WHEAT
- Weak wheat markets
Wheat markets made notable losses earlier this week, led lower by US CBOT futures that hit contract lows. By close of business on Wednesday, CBOT losses amounted to 6% and this was partly attributed to US wheat being uncompetitive and missing out on recent export trade. Syria and Bangladesh bought 200,000 tonnes and 50,000 tonnes respectively which went to Black Sea origin. On Wednesday Egypt tendered taking advantage of the lower prices; they bought 360,000 tonnes for an April shipment which was on average $10/t below the average price they paid in their earlier tender this month.
France secured half the tonnage with the other half shared between Ukraine, Russia and Romania. Thursday saw a turn around as talks to resolve the US/China trade war appeared to be more positive. It was reported that China had offered to buy an additional $30 billion of agricultural products including wheat. Additional market support came from the USDA at their Outlook Forum, where they predicted the US 2019 harvest winter wheat area at 47 million acres, compared to 47.8 million acres last year. This would be the smallest area for 110 years.
Up to date export data for the US has been lacking due to Donald Trump's dispute with the government offices. Export statistics will be published this afternoon (Friday), it will be very interesting to see how positive or negative these figures are as they could set the next short term price trend.
- Improving EU export picture
EU prices proved more resilient with Matif enduring smaller losses than US markets, helped by an improving export pace. With adjustments, wheat shipments last week reached 500,000 tonnes putting the cumulative pace 19% behind last year compared to 24% behind the previous week. Capturing the Egypt business added support. Strategie Grains see EU exports this season reaching 18.7 million tonnes which is about 2 million tonnes down on the previous year.To hit that target the EU will need to ship on average 400,000 tonnes each week until the end of the season. A lack of liquidity helped support UK physical prices.
BARLEY
- Old crop feed barley drops to attractive levels
In what could attract UK domestic demand feed barley's discount to wheat has dropped to £22 to £28/t under feed wheat. There is currently no export interest due to Brexit uncertainty. On the world market the nervous longs appear to have mostly traded out after taking another US$12/t price cut in this week's North African tender business. The two most aggressive recent world sellers backed away in today's Tunisian tender and raised their prices by $10/t leaving other traders to undertake the business. When global barley prices want to move it is generally by no less than $5 to$10/t.
- New crop feed barley is competitive
When we look at the prices during the summer months barley regains position in the feed ration against maize and wheat due to its more attractive discount. We could potentially see a bigger barley crop coming throughout the EU. There are doubts about the level of demand in the world's two biggest importers; China and Saudi Arabia. This is due to feed barley's relatively expensive price over the October 2018 to January 2019 period as they decided to reduce their purchases. The unanswered questions that remain are how and when they will increase them again.
- Spring barley sowing gets well underway
Good progress has been made this week in the midlands and East Anglia while it has been a slower affair on soils over chalk in the south. Barley sown in January whilst it was dry is just starting to show in the row. Small amounts have been sown in South Yorkshire but anywhere north of there will need a few more dry days before a start can be made. Compared with last year this is about four to six weeks earlier and comparing with 2017 about three to four weeks earlier. Hopefully, this will allow more time for the fertiliser to get washed in by timely rains. Farmers remain reluctant to sell because of their experiences in 2017 and 2018; they will need to see a positive amount of rain before commencing the bulk of their sales.
OILSEED RAPE
- Rapeseed prices crash as falling demand hits the market
Rapeseed values have sharply fallen this week; a bearish mix of lower demand in northern Europe, which is mainly due to some plants halting the crush of seeds, and large volumes of Canola arriving from Australia have caused the dramatic fall. A firming £:€ has added to the decline of UK farm gate prices.
Summer supply and demand is starting to look softer in the EU as reasonably large stocks are in place versus a falling crush demand. However, the new crop situation is far from clear. We know European plantings are down while plantings are up in the Black Sea; crop development from this point will be significant. We will soon enter the weather watching season and this is likely to be the next price influencer.
- Soybeans
This week at the USDA Outlook Forum it was forecast that US soybean plantings would come in at 85 million acres, which is a decline of 4.2 million versus the 18/19 planted area. This is not surprising as current political uncertainty and low prices were always going to influence farmers to plant other crops. There is also still some uncertainty around the supply situation in South America so in the short term we could see a soybean market that finds some support.
PULSES
- Old crop beans
Old crop bean markets have almost ceased trading now due to the lack of available farm supplies. UK consumers have all the cover they require for now and it looks as though they won't be taking on further supplies due to the unseasonably warm weather.
New crop values have come under some pressure this week as the strength of the sterling reduces values to export buyers. Our new crop bean contract to supply beans to the aquaculture market is now up to £40-£50/t premium to November '19 wheat futures depending on the level of protein. Please contact your local Frontier farm trader for further details.
FERTILISER
- Nitrogen
Prices of imported ammonium nitrate and urea have slipped again as a result of currency movement. Imported ammonium nitrate supplies in the UK are higher in the north but are still limited due to COMAH storage issues. Granular urea offers continue to fall but globally the market actually firmed as volume rose. Are we at the bottom of the urea market for the next few weeks? Nitram and Extran stocks seem acceptable at the moment subject to currency and production issues. Another week of fine weather continued to put pressure on the industry logistics. Once rain is forecast pressure will build, therefore we would advise you speak to your local Frontier contact if you still require nitrogen for the first or second dressing.
- NPKs
Whilst spring appears to have come early this year, the market is unsure how many grassland customers have bought their NPKs as yet. Currency is helping on all fronts for blended NPKs. Compound NPKs are generally easier to acquire currently as stocks are available for movement.. At the moment there is quite a gap between blends and compounds which could push more buyers into blends and put more pressure on the blenders' current supply issues. Again please keep in touch with your local Frontier contact.
- PKs and Straights
No real change since last week's Frontrunner. MOP and TSP levels have come lower due to currency movement but both products are in high demand so European/US producers are able to move prices upwards subject to supply.
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