Last Wednesday saw London May wheat futures close at £192.95/t. Prices firmed slightly to £194.40/t before easing back to £193.34/t on Friday's close. Markets opened £3.05/t down on Monday at £190.40/t and haven't moved much since.
MATIF followed a similar pattern with its May '25 contract closing at €235.00/t on Friday, before trading €6.25/t down at one point on Monday to €228.75/t.
WHEAT
- Market update
Last Wednesday saw London May wheat futures close at £192.95/t. Prices firmed slightly to £194.40/t before easing back to £193.34/t on Friday's close. Markets opened £3.05/t down on Monday at £190.40/t and haven't moved much since.
MATIF followed a similar pattern with its May '25 contract closing at €235.00/t on Friday, before trading €6.25/t down at one point on Monday to €228.75/t.
- Global headlines
This week 60,000 tonnes of milling wheat was traded at $268.90/t for delivery to Jordan in mid to late January. A tonnage was also traded at $267/t to Algeria for delivery in January to March. Black Sea and Argentinian origin wheat appear to have been the cheapest source recently, but the origin for the above trades is unknown.
For December delivery, Russian 12.5% protein wheat is being repeatedly offered at $220/t FOB and 11.5% is being offered at $222/t FOB. Russia is forecast to export 45 million tonnes this season and is currently ahead of last year's export pace by one million tonnes.
Markets expect Russia to be nine million tonnes down on December to June exports in comparison to last year's volume. This is a substantial amount, however, it has not caused concern as tonnage from North America and the Southern Hemisphere should fill the shortfall.
Currencies and politics continue to cause headaches for traders. High interest rates in Russia are promoting sales, but big importers like Egypt are currently facing a weak currency and interest rates of 20%, which is causing demand to fall away.
Something to monitor closely is wheat versus soymeal prices. Traditionally, wheat has been the staple part of the majority of animal feed rations. However, as soymeal prices fall it will become a more viable option for compounders, allowing them to switch out wheat for soymeal and top up with corn.
Compounders have a tendency to stick with wheat until the wheat to soymeal protein ratio climbs above 3:1. This happened for prolonged periods in 2011 and 2022 and it's just reaching the 3:1 ratio now. On the other side, wheat and corn are almost trading at parity in some cash markets.
- Weather impacts
Parts of the UK were covered in snow last week, but on the whole Europe remains free from snow with temperatures warmer than usual for this time of year. French sowing has caught up and is now standing at 90% complete, in line with last year. Central Ukraine has had some snowfall, but the rest of the Black Sea region remains warm and dry in most parts.
Conditions remain dry in the USA, unlike Canada, where snow continues to fall. Rainfall has hit southeast Australia and Argentina as they both try to prepare land for winter plantings.
BARLEY
- Feed barley prices stable whilst discount to wheat shrinks
UK compounders continue to show interest in monthly top ups and longer-term contracts in feed barley, as the commodity remains at maximum inclusion in most livestock rations.
It seems that only a small quantity of feed barley exports from the southeast of England would be required to balance the supply and demand. The discount to wheat has shrunk by £5-£7/t over the last few weeks, as wheat values have fallen whilst barley values remained unchanged.
- Malting barley hard to sell and premiums grinding lower
There are few malting barley bids this side of Easter for the following reasons:
1.Good yields and quality of spring barley – solid germs in comparison to last year
2.Beer - and therefore malt consumption - has dropped a couple of percentage points, so demand is not running at the pace maltsters expected
3.Carryover from crop '23 is higher than budgeted by maltsters, thereby reducing demand for crop '24.
Competition between world maltsters is also increasing due to these factors and they will not enter the market for more malting barley until they make more sales.
Finally, the harvest in Australia is larger than expected and of adequate quality, with about 60% cut. The same can be said for Argentina, where harvest starts in two weeks.
- Lower predictions for crop '25 barley
The Agriculture and Horticulture Development Board (AHDB) Early Bird Survey results suggest that the winter barley area will further decline and the spring barley area will drop by 13%, after it ballooned due to the wet autumn of 2023.
