Frontrunner - 18th January 2019

WHEAT

• Lost opportunity

Domestic wheat markets have given back all of this month's gains during this week. Milling markets have also softened, with notable sellers pressurising the premiums by around £2/t versus feed as markets transit from being bid for weeks to offered.

It seems that political uncertainty continues which is putting people off making decisions. However, time is passing and some market opportunities may well be lost in some areas.

• What goes sideways generally goes down

Wider markets continue to track sideways, with all major export regions equally priced. This has calmed what was a bullish outlook for wheat some weeks ago. Market direction will seek input from weather issues for new crop as move through winter. Old crop markets have a weaker feel from here on, with comfortable worldwide supplies on offer to fill remaining world tenders and a domestic market that, on paper, is in surplus with no real demand at current price levels.

BARLEY

• Old crop feed barley slip

Lack of further demand from the export market and a fairly dry December and January in the livestock areas has caused supply to outweigh demand this week. As a result, values have dropped around £3/t in England. Growers looking to tidy up balances of feed parcels have willingly sold more at lower prices than over the Christmas period. It feels like there is not as much barley left on farm now – certainly no more than is normal for the time of year. Due to relatively decent discount to wheat compared with the autumn (£5 in the east and £8/9 in the west), once compounders look to price their rations for the summer months barley should find the usual inclusion levels available.

• New crop barley prices stable
  

Values for harvest parcels of feed barley have remained stable this week. In the harvest position, new crop barley is £35 to £40/t under old crop wheat values and has the potential to grab the maximum share of the livestock ration that barley can get. At present, we also look export competitive against other international origins in the harvest position. This bodes well once new crop export enquiries do kick off.

• Spring barley sowings have commenced
  

Sowings have started on the lighter/drier soils in the south, East Midlands, East Anglia and the south-facing South Downs. While there is always a little drilled either side of Christmas, in South Lincolnshire and Norfolk this year it does seem more widespread. The frosty weather over the next few days may well encourage a few more to make a start, as long as the seed bed that can be formed is good and the seed goes into good conditions.

​OILSEED RAPE

• Political influence

Oilseed markets are kicking off 2019 much in the same way as they ended 2018; with a lively mix of weighty, global political issues and underlying good demand from crushers. The US-China trade disputes continue to overshadow soybean markets and this week we have seen various cross winds influencing values. A comment from a senior US official about relaxing tariffs on Chinese goods saw CBOT soybeans find good support, only for the US Treasury to later deny that any such move was afloat.

Closer to home we have our own politics to contend with, as uncertainty over Brexit continues to see huge volatility in the value of sterling. MATIF rapeseed futures have firmed on the week but strong sterling has knocked UK farm gate prices significantly. Spot interest for rapeseed into the crushes remains strong as demand for rapeseed oil in the winter period continues to be supported.

• Weather

Extreme cold is expected across Eastern Europe and the former Soviet Union (FSU) in the next 10-15 days. Whilst snow cover remains excellent in Russia and Ukraine, this is not the case for Eastern Europe so crop watchers will be on alert. Soybeans in South America are facing some difficult conditions as Central and Northern Brazil continues to see warm and dry conditions whilst, further South in Argentina, heavy rain has affected up to 300,000 hectares of soybeans.

 PULSES

• New crop

As old crop markets dry up and very little tonnage is trading, all eyes focus on new crop. During the past few days, spring bean drilling is well underway in drier regions and the outlook for new crop values is very promising. Feed bean values for November are now trading at £185 to £190/ t and Frontier have a new bean contract out in the market paying £35/t over November 2019 wheat futures. On top of these strong values we will likely see big premiums for human consumption beans, especially early on in the season when there will be minimal crop available.

Please contact your local Frontier farm trader for further contract details.

 FERTILISER

• Nitrogen/urea
  

India is in the market again for more tonnage but markets are globally very slow and weak in the US. We are unlikely to see any price changes in the UK as suppliers sell off current physical stocks.

This week, we had Defra's announcement on the 'Clean Air Strategy', part of which is to reduce emissions from urea fertilisers in the "shortest possible time". The government will consult on this later in the year.

SustaiN (the new name for KaN) should be considered when planning for next season.

UK nitrogen prices are very competitive versus imported options and demand is strong, however, as we move towards the end of January, CF Fertilisers will remove terms and move up slightly to focus on February and March. Logistics are already an issue due to delays in supply and the industry trying to catch up. Adding in spot orders is only putting more pressure on the system. Please talk with your Frontier contact urgently to secure products.

• MOP
  

Prices of MOP and products that contain potash have moved up as the producers increased levels into the UK. There are very low stocks as blenders delayed buying due to recent exchange rates between sterling and the euro. However, now that things are slightly better stocks are being replaced. It should be noted that, periodically, we will see regional breaks in supply. If product is required then we advise that it is ordered and a delivery planned. 

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