Frontrunner - 16th November 2018

WHEAT

• Global markets less volatile

Wheat markets traded within a narrow range this week, with global prices closing either side of unchanged. As harvest progresses in the Southern Hemisphere, poor weather continues to cause uncertainty around crop quality. The forecast is poor for Argentina over the next seven days with 84% of the crop still to harvest and, as one of the world's major exporters, traders are keeping a close eye on this. Crop estimates currently sit between 19-19.5 million tonnes with the USDA at the top end of estimates.

In the Northern Hemisphere, winter drilled crops are developing well with the exception of some areas in Eastern Europe where dryness remains an issue. It still feels likely that we'll see an adjustment to global trade-flows, as Russia enters into winter on the back of a record early export programme. With this we expect the 'usual' logistical challenges to hit the supply chain and with competing origins pricing close to parity, we could see a supply shift in the near future. The US will be one exporter keen to see this happen, as their exports sit 20% behind last year's pace and the market could construe this as supportive should it happen on a large scale and quickly.

• Brexit & currency at the centre of UK trade

This week's Brexit negotiations and political unrest in the UK triggered significant devaluation of the pound which supported wheat prices – but not for long. On Thursday, sterling tumbled 2% and for a while it felt like prices could break out of the recent downward trend. However, markets gave back all gains today and returned to fundamentals. Recent downward revisions in feed wheat demand leave the UK supply and demand figures more balanced, resulting in an exportable surplus. In theory, a weaker pound should attract foreign buyers and lend support to prices but given the relaxed attitude of domestic consumers and in the absence of market bids, this simply hasn't been the case. 

BARLEY

• Quieter week in the feed barley market

With no significant tenders on the world feed barley market this week, values have stagnated. Export opportunities for the UK do still exist but are for coasters to Europe rather than the bigger ships to North Africa. Bids to the southern and eastern UK ports have fluctuated over the week as currency movements remain the biggest driver for changing prices. New domestic demand remains limited as most compounders have nearby requirements covered. With feed barley in the south and east almost parity to feed wheat and with only a small discount in the north, domestic use is likely to reduce over time as wheat and corn are used increasingly in many rations. Feed barley values remain highest in the north of England and into Scotland, as low spring barley yields affect supply.

• Malting barley premiums remain good

Malting barley values remain quietly firm as cargoes are shipped and domestic deliveries of crop 18 barley increase in pace. Low water levels across mainland Europe continue to cause transport issues and make the UK a good collection point for cargoes in the nearby positions. With variable spring barley quality farm, malting supply remains relatively tight. New demand in the UK can still be found as end users mainly look to purchase specific varieties and nitrogen qualities to make use of what they have already purchased earlier in the season.

​OILSEED RAPE

• A firmer feel to rapeseed markets

OSR values continue to feel supported, driven mainly by strong oil demand in the bio fuel sector. However, politics continues to influence prices with soybeans seeing support this week on the back of optimism around a US-China trade agreement. In addition, with the ongoing issues around how the UK exits the European Union we have seen large swings in the value of the pound versus the euro which, in the past few days, has helped UK values considerably.

• World markets

Canada has completed the canola harvest and has a large exportable surplus to market between now and June '19, with eyes on the Northern European crush markets. In Australia, the harvest is circa 20% done with yields reported as expected. The first cargoes of new crop Australian canola will start to arrive in Europe late December and early January 2019.

 PULSES

• Markets balanced

Bean market values have levelled out this week, with no fresh buying interest and shippers able to buy sufficient supplies to cover their existing programmes. Further price moves will be dictated by sterling volatility rather than fresh UK demand, due to the relatively high price for feed beans stopping their inclusion in compound feeds.

With supplies of quality beans quickly running out, buyers are looking to see if they can improve the quality by using more intensive colour sorting or needling techniques. Unfortunately, with a limited capacity to do this work and a short time frame due to export restrictions to Sudan, the volume of ungraded tonnage will be very limited. 

 FERTILISER

• Secure orders for January

Fertiliser trade has picked up as many farmers have completed cropping plans and are pleased with how winter cereals are establishing. With many manufacturers sold out for delivery before Christmas, focus needs to be on securing orders for the January period ahead of usage and also to avoid any further price rises.

• Nitrogen

Currency is a big driver for fertiliser prices. Generally, the weaker the pound, the higher our fertiliser price and current uncertainty around Brexit will not help this. The other key influence on global nitrogen values is the supply and demand situation for granular urea. India is expected to confirm the second tender of the year this week of over a million tonnes. Whilst the price is lower than in previous rounds, this will take out any surplus production from the Gulf, North Africa and China, giving support for a continued firm price into the February/March period of next year.

• Nutrient requirements

This is a good time to review total nutrient requirement across the farm. As well as nitrogen, it's also important to consider sulphur, potassium and phosphate. We are seeing many people look at the trace element status of their soils and make plans for addressing any potential deficiencies before they appear in the crop and rob yield.

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