Frontrunner - 5th July 2019

WHEAT

• Market prices

Markets have fallen considerably this week with most business concluded for old crop wheat. However, supplies continued to come forward, knocking farm gate prices by £4 to £6/t for old crop during the week. New crop markets are solely focussed on weather and with parts of the European harvest now underway, eyes will turn to the analysis of data to gauge the next market move.

• High yielding US crop

The wider wheat market is still underpinned by recent events within the US corn market. With a high yielding US wheat crop and surplus balance sheets forecast in all major output areas, the world appears to be in a comfortable position if you are a buyer of wheat. On that basis it would not be unreasonable to expect price levels for EU and UK wheat to move lower if crops perform at an average level or better over the harvest campaign, whilst current price parities point to the fact the EU wheat needs to fall in value to expect significant demand.

BARLEY

• 2019 barley harvest

The 2019 barley harvest got underway this week; winter barley was harvested in Norfolk and Lincolnshire. It is too early yet to get an accurate gauge of both quality and yields as there are limited reports. As a result we can expect the market to keep a close eye on samples throughout next week.

• Malting barley

New crop malting barley buyers remain absent to the market, waiting for harvest and the anticipation of crops with plenty of potential. If crop prospects are reached we could expect further erosion in malting barley premiums.

• Barley market

With harvest now underway, it is important to have a plan for feed and malting barley for the coming season. Brexit uncertainty still hangs over the barley market; be sure to contact your local farm trader for advice on marketing options for barley crops this season.

​OILSEED RAPE

• Prices flat

UK markets look set to end the week unchanged. Values are caught between more bullish news from the US and the prospect of good crops elsewhere. There has been little change in the value of sterling over the past couple of weeks.

• Bullish USDA report

Traders started the week trying to digest the news from the previous Friday's United States Department of Agriculture (USDA) report. It was predicted that farmers in the US who hadn't been able to sow their corn would switch those acres into soybeans but the report suggested otherwise. Bean plantings were cut by 4.6 million from their March estimate, leaving the projected figure at a huge 9.2 million acre reduction from last year. Furthermore, the report highlighted the poor condition of the crop in the ground with ratings in comparison to 2012. It also surprised the market with a cut in yearend stocks; however the reduced figure would still be a record.

• Lower EU production

EU oilseed rape production is projected to drop this year. The European Commission released a total crop figure of 17.86 million tonnes on Wednesday, compared to 19.7 million tonnes in 2018. The Agriculture and Horticulture Development Board (AHDB) planting survey has been released today, showing UK sowings at their lowest level since 2003 at 11% less at harvest compared to 2018. It reports that the crop has been negatively impacted by poor sowing conditions in the dry autumn and pressure from pest damage. However, crops that have achieved a decent establishment are of a good quality.

• Better prospects in Ukraine and Australia

Less bullish news is to be found elsewhere. The Ukrainian oilseed rape harvest is approaching 20% complete and they are expecting a record crop of around 3.9 million tonnes. Forecasts are predicting a cool and wet spell of weather in Canada, which will aid crop development. Timely rains have been received in Australia, specifically Western Australia which predominantly needed the extra moisture.

 PULSES

• High prices

Crops continue to look good in the field but there is a surprising lack of selling activity in markets. A farm gate price at over £200 per tonne makes beans expensive relative to wheat. UK compounders are finding more cost effective alternatives, while the export trade for human consumption generally only gets going when we have a better idea of quality. If yields are more reasonable then the £40 per tonne premium over wheat futures, contracts could easily disappear and free market farm values could slip below the key £200 mark.

 FERTILISER

• Nitrogen

The solid fertiliser market has taken the back seat this week as the liquid suppliers came forward with tank fill terms. There have been forward supply issues with the solid fertiliser market, meaning that the liquid suppliers have only offered to fill current tank space. The spring 2020 offer may come later depending on currency, dock space and Brexit. The current tank fill offer very much mirrors the Nitram and Extran for the June to July offer and has therefore been taken quite positively by the market. Time will tell where we go next, but harvest is likely to take precedent with barley now being cut in East Anglia.

• Urea

The latest Indian urea tender saw much more urea offered than the previous tender in early May. Reports suggest a proportion of the offer is coming out of China, suggesting they may have an appetite for this higher priced urea market. More information is expected to come out in next few days but China's supply would potentially increase availability of urea to the market. Keep an eye on sterling versus the US dollar as this isn't helping UK prices of granular urea.

• PKs

No real moves this week with triple super phosphate (TSP) diammonium phosphate (DAP) and muriate of potash (MOP). All offered to the market but there has been very little interest as harvest could mean storage space on farm is required for grain.

• Foliar N

Foliar N sales this week have continued with more interest as sunshine helps yields of milling wheat in the UK. Talk to your Frontier contact for more information.

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