If these predictions are correct, it will paint a brighter picture, price wise, for both feed and malting barley types. Any challenges to the crop '25 spring barley growing season will create price spikes, lifting the prices of unsold crop '24 parcels and enabling growers to lock into good premiums on crop '25.
OILSEED RAPE
- Rapeseed prices fall
Rapeseed values have been subject to a sharp decrease over the last week, after the strong bull-run that started in the middle of September.
UK ex-farm values are now approximately £30/t lower than they were at the peak on 9th November. This is a result of consumers being able to buy more domestically and from imported sources like Australia due to increased farmer selling at the recent higher prices.
Canadian canola is now cheap enough to export to Europe following the recent news of Donald Trump imposing 25% tariffs on Canadian goods. This, combined with potential Chinese tariffs on Canadian canola, could further force it into Europe.
This year, Europe will crush comparatively more soybeans and less rapeseed and sunflower seed than last year. This is due to limitations of domestic supply and more attractive margins for soybean crushing, which has reduced rapeseed demand.
The soybean market continues to move without any strong direction either way, as the trade weighs up Chinese demand levels versus potential tariffs and policy changes from the upcoming Trump administration. On the other hand, palm oil markets are firm with production levels low due to drought stress.
PULSES
- Feed beans
UK export values align or are in some cases cheaper than current Baltic values. However, buyers are busy with early, cheap Baltic beans meaning little is being bid in the current market and into early 2025.
Domestic homes are now bought up pre-Christmas, with very little bid in the market. Although prices are holding firm, beans don't currently factor into summer rations as they are not competitive in comparison to other protein sources.
- Human consumption beans
A third of the Egyptian import requirement of beans is expected to hit the country pre-Christmas, with the first vessel from Australia due to arrive in the next four weeks.
Southern Australia's bean harvest will start this week (subject to rain) and will be one to watch.
- Peas
Canadian micronising peas are trading $100/t cheaper than UK peas, so there is currently little opportunity for export to Asia and other countries.
Domestically, end users bought requirements at the beginning of the season and with what seems to be a lot of nice peas around, the premiums we saw in August/September are being driven down.
There continues to be a large premium on feed peas above feed beans, with only a small market for feed peas.
FERTILISER
- Urea/AN
Following last week's update on European gas values, there now appears to be some stability in pricing, but certainly no declines. Ammonia pricing has increased for December, meaning producers in Europe and the UK will continue with lower production rates, as demand is still low.
Two major European manufacturers have pulled offers in some countries on AN/CAN, with new levels offered at €15-30 above those previously seen and all the available delivery options now from January 2025. It's likely that this change in pricing and offer will impact UK terms given that both these manufacturers supply UK importers and direct to farm.
A relatively low product demand, coupled with delivery options being pushed later, suggests that there could be a tight supply of product in the market should purchasing decisions continue to be delayed for post-Christmas.
We encourage those who know they will have requirement for February/March 2025 to consider covering nitrogen and sulphur requirements over the coming weeks.
- Liquid/UAN
Progress in plantings earlier this month has renewed interest in switching to liquid fertiliser and we continue to see tank installation across the UK. This could be due to some growers not having purchased yet and recognising the benefits associated with using liquid fertiliser. Discover more about liquid fertiliser here.
Although the liquid market tends to be slightly de-linked to the AN and urea market, what AN and urea producers cannot avoid is that their raw materials remain high and that they will be looking to cover spring product. It's likely that any moves in the solid nitrogen/sulphur market will be slightly mirrored by the liquid suppliers – again we suggest looking at early spring requirement, if you haven't already.
- PKs/Straights
There has been a significant increase in PK purchasing following earlier comments on potassium being at the bottom of the market, with growers varying their delivery preference around pre or post-Christmas.
Regardless of the season, our crop nutrition trials have consistently shown that autumn or spring applications of phosphate and/or potassium increase yield and demonstrate a return on investment. Therefore, we recommend growers review their PK purchasing strategy and consult their most recent soil analysis.
DAP is remaining firm due to high ammonia costs. Anyone looking at DAP for spring usage should keep an eye on this due to the limited options on DAP coming into the UK, as pricing will be very reactive to global demand. You could consider alternative options, especially with maize establishment.
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