Frontrunner - 18th April 2019

WHEAT

• Rising Russian wheat crop estimates weigh on markets

2019 harvest wheat crop prospects for one of the world's most influential producers are improving according to the latest publications seen from analysts this week. Favourable autumn conditions and a kind winter coupled with uninterrupted spring drilling have seen the wheat area increase by over 2% on the year. Trend line yields would produce a crop in excess of 77 million tones according to the International Grains Council. With crops in good condition, the Russian agricultural consultancy now forecast the country's 2019 wheat crop reaching 83.4 million tonnes; up from their previous estimate of 80 million tonnes. This looks optimistic compared to the Institute of Agricultural Market Studies (IKAR), which sees the crop at 79.5 million tones. However, this is well above the 2018 crop of 72 million tonnes. Weather will need to remain favorable but, historically, the dry and hot conditions in the three months leading up to harvest is when the damage has been done.

• Speculators stay short

Speculative funds continue to hold a near record short position in the US CBOT corn futures market, despite the significant snow, rain and flooding that has affected the US Corn Belt and raised concerns around delayed drilling. In their crop progress report on Monday, the USDA reported 3% of the crop planted which was behind trader expectations but in line with last year. The funds are holding their nerve but planting progress will be watched closely in the coming weeks. In Brazil, weather remains favourable and observers there see the potential for record yields for the safrinha (second) corn crop.

• Rain would be welcome

In contrast to the US Midwest, the East of England has stayed mostly dry and there is no rain of any note in the short/medium term forecast. With temperatures set to rise to over 20 degrees centigrade over the coming Easter weekend, there are increasing fears for the potential of the UK wheat crop.Without notable rain in the near future, yield potential could be tested, particularly on light land. Some European countries are faring better, and earlier this week a German cooperative put their wheat crop at 24.4 million tonnes, up over 20% on the year.

BARLEY

• Old crop feed included in compound rations

It has been a quiet week in the feed barley market. Old crop feed barley is now at a reasonably large discount to wheat and, as a result, on paper it is starting to feature more in compound rations. It should be noted, however, that due to historic purchases of maize many consumers are unable to reformulate and include more barley in their rations.

• Malting market firms

The new crop malting barley market has been nervous on the back of dry weather around Europe. This has resulted in a lack of farm selling and, coupled with brewer buying interest, has resulted in the market firming despite the large spring barley crop.

• Barley pools

With plenty of uncertainty in the next year, we can expect volatility in the barley market and pools will continue to help manage the risk when marketing crops. Frontier's feed and malting barley pools remain open. Please contact your farm trader for more information.

​OILSEED RAPE

• Short term stability

After the steep sell-off in the early part of 2019, domestic OSR prices have been reasonably stable over the past couple of months. Current values are around £30 per tonne lower than at harvest and £10 per tonne of this can be explained by the weakness in sterling over the same period. Hopes of a price bounce based on the new crop European supply and demand balance in rapeseed is currently being hampered by a number of factors in the wider global oilseeds market.

• Subdued world oilseeds markets

There continues to be optimism from both sides for a resolution to the US/China trade dispute but the lack of definitive detail on any deal continues to fuel negative sentiment. South American soybean crop estimates continue to grow. This week the Soybean and Corn Advisor, an influential news feed based in Illinois, marked Brazilian and Argentine production up by one million tonnes each and predicted that Uruguay's yields could double if good weather holds into May. Additionally, China's National Bureau of Statistics flagged that Chinese farmers expect to plant 16.4% more beans than last year, which could increase their production by around two million tonnes. In the meantime, Chinese demand for oilseeds is being severely restricted by the outbreak of African swine fever in their pig herd. They could lose 200 million pigs during the outbreak, with March figures confirming a drop in numbers of 18.8% against the same month last year. Currently, Chinese soybean imports sit 14% down on an annual basis. These factors all point towards a heavy stock position as we move towards the northern hemisphere harvest.

PULSES

• Lack of rain holds back sales

​Both old and new crop pulse markets remain very quiet in the run up to Easter. With very little rain in the forecast for the next two weeks, farmers are reluctant to make further sales but at the same time, buyers are not hungry at these relatively high new crop price levels. Looking forward, further price movements will be dictated by weather changes both here in the UK and in the Baltic states where spring beans have only recently been drilled.

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