- UK wheat markets under pressure
Old crop and new crop wheat values made some losses this week. For old crop, consumer cover is relatively high and this week's latest Department for Environment, Food & Rural Affairs (Defra) figures confirmed a sizeable 1.98 million tonne carryout which is 266,000 tonne higher than a year ago. The smaller harvested crop in 2018 meant that at the start of the year the balance sheet was tight but this was more than offset by minimal exports and competition from other grains such as imported maize. The window for an old crop rally is narrowing quickly so please consider your marketing options if you're a long holder.
New crop is rapidly approaching with wheat now flowering in some areas of the south but, again, a distinct lack of domestic demand has pushed prices lower this week. UK wheat is currently priced at an £8 discount compared to French wheat. This would ordinarily price us to export; but for now cheaper offers from the Black Sea are undercutting UK port offers. With a bigger harvest on the way, growers will be limited by their harvest movement options and this has to be reflected in prices. Until domestic consumers take new crop cover, it feels as though UK markets will look further afield for direction, particularly weather events around the globe.
- US corn planting underpins prices
Adverse wet weather in the USA hasn't gone away and corn planting currently sits around 30% behind the five-year average, adding an undertone of uncertainty and supporting markets. As a result, Informa released their latest US corn crop estimate at 13.5Bbu vs. the United States Department of Agriculture's (USDA) 15Bbu. There's no doubt that the inability to plant spring corn crops will reduce the USA's production and stocks figures, but eventually the market will refocus on cheap corn supplies elsewhere which currently make US prices look overvalued. However, growers should look to take advantage of any short-term price spikes as it looks set to remain volatile for a few weeks.
- Weather elsewhere a watch-point
Looking east across Europe, it's getting hotter and drier. It was 33 Celsius in Germany on Wednesday and increasing heat in Russia and Ukraine over the coming two weeks is a flag for wheat crops, which are quickly reaching maturity and will begin to be harvested at the end of this month. Tuesday's USDA report will be the next set of crop estimates, with most recent trade estimates anywhere between 75 – 80 million tonnes of wheat for Russia.
- Barley trade sees quiet end to week
A week of volatility on the wheat futures saw the barley trade quieten. Lower values for new crop and lack of old crop supply has meant less trade as the week now draws to a close. Export demand for old crop barley to Spain is still present but at lower levels than seen recently. With smaller volumes coming from the farm, volume export sales are more difficult to make.
- Decline in prices see demand in UK compounder
As the value of new crop barley declines we have seen some interest from the UK compounder. Feed barley discount to wheat remains substantial but it needs to be to make sure we see good domestic demand. With continued uncertainty regarding Brexit and our ability to export into the EU after 31st October, it is important we maximise UK demand wherever possible. If we rely on the world market for surplus barley after this date then we enter a market that is very competitive, quite irregular and very volatile price wise.
- Malting barley prices under pressure
With further rains across Europe, including the UK, new crop malting barley values have declined this week. The spring barley crop across the UK now looks full of potential. We have seen some export business completed for deliveries up to the end of October but the situation beyond that in regards to exports is looking uncertain. Overall, the domestic malting barley market remains quiet across the country.
- US still struggling with weather
Firmer markets at the start of the week have given way to a softer feel as the outlook on soybean plantings in the US improved. Reports on Monday showed a 10% advance in the past week, which was less than traders expected. This left the total planted figure at 39% compared to 86% at the same point last year and a ten-year average of 75%. This is the slowest soybean planting progress seen since 1980 and these late sown acres are expected to yield well below the trend, possibly by up to 7%. However, there is the potential thought that farmers may abandon plans to plant corn and switch into beans, which would increase the total area by as much as an extra 1 to 2 million acres. On this basis it would need a sharp drop in trend yields to significantly tighten the ending stocks outlook. A recent drier seven-day forecast for northern and western growing areas has brought sellers back into markets and there is a complex equation in the US which is still unfolding.
- Uncertain outlook and Harvest Plus
Analyst, Stratégie Grains has cut its forecast for EU oilseed rape production back to £17.8 million tonnes for the 2019 harvest. This is 11% below last year and would make it the lowest crop for 11 years. Imports will rise to fill the gap, with £5.4 million tonnes expected to come into the EU, mainly from Canada, Ukraine and Australia. Out of all this the future for our domestic market looks to be uncertain, with high levels of price volatility expected. Frontier's Harvest Plus contract could be a good marketing option combining harvest movement, a minimum guaranteed price and the chance to stay in the market to benefit from any later price rises. The ex farm harvest price will vary depending on location but, currently, it could be in the region of £300 per tonne plus bonuses. Please contact your Frontier farm trader for more information.
- Consumers reluctant to take new crop cover
Great growing weather for bean crops and a high priced market carried forward from last year is currently combining to keep consumers away from buying any significant forward cover on new crop. Their approach is either that there will be a better time to take cover or that there are simply cheaper alternatives to relatively high priced UK supplies. £200 per tonne ex farm for feed quality beans is achievable pre-Christmas in most parts of the UK and we are finding a steady supply of farmers willing to lock in at these levels.
- New season
As is always the case at this time of year, attention from both trade and farmers is focussed on when new season fertiliser prices will be released and at what level. It has been nearly three weeks now since we saw the campaign start in France, Germany and Benelux where the new price was around €35.00 per tonne higher than last year. The continental farmers have taken the view that this is still likely to be the best price in light of the supply and demand situation around the world, coupled with anti-dumping duties on liquid fertiliser and higher gas prices.
There is no firm indication yet from any of the large UK manufacturers but it is expected that the season will start shortly to enable the usual deliveries to farms ahead of harvest.
- Granular urea
Granular urea markets, which have been unusually quiet in the UK up until now, are beginning to show signs of life. However, most of the major importers are still holding off on any large commitments until we see a clear direction in terms of ammonium nitrate pricing and currency. Product can be secured at approx. £275 in many areas.
- Nitrogen and PK
Whilst the focus is on nitrogen, it is also important to start considering PK requirements – especially with the effect that currency can have on these two imported products. Now is a good time to consider taking product before any further issues with currency; which could be caused by the political uncertainty we are faced with.
- Multi N
Recent rain will have boosted confidence in many of the winter wheat crops and yields in several areas could be higher than average. This can lead to protein dilution and an application of a crop safe, quality foliar N at this later stage has been proven to improve protein content.
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