This week, Chicago Board of Trade (CBOT) ended Tuesday 14 cents down, posting its fifth consecutive lower close.
Upbeat US crop condition weighed on the US market, despite a wealth of international trade activity. European markets maintained their value as France proved successful in capturing market share in international trade.
US winter wheat condition improved by one point, increasing to 49% of the area rated 'good/excellent' which is still notably ahead of last year's 36%. 83% is headed which is up on the average 78%. The US wheat harvest is underway with 6% complete, double the pace this time last year and the average.
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WHEAT
- Upbeat US crop progress stalls prices
This week, Chicago Board of Trade (CBOT) ended Tuesday 14 cents down, posting its fifth consecutive lower close.
Upbeat US crop condition weighed on the US market, despite a wealth of international trade activity. European markets maintained their value as France proved successful in capturing market share in international trade.
US winter wheat condition improved by one point, increasing to 49% of the area rated 'good/excellent' which is still notably ahead of last year's 36%. 83% is headed which is up on the average 78%. The US wheat harvest is underway with 6% complete, double the pace this time last year and the average.
Spring wheat planting nears completion, having now reached 94% complete and the planted crop is in good shape. 74% is seen as 'good/excellent', well ahead of trade guesses of 69% and last year's 64%.
Corn planting is at 91% and is up eight points on the week and just two points behind average. Corn condition is 75% rated 'good/excellent' - five points ahead of trade guesses and well ahead of last year's 64%.
- Major importers step in to take advantage of the dip
Egypt and Algeria governments took advantage of the dip in futures prices and bought significant volumes of wheat. Egypt bought 480,000 tonnes from a range of sellers for June and July delivery.
Both countries were able to benefit from French old crop physical long holders who chose to sell and therefore took discounted physical prices compared to forward position futures prices. However, the French sales were the highest priced traded at $304.25 including freight for June.
Ukraine was the cheapest FOB seller ($268.80/t) but had freight costs of over $34/t which was more than double that of Bulgaria – the actual cheapest seller which included freight at $298.95. Overall, average values were about $21/t ahead of the previous tender on 8th May.
Russian offers were too high and secured no business which has been a common feature in public tenders for Egypt this season. It's assumed that Algeria bought over 800,000 tonnes for delivery in August. Prices are thought to range from $279 to $279.50 including freight costs, which is about $30 ahead of prices paid in early May at the previous Algerian tender.
- Russian wheat crop still shrinking
Weekly wheat production estimates for Russia continue to fall. The latest statistics from SovEcon have fallen from 82.1 million tonnes to 80.7million tonnes. This is now almost over seven million tonnes below the estimates made by the United States Department of Agriculture (USDA) in May and presents a major dent in wheat export availability from the world's largest supplier.
Last month, the USDA published its first estimates for next season and put Russian wheat shipments for 2024-25 at 52 million tonnes which is below the 53.5 million tonnes estimated for this season. This will cause Russian end stocks to drop from 11.44 million tonnes to 7.99 million tonnes - the lowest for five years.
This leaves little wriggle room and the lower Russian crop will see a notable drop in exports which will need to be supplied from other origins - a challenge when Ukraine and the EU are also likely to have smaller wheat output and lower export capability.
Additional concern comes from a return to high temperatures in southern Russia, with up to 35 degrees forecast over the next ten days. Neighbours Ukraine and Kazakhstan are also affected by potentially crop-damaging weather.
BARLEY
- Buyers appearing but farm selling slowing on UK feed barley
Farm selling has slowed in the last ten days as prices have fallen in line with weaker global futures markets.
Barley remains an attractive discount to wheat in physical markets and we've seen buying interest appear in the last week. However, maize remains the dominating grain for consumers in new crop rations at current pricing levels.
With five or six weeks to go until we start to see new crop harvest begin, it'll be interesting to see just what level of harvest pressure there is given the lack of competitiveness of UK barley on the global export market.
The UK has traditionally been an exporter of harvest feed barley to the EU and has had to discount itself to become export competitive. However, with a smaller winter barley area year on year, that level of harvest pressure could be debated compared with previous years.
- Good weather in May, now for June
The malting barley market has had another quiet week with both buyers and sellers focused on the weather.
On the large, spring crops look well with plenty of potential and have benefitted from recent rainfalls. May weather was mostly favourable but the market would like to see some more sunlight in June to help these crops reach their full potential.
OILSEED RAPE
- Values fall
This week, oilseed rape values have traded lower, driven down by lower crude prices as well as improved growing conditions in Canada over the past ten days.
European growers are aware that harvest will start in the South at the end of June and have also added to the weight of sellers to drive the French MATIF oilseed rape market lower by €20/t over the past week.
PULSES
- Crop potential
The weather continues to be near perfect for the growing bean crop, with a couple of hot sunny days then more rain. This will certainly help yield potential but also brings out plenty of black bean aphids that need controlling as well as a fear of chocolate spot disease that can spread very quickly and decimate the crop.
In line with wheat, bean values have fallen over the past week and are now £8/t lower. However, the premium to wheat futures remains at an all-time high and it's still certainly worth considering locking into these current high levels.
It's also important to appreciate that UK values for new crop are €20-€25/t higher than new crop Baltic beans - something will need to change and that's likely to be lower UK values.
FERTILISER
- AN/urea
UK-produced ammonium nitrate (34.5%) prices for next season have now been issued.
The offer for June to August delivery is aligned with last year's opening levels and the uptake has been very strong. Due to the drawn-out season and therefore a busier than normal May, the tonnage on offer for June to August delivery is lower than in previous years - but with a price showing improved breakeven ratios for growers which hasn't been seen for a few years.
Gas prices, whilst not directly affecting UK production of ammonium nitrate, are causing issues for all other European producers. Gas has been rising since early May and spiked again on Monday this week following an outage in Norway. Therefore, with already low ammonium nitrate stocks this volatility in raw materials is again putting upward price pressures on European producers, with signs of an increase already evident into July.
Urea markets are under supply pressures as there have been further natural gas supply cuts causing the complete shutdown of four major producers in North Africa.
It's common to see producers in the region suffer a slight reduction of gas supplies at this time of year, but unusual to see a reduction that forces a halt in all manufacturing. It's not known how long this will be for or the full effect on supply and prices remain firm.
- Liquid
As expected, this week saw the release of a full portfolio of liquid fertiliser grades into the UK marketplace.
Where there's tank capacity on farm, both nitrogen and nitrogen sulphur products are available for delivery through the summer and autumn positions. Current values offer growers the opportunity to commit to product that is competitively priced when compared to a solid system, however, volumes are limited.
With milling wheat premiums at higher levels than seen for some time, the return on investment for achieving the required contract specified quality is significant. Products targeting protein increase for application at GS69-75 (milky ripe) are available in both IBC and bulk for prompt delivery as the application window nears.
- Straights/PKs
Potash and phosphate prices remain stable in the UK. Globally, the markets await direction on potash as South American buying continues and interest in Europe is picking up. In the phosphate market, the reduction by the Indian government in price support for DAP is forcing shippers into lowering prices to move product. With both nutrients, eyes are also on China to see what prices they release and the tonnage made available for export.
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