Concern over new crop wheat planting has driven prices this week. With an estimated winter wheat planted area of just 50%, compared to 95% this time last year, new crop wheat values moved up £7/mt.
Old crop wheat values have followed the new crop as farm selling remains light and domestic consumers still need plenty of cover for the balance of the crop year.
Little new trade in export markets
Ports remain active but with the shipment of sales already made, finding fresh export trade has been difficult due to a lack of nearby supply, firmer sterling and cheaper availability from other origins.
In a week dominated by a firming wheat market, domestic feed barley values have been pulled up on the back of feed wheat, with the price difference between wheat and barley widening. With a large barley surplus still to ship, the impact of the three month Brexit extension period has had a limited impact. The UK has come back into the market as a seller but finds little demand from the continent, as many EU buyers have covered requirements from other origins.
Old crop malting barley also finds many EU buyers have taken pre Christmas cover from other origins due to the uncertainty over UK malting barley exports. The domestic malting barley market has been quiet with maltsters appearing well covered for the season and the main trade being UK merchants buying malting barley to cover previous sales.
With the well publicised issues around autumn wheat sowing, everything is pointing towards another large spring barley crop for harvest 2020 and spring seed availability is likely to become tight. Once again we have the ever present uncertainty around Brexit and the impact of potentially exporting this surplus to Europe. Subsequently, we could see pressure on both new crop feed and malting barley values.
It looks prudent to have a contract in place for harvest 2020 malting barley. Frontier is offering guaranteed minimum premium contracts; feed and malting barley pools and futures related distilling contracts. Please speak to your local farm trader for marketing options available in your area.
- Firmer domestic prices
Domestic markets have staged a bit of a recovery this week with the benchmark Liverpool market pushing £5 per tonne higher over the last five trading sessions. We can expect the value of sterling to be a key factor over the next few weeks but it has been a range of supportive international news that has been leading our market higher in recent days.
- Signs of Chinese markets opening up
Finally, it feels like the US/China trade dispute might be moving into its closing stages. A phased roll-back of tariffs between the two nations has been agreed as they continue to work on a final deal. This sentiment helped to support US soybean futures which, in turn, has given a boost to the wider oilseeds complex. This was also helped by a parallel development in trade relations between China and Canada.
This dispute has been all about the diplomatic fallout from the Huawei affair but the loss of this key outlet, which historically has taken around 40% of their surplus canola, has forced Canada to aggressively expand their European markets. However, China announced this week that it is resuming Canadian meat imports and some traders are concluding that this policy might extend to importing other agricultural products such as canola.
- Australian crop woes
Elsewhere, the Australian crop continues to struggle. Earlier in the week financial services company, FC Stone, reduced its crop estimate to 1.8 million tonnes which is a considerable difference to the official Australian ministry forecast of 2.3 million tonnes and last year's production figure of 2.2 million tonnes.
Australia's domestic requirements are for about 1 million tonnes so, if this is correct, they will only be looking to ship about 800,000 tonnes. This is well short of Europe's projected requirements from this source. European crushers are covered through to the end of January but when they go back in for more they may find that Canada and Australia are not such aggressive sellers...
- Winter beans
Pulse markets have remained very static and are certainly not following the price movements seen in other grain markets this week. As the uncertainty grows over winter sowing of other cereals, winter beans can still be drilled right through to January – although there may be some yield impact and slightly later harvesting dates.
- Spring beans
There will certainly be a big increase in the spring bean acreage this year and, subsequently, premiums to futures contracts have come under pressure. We are currently reviewing the Frontier bean contract but we still have the bean pools open and expect a much larger marketing volume in 2020 after this year's strong bean pool results.
There has been no news from the UK's major ammonium nitrate producer this week. As a result, prices remain withdrawn with very little farm interest as drilling ground to a halt following this week's rainfall. Imported ammonium nitrate offers are also limited, with suppliers waiting for the next move.
European markets are also quiet with similar weather issues holding them back. More crops will need to be planted before we see any significant demand.
World urea markets slipped again this week with little demand. Africa and India still have millions of tonnes to place and they may look at current urea numbers – which are well behind previous seasons – as an opportunity to jump in and cover the nearly new year requirements. In fact, another Indian tender is due to be confirmed next week which could be anything upwards of 2 million tonnes. The shipment window on this tender is mid December so that could well move the market.
The slow demand around the world has certainly forced producers to reconsider current levels and replacement stocks could well be lower as we move through November and December. However, with low demand in the UK, current stocks need a home before anyone can consider buying new stocks. Speak to your Frontier contact for more information.
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