Frontrunner - 29th March 2019

WHEAT

• UK wheat prices flatten

Domestically, futures and delivered markets remain thin with a large portion of the old-crop market still to play out. Northern feed wheat premiums remain elevated to encourage the trade-flow of grains from further south but, in the main, consumers remain subdued with a 'hand-to-mouth' approach to buying. This said, long holders continue to weigh up market uncertainty which has stemmed the flow of supply somewhat and the market trades in a very narrow range. Currency fluctuations, questions around the UK supply & demand figures and of course Brexit all continue to support old crop prices which remain £15 above new crop.

• Global market turns to weather and funds position

Widespread flooding and below average temperatures in the US plains and Midwest remain a flag for growing crops, while warmer forecasted weather could compound the problem as snow-melt will add to ground moisture levels. Conversely, soil moisture levels in the EU remain below normal everywhere except southern Russia, and now possibly Iberia where we see some short-term precipitation in the forecast.

US funds still hold a huge short position around 17 million tonnes, indicating they see the market trading lower despite the widely reported weather concerns. As a result, Chicago futures fell 5 cents this week which clearly shows the funds are confident enough to hold their nerve through the weather stories.

BARLEY

• Malting barley suffers from low liquidity

Activity on the malting barley markets has been very slow this week, with many in the trade attending the World Barley, Malt and Beer Conference in Warsaw for the last three days. As the UK drills the last of the spring barley crop and traders take up weather watching across Europe, it remains to be seen what the size and quality of the EU malting barley crop will be this season.

• Feed barley prices remain under pressure

As old crop feed barley continues to be marketed by growers, values remain under pressure. Barley trading at £30 under wheat looks good to end users but has competition from cheap wheat feed into compound rations. A lack of any sort of export activity certainly does not help.

• Frontier barley pools still open

With plenty of uncertainty in the next year and an expectation of considerable volatility in the barley market, pools will continue to be a viable option to help manage the risk of marketing crops. Frontier's feed and malting barley pools remain open – please contact your farm trader for more information.

​OILSEED RAPE

• Currency watch

Overall, markets have traded lower this week with changes in values close to reflecting movements in exchange rates. Old crop physical prices were down £4 per tonne by Thursday against a 1% firming of sterling but, at the time of writing, a weaker pound has pushed the market up by £2 per tonne. Currency markets are somewhat of a rollercoaster ride at the moment and, given all that is going on in the political arena, this factor will need watching closely over the coming weeks.

• Focus on China

With exchange rates explaining most of the recent price movements, the implication is few changes in the underlying market fundamentals. The market has been getting some support from concerns about overly dry conditions in Europe and the prospect of reduced canola plantings in Canada given the current Chinese import ban. However, this latter situation can cut both ways and there are concerns that Canada will look to Europe to find export markets to replace the normal demand from China. Furthermore, Chinese pig numbers continue to fall, raising the prospect that Chinese consumption could be switching from pig meat to poultry which requires much less high protein feed to produce. Oilseed markets currently feel well balanced.

 PULSES

• Harvest marketing

With bean crops mostly sown and germinating nicely, it's a good time to start thinking about marketing options for harvest '19. We are currently in a season which will be remembered for tight supplies and booming prices but it is reasonable to expect yields from the crop in the ground to return to more normal levels. This could lead to feed beans losing some of their premium over other crops and, on this basis, it may be a good time to lock into a futures related forward contract. Frontier are currently offering a £40 per tonne premium ex farm over the relevant wheat futures price for feed quality, plus bonuses on any beans that are suitable for human consumption. Our bean pool is still open if this is a preferred route to market.

 FERTILISER

• Imports

Markets have been slow this week, as application is in full flow given the weather conditions. Planning your top-up nitrogen delivery is still key as supplies of imported N are now limited. With little new product due into the UK during April, this will add pressure to UK producers. Uncertainty around Brexit and the possibility of import tariffs have been causing delays on replacing raw materials on other products and logistics are being pushed to the limit to catch up with and sustain current orders.

• Urea

Urea markets had been on the slide globally but this week they moved up by approx $20 as India came in for another tender, coupled with supply issues with producers. All eyes will be on what level this tender will be covered to give a feel for the UK new season urea market.

• Blends

Blenders in the west remain very busy catching up on older orders and are now looking at approximately 10 working days to supply new orders. This is due to production issues that caused a delay, on top of big demand. Eastern facilities are faster to produce, however, logistics remain an issue.

All fertiliser requirements for April should be booked fast to ensure delivery. To limit any risk surrounding Brexit and raw material stocks, please talk with your Frontier contact to discuss.

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