- US market loses last week's gains
US wheat futures from the Chicago Board of Trade (CBOT) put on an impressive performance at the end of last week. Last Friday, they jumped the equivalent of £5 per tonne and saw overall gains of 10% since mid November. The sharp move was allegedly brought about by Southern Hemisphere crop problems – particularly comments from Argentina suggesting that the main wheat production areas would see 37% yield losses. However, these gains were not sustainable. US wheat quickly became uncompetitive in the global export market and CBOT futures have now all but lost last week's gains. The need to stay competitive was highlighted by this week's US wheat export sales of just 228,100 tonnes. This was the lowest since June and sat well below trader expectations.
- Winter drilling edges ahead
Winter wheat drilling has been able to progress on the near continent and in parts of the UK thanks to a break in the wet weather. According to the farm office FranceAgriMer, French farmers reached 83% of their winter wheat drilling by 2nd December – that's 3% up on the previous week, but compares with 99% complete at this time last year. However, the crop in the ground continues to deteriorate. 73% was rated 'good' or 'excellent', down from 75% the previous week. Many UK farmers reported wheat drilling progress this week but overall remain well behind the rest of Europe. Without an official measure, it is thought little more than 55% is complete. Meanwhile, UK wheat futures have eased lower this week. Prices dropped to a one-month low as old crop exports stalled and the trade adopted a more optimistic view for 2020 drilling prospects.
- China enjoys an improved grain harvest
The National Bureau of Statistics of China (NBSC) published its 2019 grain production figures this week, which showed a near 1% increase on last year at 663.84 million tonnes. China is the world's largest wheat producing country and is the second largest corn producer after the US. Their corn output jumped by almost 3.5 million tonnes on last year and is estimated to be at 260.77 million tonnes. Their wheat production is anticipated to be 133.59 million tonnes which is 2.19 million tonnes up on last year. It will be interesting to see if these increases form part of the United States Department of Agriculture (USDA) December World Agricultural Supply and Demand Estimates report, which is due to be published next Tuesday.
- Spot feed barley demand remains good
As winter feeding steps up, demand for feed barley remains good, particularly in western England. In the south, bids to the ports are seen most days as exports of feed barley continue for December and January. Sterling has strengthened this week which has taken the edge off of these values for now, but with political uncertainty still looming, further volatility is quite likely to be seen. In the spring, additional barley export opportunities need to be found to ensure the surplus is further reduced.
- Malting barley market in the subdued
UK maltsters appear well covered for this season and little new business has occurred this week. Premiums over feed remain modest as supplies on farm look more than adequate to fill what has been sold for domestic usage and export. Most focus now is on the spring barley crop in the UK that will be planted for 2020 harvest. What will be the planted area is and what it will eventually yield remains to be seen.
- Markets fall throughout November
Global oilseed markets experienced an unstable November, with US soybean futures dropping by 6%. Notably, this was brought about by a lack of progress in the US/China trade negotiations, as well as decent rains in South America throughout the planting period which have led to fears of stock builds in the US. Weakness in the Brazilian currency has also made their exports more competitive. Palm oil markets have been weak in recent weeks and demand for rapeseed oil is eroding as consumers switch to cheaper and more readily available soy and sun oils.
- Recent signs of recovery
The arrival of December has signalled a slight change in sentiment. This week, the US/China trade talk rollercoaster moved into a more positive phase, with the Trump administration claiming that talks had progressed to a point where a 'phase one' trade deal is close to completion. It is also worth noting that, although world rapeseed markets are linked to the wider oilseeds complex, fundamentals in the rapeseed market are very different. EU rapeseed crushing in 2019/20 is forecast to drop to an eight-year low despite sharply increased imports of Canadian canola, particularly into France. European rapeseed production is expected to remain subdued in 2020 and this could signal much stiffer completion for supplies in 2020/21 – particularly if China decides to resume its normal arrangements to import Canadian seed.
