Frontrunner - 23rd August 2019

WHEAT

• Wheat prices continue to fall

US, French and UK wheat futures fell further this week, with all markets hitting new contract lows. Following numerous spells of inclement weather in recent weeks hampering the wheat harvest, much of the UK has been more settled in recent days. This has allowed combining to progress rapidly and, fortunately, notable yield increases on last year have been widely reported. However, the weather has taken its toll on quality. Hagbergs have fallen and, in some cases, the tests reveal quality is well below the minimum industry standard of 250. Careful sampling and grading will be needed to help maximise value and avoid rejected loads.

• Ukraine wheat exports off to a flying start

Wheat exports from the Ukraine have made a rapid start this season and have reached 3.7 million tonnes since the 1^st July. This is a 46% jump on last season's pace. Wheat exports could reach a total of 21 million tonnes compared to 15.53 million tonnes shipped in 2018/19 according to the Ukrainian grain traders union, UZA. This level of competition highlights the challenges the EU has in shifting its wheat surpluses.

• Upbeat US corn crop puts potential pressures on prices

Die-hard bulls hoped to see market supportive data from the Pro Farmer Crop Tour this week as their scouts surveyed fields across the US Corn Belt. However, their yield assessments reported so far have been better than expected and helped push Chicago Board of Trade (CBOT) corn futures a further 3% lower this week, to a three month low. The full report is published later today (Friday 23^rd August). US wheat futures prices found some support following the better-than-expected weekly wheat export sales of almost 600,000 tonnes.

• China retaliates in trade war

In the latest chapter of the trade war, China said on Friday it would impose extra 10% tariffs over and above any existing rates on US wheat and corn imports. With US futures at contract lows, this will only add to the downward pressures on their markets.

BARLEY

• Record pace for barley exports

The total for feed barley exports by the end of August could reach nearly 300,000 tonnes, on top of the quantities already loaded in July. We can't expect a total close to that in September but it could be another significant month as malting barley shipments ramp up.

However, with good yields that are somewhat higher than average and quiet UK feed compounders, due to the amount of home grown forage, UK barley farmers still require the strong pace of exports to continue. This can only happen if we retain our competitiveness versus other origins of feed barley, wheat and imported maize from countries outside the EU.

• Malting barley market update

Demand for fresh cargoes of malting barley remains subdued as the EU maltsters already have significant quantities of English origin supplies on their books to execute by the end of October. The UK is currently nearly €18/t cheaper than Danish supplies, but Scandinavian barley trade offers significant flexibility through to March and this makes the two origins very different for the continental maltster due to the uncertainty created by Brexit.

Scotland is starting to make some progress into the bank holiday weekend after a couple of weeks of wet weather. Whilst there may be a little damage to some parcels, the majority of the crop was only just becoming fit to cut. There is now a good five-day window in the forecast to make significant progress but there is another band of rain predicted for Tuesday night and Wednesday. As a result, there is every incentive now for the grower to get as much harvesting done as possible.

​OILSEED RAPE

• UK market softens

There has been little change in domestic prices this week and early gains have been negated by firmer sterling over the last couple of days. It is now 1% stronger against the euro compared to the start of the week, which alone makes imports to the UK £3.50 per tonne cheaper. This, coupled with softer US soybean prices driven by wetter weather in the eastern states, has given the market a softer feel.

• US soybean yields marked down

One story that is still developing is a concern over projected soybean yields in the US. Each year at this time the Pro Farmer Crop Tour takes place and one of the key assessments is the number of pods in an area of 3 x 3 feet. There is a lot of data to digest but the fundamental message is that the crop has produced significantly fewer pods than last year due to the dry summer conditions. For example, crops in Indiana have an average of 924 pods compared to 1,311 pods last year and yields in this state are predicted to fall by 15%.

 PULSES

• Prices under pressure

Feed bean prices continue to come under pressure as yields still look far better than expected and buyers of feed beans, following wheat price ideas, keep dropping their price ideas. With a large percentage of beans still to be cut we would expect values to fall further over the coming days.

The market is still assessing new crop bean quality. Most of the Tundra beans sampled so far have been too discoloured for human consumption, which will also put pressure on feed bean values. The early spring bean samples look far better than winter beans but still have variable percentages of Bruchid infestation. Early premium indications are £25 to £35/tonne depending on quality but it's early days to establish values. As the harvest moves north over the next ten days we will be in a better position to firm up premium levels.

 FERTILISER

• Market update

This week, there has been increased activity of growers looking to purchase fertiliser due to the continued concern about the implications of Brexit. Exchange rates remain the biggest driver and with more volatility this week came very small windows of opportunity on urea grades. Get in touch with your Frontier contact to make sure your requirements are known.

Last week Yara made the move to offer November terms on EXTRAN 33.5 at £16/t. over the published October price. This increase reflects mainland European prices and the possibility of a 6.5% import tariff if we have a no-deal Brexit on 31^st October. CF Fertilisers haven't yet followed this move and is only offering terms for September and October. 

• Nitrogen sulphur

Many options are available to UK growers this season but all will have the price effect from exchange rates and potential import tariffs. A good positive and viable option for Frontier customers is Sulphur Gold granular compound 29n 20so3, produced in the UK by CF Fertilisers. Call your Frontier contact to discuss.

• Oilseed rape establishment

With drilling underway, getting crops off to a good start is essential and trials show that an application of fertiliser (DAP) at planting is beneficial.

View markets, set price alerts, manage contracts and take advantage of extended trading hours with MyCropMarketing, Frontier's online grain marketing platform.