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- UK harvest progress sporadic but promising
This week, the UK's oilseed rape harvest has continued making progress further up the country where weather has allowed. As mentioned last week, yield reports seem to be improving as harvest makes its way north. An increase on the widely estimated 3.3t/ha may well be seen before harvest with numbers as high as 5t/ha being reported in the Lincolnshire area.
- Markets remain volatile on mixed global news
Oilseeds prices are £2/t higher than last Friday after having been up to £12/t lower earlier in the week.
On Friday 30th June, reports of Chinese parties selling rapeseed oil back onto the market caused a sharp down day in MATIF rapeseed and Canadian canola markets. European markets have been tracking Canadian canola markets at a discount for a while. Due to the large import requirement in the EU, it was widely anticipated that the UK needed to close in on the Canadian market to attract any available seed from that origin. Over the last several weeks, that spread has narrowed but EU prices still need to get closer to Canadian values for that trade flow to work. In addition, the Canadian crop is ever worsening as harvest progresses, with many yield estimates now around 5 million tonnes below the 16-million-tonne estimate of three months ago.
In other oilseed news, the United States Department of Agriculture (USDA) increased its percentage of soybeans rated 'good to excellent' from 58% to 60%. However, the trade widely shrugged this off after an initial negative reaction, with November soybean futures up 14 cents per bushel over the last three days.
- Mixed yield reports in UK barley harvest
The UK barley harvest has progressed this week in all areas between rain showers. There is significant regional variation in feed barley both in terms of yields and quality. Low specific weights and below-average yields are a feature in East Anglia and the south, yet in the north and west of England and Scotland feed barley quality and yields have generally been very good.
Spring malting barley has also started to be harvested this week, and low nitrogen is a feature of most samples to date. Screenings are significantly better than those of winter malting barley and initial yield reports are very encouraging. The Scandinavian spring barley harvest is due to commence shortly subject to favourable weather.
- Surplus of malting barley
The malting barley market has firmed this week as a result of a lack of liquidity throughout Europe. On paper, the market has a comfortable surplus, despite some screening issues in Germany. Today with a large percentage of spring barley still to be harvested in the UK and Scandinavia and an uncertain weather forecast, germination concerns will keep the market underpinned in the short term. Malting premiums are at very attractive levels, so growers are encouraged to prioritise harvesting of spring barley to make sure malting quality is preserved.
- Paris futures at contract highs
Persistent rain across much of France continues to delay harvest and is proving damaging for wheat crops. With over a third of the crop still in the field, compared to only 3% left to harvest this time last year, specific weights are an issue and many are below the crucial 76kg export specification. This has led to a wave of short covering on Paris wheat futures, which have a milling specification, and driven prices to new contract highs this week. French traders were reported to have also been forced to buy suitable export quality wheat from Germany in order to meet shipping commitments. Adverse weather led the French Ministry of Agriculture and Food to cut its wheat production estimate to 36.69 million tonnes from 37.1 million tonnes last month. In addition, the association of German farmers, DBV, has cut its German 2021 winter wheat forecast to around 21 million tonnes from its previous estimate of 22.82 million tonnes due to the excessive rainfall last month.
- Lower Russian crop estimates
Yields continue to disappoint as the Russian wheat harvest progresses. Data to the 3rd August showed that over 40% of the expected area had been combined, with yields running at 3.45t/ha. The average at this time last year was as much as 3.66t/ha. Normally yields decrease as harvest progresses - although last year was an exception - and it is thought the final average yield could drop to between 2.5-2.75t/ha; well below the USDA estimate of 2.93t/ha. Hot and dry weather has been damaging for spring wheat crops. Officials cut the winter drilled area to 15.6 million hectares; well below previous estimates of 16.8 million hectares. The lower yields and cropped area led agricultural consultancy SovEcon to make a significant cut of 5.9 million tonnes in its total Russian wheat production estimate to a new figure of 76.4 million tonnes. This compares to the previous estimate of 85 million tonnes from the USDA.
- Canadian wheat harvest ahead
In Canada, harvest in the major producing province Saskatchewan is 3% complete and running ahead of the average timeline. Reliable yield data should soon be available, revealing how final production volumes compare to the 31.5 million tonne estimate the USDA issued in its July World Agricultural Supply and Demands Estimate report. Some educated estimates put the crop at 26-27 million tonnes.
Currently, just 16% of Saskatchewan spring wheat is classed as 'good to excellent' compared to 77% in mid-June, highlighting how damaging persistent heat and dryness has been. The USDA will publish its next WASDE report on Thursday 12th August, with potentially significant changes to make for many of the world's major wheat and corn producers. Brazilian corn production estimates and wheat production estimates for the US, Canada, EU, Russia and Kazakhstan are all anticipated to be lower than the July USDA estimates; potentially to a significant extent. Concurrently, the export pace from primary shippers has been lacking and could point towards cuts in consumption estimates. China is expected to import 26 million tonnes of corn and 10 million tonnes of wheat this season; however, the country has been noticeably absent from markets in recent weeks.
- Market awaits UK pulse harvest
The UK market for all pulses is incredibly quiet as the market waits for harvest to get underway. Early reports of dried peas harvested in southern counties are of good yields of up to 5t/ha with varying qualities, with some samples being excellent to others showing some level of bleaching. The simple message at this stage is to get the peas harvested as soon as possible in order to protect the colour, especially as there is a price difference of over £75/t when comparing strong green colour with bleached peas.
There have also been reports of the first bean crops being harvested in Kent but there is little information available yet on yield or quality; however, across the UK significant bean harvesting would not be expected until early September.
- Disappointing yields in the Baltic States
In the Baltic States, early harvest reports are a little disappointing. This is likely due to the short spell of very hot weather in late June. Nevertheless, Egyptian buyers have already bought 100,000-140,000 tonnes of beans and will now wait for the arrival of the UK harvest before buying further supplies.
With focus and attention on the weather and ongoing harvest, the recent price increase for spot and September UK ammonium nitrate (AN) has likely gone unnoticed. However, growers must note that European calcium ammonium nitrate (CAN) has increased a further €10/t, bringing it in line with 33.5 AN, which still leaves the UK at £20/t discount to Europe.
As we progress through the months, the ongoing logistics situation is unlikely to improve. Growers are therefore encouraged, at a minimum, to purchase their requirements for first applications now.
Following the recent conclusion of the Indian urea tender, international buyers have felt some temporary unease. However, with large volumes still to be bought, the tender has kept urea values at a plateau for the time being. Given that shipping freight rates continue to hold firm and fluctuations are to be expected, urea levels can be expected to remain steady or drop off slightly.
The UAN market has seen an increase over the past three weeks; however, values at around £0.92 per kilogram of nitrogen vs £0.97 per kilogram of nitrogen for solid N should be seen as an opportunity for customers who haven't yet made a decision to fill their tanks pre-Christmas.
Spring UAN values are not available at this stage, with expected terms available post-harvest. Further rises this autumn can't be ruled out as the overall supply and demand remains tight.
There has been no change for phosphates in the UK other than the demand and pressure for application for oilseed rape (OSR) establishment. OSR growers would be wise to plan ahead and discuss alternative options on nutrient delivery due to higher phosphorous prices.
With MOP at just under £400/t and a likely increase in excess of £10/t expected on new cargoes into the UK for late August and early September, it is advisable to look now at options for late harvest delivery to help on storage at current levels.
Given the key role that phosphorous has for establishment and potassium has for yield, growers should discuss their PK requirements with their Frontier contact now.
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