Frontrunner - 12th April 2019

WHEAT

• USDA publish a bearish report

The USDA published their April World Supply and Demand report on Tuesday afternoon and, as expected, it held bearish data – particularly for corn. World corn production jumped six million tonnes, with increases seen for most of the major producers. Argentina, Brazil and Mexico were up, reflecting the favourable growing conditions in South America, as was the EU. As a result, global corn stocks were increased by 5.5 million tonnes. However, with extensive flooding and now significant snowfall in parts of the US Corn Belt, there are increasing concerns around delayed planting which may affect future production.

Speculative funds continue to hold significant short positions. World wheat production was put marginally lower at 732.87 million tonnes but falls in consumption saw year end stocks increase by five million to 275.61 million tonnes. Overall, the USDA report had little impact on futures markets and the US corn futures closed higher following its publication.

• Wheat prices higher on weather concerns

While the US remains too wet, Europe is quite the opposite.The ongoing dry weather is persisting through much of Northern Europe including the UK and this is becoming an increasing concern. The negative impact on wheat is evident in France where their crop conditions continue to worsen. French agricultural office, FranceAgriMer, rated 83% of the French soft wheat crop up to 8^th April as good or very good. Some analysts think optimal yields will be difficult to achieve due to the dry weather.

• Algeria buys more wheat

Strong wheat demand to North Africa continued this week, with Algeria buying at least 540,000 tonnes for June shipment.The origin is not clear but both French and US wheat were equally competitive, despite the US being at a $12 freight disadvantage. If the French take some or all of the business, this will add to the improving EU export pace and will tighten year end stocks going into next season. Last week the EU shipped 490,000 tonnes, taking the total to 14.982 million tonnes compared to 15.638 million at the same time last year. 

BARLEY

• Old crop feed barley continues to be available

• Brexit delay supports harvest feed barley values

Before the announcement on Thursday, it was pretty difficult to find values for harvest as available movement. Now that UK grain merchants have the opportunity to export to the EU free of import levies, they are prepared to bid into their ports. There are some buying enquiries from Spain and Portugal which is a starting point.
Malting barley trade is still likely to be disrupted following the Brexit delay, as movements don't typically happen until November. Instead, European maltsters will look elsewhere for supplies until they receive further clarity on the UK's trade position with the EU. 

​OILSEED RAPE

• Europe

Oilseed markets continue to trade in a narrow range. Old crop markets are largely now a follower of new crop markets, with the supply and carry out of 18/19 crop looking healthy as we enter the period of seasonably lower summer demand. MATIF Rapeseed futures are supported by a lack of selling from European farmers as ongoing dryness and uncertainty over yields keeps growers away from marketing.

• Russia/Ukraine/Eastern Europe/Australia

The market is also keeping a keen eye on what is happening around the world. Rain has fallen which is helping to stabilise the crop in many regions, with more forecast in Eastern Europe and the Black Sea countries. It is fair to say that what happens in the Black Sea from now until harvest will decide what way the OSR market moves next. Planting season in Australia is about to commence and conditions in most states are reasonable – at the time of publication analysts are forecasting a rebound in production from harvest 2018.

• China

China continues to be the conundrum the market seems unable to solve. Canola exports from Canada are currently on hold as political disputes continue. The planting season in Canada is underway but growers are likely to reduce their acreage following the impact of falling prices and uncertainty over exports. There appears to be more optimism about a US/China trade agreement and it seems likely that this could take place soon. What is unclear, however, is how much this will impact the soybean market as South American soybeans are currently cheaper than US origins and declining pig herds in China will impact overall demand. 

 PULSES

• Old crop values

Despite falling old crop bean values, there are still a number of farm balances being marketed and with no new demand this fall in prices is set to continue.

• New crop

New crop beans are looking in great condition, with many spring beans now coming through the ground. The dry weather and lack of any rain in the forecast is raising a few concerns but at this stage in the crop cycle, as the temperatures are not too hot, the roots are developing and following soil moisture levels lower. New crop prices remain largely unchanged, with the only notable difference being that at these high levels there are more sellers of export feed beans than in previous weeks.

 FERTILISER

• Price changes

Following a period of growth for the differential between compounds and blends, this week CF Fertilisers announced a readjustment of between £10 and £20 per tonne on several of their key grassland NPK grades. The blenders are yet to react but we may well see some changes coming forward.

• Stock

As we enter a busy delivery period ahead of Easter, please talk to your regional fertiliser contact for the best offers and availability. 

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