £7-£10/t as the last export cargo traded earlier this week. There is no domestic demand at these high levels and consequently values are expected to fall again.
- Forward marketing options for new crop
New crop values continue to trade at relatively high prices. While there is still some uncertainty over the cropping area in the UK, and sowing is delayed in the Baltic states, it's a good time for UK bean growers to consider forward marketing some of their growing crop. Options include Frontier's pulses pool and a new premium buyback contract for beans. Please contact your local Frontier farm trader for further information.
- Spring applications continue as market remains steady
There was little change in UK prices for the main fertiliser grades this week. Spreading activity has picked up in many areas and a second dose of nitrogen is being applied to crops.Interest in 'top up' requirements is growing, with farmers taking advantage of recent price drops to book products in time for the next round of application.
- New tender strengthens global market
The global urea market was given some strength this week with the announcement of a new tender from India; more than 300,000 tonnes have already booked with further tonnage to be confirmed in the coming days. This will take the total tender to over half a million tonnes.
Uncertainty prevails in Europe as producers and importers come to terms with the knock on effects of a potential anti-dumping duty being applied to UAN (liquid fertiliser) from USA, Russia and Trinidad & Tobago. This has caused some large buyers to consider switching to EU-produced ammonium nitrate (AN) as a substitute. This has led to speculation that AN supply may be tighter this year.
- Brexit continues to hamper importers
With continued uncertainty around Brexit, importers to the UK are understandably cautious about booking new cargoes until we have clarity around potential tariffs and, of course, currency rates. Speculation is that new tariffs could be around 6.5% on EU-produced fertiliser.
- Act now to secure supply
The current stock situation in the UK is good with product available from most locations. However, delivery times are creeping up as we manage the busy spring period ahead of Easter. As ever the message is clear, book early to ensure you get the product you need when you need it.
View markets, set price alerts, manage contracts and take advantage of extended trading hours with MyCropMarketing, Frontier's online grain marketing platform.