Frontrunner - 21st February 2020

WHEAT

• Potential for Russia to break records

Farmers in Russia have enjoyed the opposite of the dire weather conditions endured by UK farmers. Prolonged settled weather during the autumn and a mild winter allowed Russian farmers to exceed their winter wheat planting expectations and there are limited signs of any damaging winter kill. Various analysts are now suggesting that the Russian 2020 wheat harvest will be the second highest on record. Estimates range from 75-85 million tonnes with the record being harvested in 2017 at 85 million tonnes. Exports could rise to 38 million tonnes from an expected 32-33 million tonnes this season. However, beneficial weather conditions in the spring and early summer will be essential to achieve the higher end of production estimates.

• Revised data points to tighter UK wheat supplies

Data published this week indicates a tightening supply of wheat for both the current 2019 harvest crop year and the 2020 harvest crop year. Basic Payment Scheme data from the Department for Environment, Food and Rural Affairs (DEFRA) suggests the English wheat area is 55,000 hectares lower than the DEFRA June survey. With a shortfall seen for harvest 2020, there will be less available for commercial operators and farmers to carry over to the 2020/21 season to help bridge the gap between available supplies and consumption demand.

The tight UK wheat supply situation developing for the 2020/21 season was highlighted by the Agriculture and Horticulture Development Board (AHDB) on Wednesday when it published its revised 'Earl Bird' survey. The survey indicated that farmers intended to drill wheat on an area 17% lower than the previous year. However, when the survey was conducted, those farmers had only drilled two thirds of last year's area and had unlikely been able to progress land work since then due to the continuous rain.

• USDA forecast a bounce back for US corn

The United States Department of Agriculture (USDA) held its Outlook Forum this week and it is thought that it will signal a bounce in the US corn planted area. Prolonged rain last spring prevented US farmers completing their planned cropping but, assuming all is well, the USDA predict that almost an additional 4 million acres will come back into production and also yield higher at 176 bushels per acre up from 168 bushels per acres from the 2019 crop.

BARLEY

• Limited demand for old crop

It has been another steady week for feed barley which has seen limited export demand for old crop. Turkey and Jordan tendered for barley at the start of the week, with these tenders expected to be executed from the Black Sea. The UK's competitiveness has not been helped within the global market due to the strengthening sterling and therefore it is not able to compete into Turkey or Jordan.

• Continued delays due to weather

The AHDB's 'Early Bird' survey results, released this week, had the winter barley area at 23% lower than the June survey. The spring barley area was up by 47% on the back of delayed winter drillings, particularly across central England. However, with the inclement weather continuing through February, drilling of spring cereals has yet to start in the UK, with a spell of dry weather required to dry out heavily saturated land. Drilling has started on the continent and in southern regions of France but fieldwork in the main growing areas has yet to find any real pace.

• No improvement for malting premiums

Premiums remain under pressure on malting barley and infrequent markets appear sporadically as maltsters are well covered for the season. With premiums small, the risk versus reward of moving barley as malting should be taken into serious consideration. Longer haulage rates to malting destinations over feed homes and the risk of not achieving the required barley quality should be key factors to consider. 

​OILSEED RAPE

• Spread of coronavirus

Global oilseeds markets have been subdued this week. Much of the talk has been on subjects that have been well aired in recent weeks, such as large South American soybean crops, slow US soybean exports to China and the economic slowdown due the spread of the coronavirus, which makes demand difficult to predict.

• Survey points to sharp reduction in OSR plantings

This week has also seen the release of news on plantings in the US and UK for harvest 2020. The USDA's Outlook Forum suggested that their soybean area could rise by 9 million acres. Meanwhile, the AHDB's 'Early Bird' survey confirmed a sharp reduction in the UK's OSR area for harvesting this year. With many crops in poor condition, it is expected that there will be a much smaller domestic crops.

 PULSES

• Strong feed bean market

This week's old crop feed bean markets have witnessed continued volatility, building on the price increases of previous weeks. We continue to see strong pull of demand for both feed and human consumption beans.

• Spring pulse planting delayed further

New crop activity on pulses remains slow as growers are still nervous about planting conditions for spring beans and peas, with recent storms delaying activity further. Until we experience a spell of fine weather, new crop markets will remain largely opaque. As a result, min-max and futures-linked contracts appear to be sensible marketing options.

• Old crop pea markets firm

Old crop pea markets have also been subject to some of the market conditions of feed bean, with most variants of peas seeing positive increases in price. Notably, the most boldly coloured, large blues are fetching strong premiums. If growers are sitting on peas, now is a good time to discuss marketing options before demand from buyers is filled and values subside.

 FERTILISER

• Nitrogen

Fertiliser sales have been reasonably buoyant this week given the fact that on farm conditions are still restricting applications where crops have established. There have been no significant changes in the market, although current February prices are now being offered through to the end of March for many products. Urea sales into Europe have firmed by approx $10/t but there appears to be limited buying interest in the UK at the moment.

• PK/NPK

Prices for straights (MOP/TSP/DAP) continue to bounce around and good offers are available in many locations depending on the blender's view on replacement values. In addition to this, compound NPK prices have been adjusted and are now a much closer, better value to blends.

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