- Subdued domestic markets
UK markets remain subdued with little change in delivered crush values this week. Oilseed rape prices are well above export parities which leaves the market as a purely domestic affair. Demand is lacklustre as crushes are only processing for domestic oil consumption with little evidence that the oil can compete in the export market, thereby increasing any potential processing demand. Clearly, the other major factor to keep an eye on in the next few weeks will be the value of sterling. After a stable month in November for our exchange rate, it's reasonable to expect some volatility during December as the political situation moves into a new phase. The outcome of next week's general election is uncertain and therefore the fate of sterling is a tough one to predict.
- Value of old crop peas improves
Old crop pea values have improved this week for green and better-coloured samples, as buyers look to take some cover for the winter months. However, samples failing to make micronising quality – such as feed – are falling in value as the strength of sterling allows for cheaper imported peas to come into the country.
- Trading values remain static
With some continental buyers unable to take shipment of their December feed bean cargos, a number of beans bought for December collection will now not move until January. Usually this would cause a fall in values but, as there are so few farm parcels, trading values have remained static over the past week.
It has been a more positive week, which has seen drilling continue in many parts of the UK and demand for spring fertiliser increase throughout Europe. CF Fertilisers and Yara watched the weather and crop progress, with both acknowledging that the UK market will be smaller than previous years. But, it could be a very different game if we are lucky enough to experience a dry January. Prices remain unchanged from last week and demand is still slow. However, price is only one factor in this very difficult season. It could be only a few weeks until the early N applications are on the go. Soil N and S residues are very likely to be lower than ever in late January. Early top dressings will be vital to get the crops moving. Whilst the weather has stopped autumn buying, haulage capacity is going to be critical for spring supply and, whilst some hauliers have struggled to find fertiliser work in last three months which they may have replaced with alternative jobs, we are well placed to deliver likely requirements in the spring. However, to secure delivery orders need to be placed well in advance.
- P and K
Sterling firmed at the end of the week, making fertilisers slightly better value depending on UK stocks. Speak to your local advisor if you have phosphate and potash requirements.
- Sugar beet seed
With the British Sugar seed ordering form recently arriving on farm, many sugar beet growers will now be firming up their variety choices for 2020 drilling. One notable difference this year is the arrival of the Conviso Smart beet technology; herbicide-tolerant sugar beet which, when teamed with the Conviso herbicide, allows for a radical improvement in the management of hard-to-treat weeds and weed beet.
The first of these new varieties – Smart Jannika KWS – has been added to the Recommended List of the British Beet Research Organisation (BBRO) and will be accepted by British Sugar for 2020. Conviso Smart seed can be ordered from Frontier and is expected to be in high demand. If you would like to find out more about Conviso Smart, speak to your Frontier agronomist or farm trader.
- Spring seed
Following enormous interest in spring seed during late October and November, UK supply of spring seed is starting to run short.
Spring wheat seed demand in particular has been subject to a ten-fold increase on last year, far outstripping normal supply. After acting early to secure more seed stocks from other sources, we have worked hard to maximise spring wheat availability, but these additional stocks are now dwindling.
Spring barley seed – forecast to see a 28% increase in drilling in the Early Bird Survey conducted by the Agriculture and Horticulture Development Board (AHDB) – still has broad availability across the key marketing groups, but supply will tighten as we move into the new calendar year.
Processing of spring wheat and barley seed has begun at our seed plants, with the first deliveries making their way out to farms this week. On farm storage is understandably tricky for many growers, but with the seed market likely to see early sell outs and unprecedented quantities of processing required to take place between now and February, confirming orders and getting seed onto farm is recommended.
Alongside its divisions, SOYL and Kings, Frontier is hosting a series of 17 winter training events. Open to all farmers interested in learning more about the use of digital technology to improve crop production performance, the events will include valuable insight into MyFarm and its role as a complete farm management platform.
You can find your local event and book your place by visiting our website.