Frontrunner - 30th August 2019

WHEAT

• UK wheat harvest progress

As the UK wheat harvest progressed rapidly this week and pushed through 80% complete, the Agriculture and Horticulture Development Board (AHDB) estimated production might breach 16 million tonnes, the highest since 2015. They report yields of 8.8 to 9 tonnes per hectare which is 6 to 8% above average. However, with few farmers reporting yields below 8 tonnes per hectare and many with record yields above 11 tonnes per hectare this may prove to be a conservative estimate. It is encouraging that the Teesside bioethanol plant will use 70% UK wheat this season but we are still faced with a need to export a significant surplus. Weak sterling will help achieve that, but for how much longer might that be the case? The beneficial recent dry spell has helped farmers harvest crops and it is crucial that supplies delivered to ports are no higher than 14 to 14.5% moisture in order to meet export specifications.

• IGC highlights ample wheat supplies

The International Grains Council made modest changes to the world's wheat balance sheet in their latest report but highlighted the heavy global grains supply situation. They see world production at 764 million tonnes – up 1 million on their previous report and 31 million up on last year. Year end stocks are likely to rise to a record 271 million tonnes, despite a year-on-year rise in demand to 758 million tonnes.

• French wheat export challenges

French consultancy, Agritel was the latest to increase their estimate for the French wheat crop. They saw production rise 15% compared to last year at 39.2 million tonnes, the second highest on record. This presents a challenge for France who now needs to ship over 20 million tonnes, a level achieved just three times previously. 11.3 million tonnes from this is seen moving outside of the EU-28 and beyond the traditional French market to Algeria. The need to be competitive was highlighted during the wheat tender held by Egypt this week. Egypt bought 350,000 tonnes for delivery during the first half of October. Four cargoes were Russian and one each from France and Ukraine. However, France had a $4/$5 freight disadvantage to Black Sea origins and had to discount their offer by $6 before freight to ensure they were sufficiently competitive to secure business.

BARLEY

• UK barley exports continue at strong pace

Feed and malting barley exports from the UK continue with the uncertainty of what will happen after the end of October. Last week's tender to Saudi Arabia saw them purchase 760,000 tonnes of optional origin feed barley for an October to December shipment. This purchase did little to support UK feed barley prices which, once again, have declined this week. The market ends this week with a slightly stronger sterling and lower wheat prices which is pressurising the barley values.

• English spring barley harvest draws to a close

As the spring barley harvest draws to a close south of the border, reports describe excellent quality and yields. The harvest in Scotland is now in full swing and approximately over 60% has been completed. Overall, good yields and low nitrogen levels have been recorded, however, various germination issues are occurring as a result of the wet August experienced across the country.

• UK malting barley market quiet

The UK maltsters are digesting what the harvest has given them and beginning the intake of harvest contracts. New business has so far been difficult to find and is key to bring buyers back to the market.

​OILSEED RAPE

• Weak sterling supporting prices

Fundamental global news has been mixed this week, leaving markets largely unchanged and traders looking at the value of the sterling to give the market some direction. Anything that heightens the prospect of a no-deal Brexit brings pressure on the pound. Wednesday's political news triggered a 1% devaluation of sterling against the Euro, giving an immediate boost to domestic prices.

• US/China trade dispute - no end in sight

Another factor that has no correlation with supply and demand is the ongoing trade war between China and the US, and this week's events followed a familiar pattern. On Monday President Trump reported that China was seeking talks to end the dispute which sparked off a sharp rally in US soybean futures. The following day, markets eased back as China's foreign ministry denied that any trade talks had taken place.

• UK production sharply lower

On Wednesday the Agriculture and Horticulture Development Board (AHDB) reported that 98% of the UK's oilseed rape crop had been harvested. They estimated that yields were around 3 to 3.3 tonne per hectare range, which suggests a crop of between 1.54 and 1.70 million tonnes. This would be 16 to 23% below last year's crop and the smallest since 2004. 

 PULSES

As the harvest rolls on we have now moved from winter beans to spring beans in the south and east regions. Yields are still well above last year's levels. The beans are bright in colour with minimal staining but there are still some bruchid damage issues. As the spring bean quality is much better than the Tundra winter bean, buyers will soon move away from wanting any more winter beans and this will put further pressure on feed values.

Overall values are £10/t lower than last week and, with a lot more harvesting and movement required next week, we expect to see values falling further for both feed and human consumption beans.

 FERTILISER

• Market update

Thankfully the bank holiday weekend delivered some well needed harvest weather, meaning combines rolled all over the UK. The nitrogen market in the UK remains flat with very little movement other than currency. The short term strengthening of sterling coincided with a slight dip in the world urea market. Going forward, urea still seems to have more potential to go up than down, but currency is the key factor. Speak to your Frontier contact for more information.

• UK blenders

UK blenders' stocks of phosphates (TSP and DAP) are able to supply the current demand but replacements in the coming weeks will be driven by currency. MOP values firmed for a couple of weeks but have now settled on lack of demand, however, they could quite easily firm again as UK blenders' stocks are lower than TSP/DAP.

• Grain protein content

When receiving grain sample results we recommend concentrating on protein levels. This is the best guide you'll have as to whether nitrogen applications hit the optimum or missed on the low or high side. Speak to the Frontier nutrition team for more information

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