Frontrunner - 28th June 2019

WHEAT

• US corn takes a back seat as markets are affected by EU heat wave

Global grain markets have recently been underpinned by the disastrous US corn planting and there will remain an air of uncertainty until crops are harvested in the autumn. However, this week wheat markets were supported by factors closer to home as temperatures soared across western Europe. On Monday, Matif milling wheat futures jumped €4/t higher at one point as weather forecasts reported that the heat in France and Spain would topple records in June. This became a reality as France recorded their hottest day on record at 44.3 °C, and fires spread throughout Catalonia. The heat wave is a huge flag for wheat, both in terms of yield and quality, meaning growers are therefore nervous about over-committing forward sales. Despite this, markets have reacted and cheap Black Sea wheat is being offered; it feels as though there is a cap on new crop values.

• UK wheat uncompetitive

Warmer weather will be more favourable for UK farmers who have seen ample rainfall over recent weeks. Crops have huge potential to yield well and the exportable surplus could be sizeable. However, UK wheat still looks overpriced and uncompetitive to foreign buyers. We could see further downward pressure on harvest prices before the domestic consumer jumps in or exports begin to feature.

• USDA report

The USDA will publish its quarterly stocks and acreage report tonight. With a poor export pace, US corn stocks are expected to be heavy and therefore negative for the markets. However, the corn acres estimates will be keenly watched and may give an insight into how significant crop losses might be.

BARLEY

• Weather watchers eyes turn to mainland Europe

Record high temperatures across much of mainland Europe, and the impact they may have on the developing spring barley crop, are of interest at the moment. The question is whether the final yield and quality is adversely affected or not. A good demand for feed barley into Spain and Portugal still exists and should remain into the UK harvest period; this will continue to support prices particularly around ports in southern England. Providing we see reasonable amounts of farmers selling, this should give the UK a positive start to the barley export campaign.

• Spring barley development in the UK remains ideal

Barley crops have benefitted from good weather this week with slightly higher temperatures and drier conditions. If anything, a little more sunshine is now required to help with grain fill. The malting barley market has remained quiet, with little activity from farmer selling or end user buying. This should change as harvest spreads across Europe and the market gets an idea about yields and quality.

​OILSEED RAPE

• Sharp price falls

Oilseed rape prices have fallen sharply during the week. An emerging drier and warmer weather pattern in the USA has prompted funds to start selling Chicago Board of Trade (CBOT) soybeans again and as harvest looms in Europe, MATIF futures have also been sold off to levels that are down €10/t compared to recent highs.

• USDA report

The USDA reported on Monday 24^th June that the US soybean crop was 85% planted. Soybean crop ratings started this week and the 'Good to Excellent' ratings were forecast at 54%. We note that the Good to Excellent rating was the lowest starting rating since 1992 (which was 51%). Debates continue in the marketplace on what the final planted acreage will be and what the yield impact will be, if any, on later planted crops.

• World stocks

The oilseed rape harvest has started in the Ukraine and today (Friday 28^th June) crops have been coming off slightly better than expected. European markets will be the main home for Ukrainian oilseed rape this year and the amount exported is forecast to be a record tonnage.

Canada reported this week that Canola plantings were down 8% year on year. 2018's final plantings came in at 22.8 million acres and the report this week stated that Canadian farmers had planted 20.95 million acres. The market was expecting lower plantings as the main export destination for Canola has been China and at the moment exports to China have stopped as global politics continues to influence trade flows in oilseed rape markets.

 PULSES

• Bruchid beetle

With very little change in market values it's a good opportunity to look at the pros and cons of spraying for bruchid control over the next few days. With hot weather forecast in all areas conditions will be perfect for adult bruchid beetle to actively lay eggs on the surface of bean pods. With projected premiums of £30-35/t it's clearly worth looking at bruchid control. In winter crops where the pods and developing beans are already well formed it's a good idea to cut open a number of pods and cut the beans open to see if bruchid larvae are already present. If they are there in large numbers it may not be worth spraying, especially if the pods are getting tough skins as the larvae may not be able to penetrate the pod. In spring crops the lower pods need to be at least 2cms long before spraying will have any useful impact. It's worth remembering there is no hard and fast rule for the percentage of bruchid found making samples unfit for human consumption. Buyers will always make a visual assessment first, looking at the colour and size of the bean before noting the presence of bruchid activity.

 FERTILISER

• New season

CF has now moved onto October movement for the new offer and that very much indicates that between June and September sales are complete and early buyers have taken up the early offers. In the third week following the new season start, all has gone quiet in the UK. Crop trials and seed talk have been more prominent on farms than nitrogen and sulphur. The sulphur story is very much in discussion with a number of options available to growers depending on final cropping decisions. The story in Europe is very similar with all of the early tonnage offered now sold and prices have moved on again this week for later move. Nitrogen offers from European producers are much higher than May/June offers and time will tell until the next move in the UK, but higher levels look very likely given the higher alternative offers.

• Granular urea

Granular urea producers are awaiting the next round of bidding in the Indian tender process. Volumes again look high which could keep urea producers busy for the next few months. The summer drop in urea demand looks less and less likely at the moment. Autumn and winter demand is very much centred on China's demand or supply to the market. At higher urea numbers some Chinese urea could come to our market but as usual it's difficult to predict.

• Milling wheat

Final applications of foliar nitrogen on milling wheat will take place in the next fortnight and the option of investing in extra protein for crops with potential is likely to be a cost effective decision. Speak to your Frontier contact for more information.

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