Frontrunner - 7th December 2018

WHEAT

• UK markets trade a narrow range

Domestic and futures markets traded in a narrow range this week with the benchmark LIFFE finding a level around £175/t for May delivery. Physically, grain consumers continue to take cover in a marketplace with very little farm and merchant grain offered, which is lending support to prices.However, the uncertainty surrounding Brexit and limited market movement is keeping forward interest at bay, with most consumers in no real hurry to cover spring/summer positions.

• Volatile currency

Sterling has weakened further this week and looks set to remain volatile as the UK works out how to exit the EU. Due to the UK now having an exportable surplus of wheat, a weaker pound should increase the attractiveness of grain to foreign buyers and may be supportive of prices. However, busy ports continue to create logistical constraints for potential buyers and cheap competing origins continue to block trade.

• Global roundup

US exports continue to run behind last year's pace after being out-priced by Russia for the majority of the season. Russia remains one of the cheapest origins for global wheat, but export pace has slowed recently. This is partly due to cheap competing origins but freezing weather stretching logistics has also contributed. In Argentina, harvest is around 40% complete and in-line with last year's pace but rain-damaged crops continue to throw up questions around quality.

Argentina will be competing with the EU, Russian and US wheat to supply North Africa and quality will need to hold-up for them to connect. Drilled crops in the northern hemisphere are encouraging with most of Western Europe well-established. There remains an ongoing concern over dryness around Russia and the Black Sea region where crops struggled to germinate, but recent rainfall will go some way to help the growing crops.

BARLEY

• Feed barley market quiet as prices drift
  

There has been a lack of domestic buying activity this week as we have seen feed barley prices drift in the northern half of the country. A barley tender from Jordan saw plenty of offers mid week and 60,000 tonnes of barley was traded for March delivery from more competitive origins. Competition around the world to find barley markets for the new year remains keen as shown by this week's tender.

• ​Malting barley exports continue from south and east coast of England
  

Cargoes of malting barley continue to leave the UK for mainland Europe and more are being called for in the new year. Lack of water across mainland Europe continues to affect river traffic as water levels are low. Continental end users are drawn to the UK for nearby supplies as they collect forward contracts. However, new export demand is almost non-existent at the moment and values have slipped as a result.

• Domestic malting barley prices remain firm

With a lack of new export business domestic malting barley prices now lead the way. Demand for spring malting barley remains good especially into East Anglia for Propino which now commands a premium over Planet. Low nitrogen parcels are in high demand and attract a premium over standard 1.85 nitrogen barley.

​OILSEED RAPE

• Flat markets
  

At the height of the UK harvest, the price of rapeseed for delivery into Liverpool was at precisely the same level as it currently stands for delivery this month. Over that period of time the market has occasionally been £10/t higher but also £10/t lower, summing up the lack of direction in recent months. During the Brexit process fluctuating currency exchange rates have had a part to play but it's also interesting to note that the exchange rate (£/€)is the same today as it was back on the 3^rd August 2018.

• Long term optimism
  

It's difficult to predict the direction of travel in the new year. After a very dry, late summer there are continuing concerns about the condition of European crops. This is helping traders maintain an optimistic outlook, particularly as farmers are reluctant sellers whilst they wait for higher prices.

In the short term, the market is struggling with a number of bearish factors including very weak crude oil values, a lack of clarity on the US/China trade dispute and good progression on spring soybean plantings in Brazil and Argentina.

 PULSES

• Prices remain firm
  

The UK bean market has virtually stopped trading this week due to lack of volume. As market values rise and very little trading more and more consumers are looking to sell back their purchases to the original trade sellers. This should put pressure on prices but while are still a number of shorts, who cannot cover their positions, prices remain firm.

• Feed bean replacement
  

Feed peas continue to be imported to the UK from France and the Baltic states and these represent a good value protein source for feed compounders as a replacement for feed beans and other mid range proteins.

 FERTILISER

• Nitrogen
  

The only news this week is of a Russian nitrogen cargo heading to the UK in January. Russian prices are circa £10/ha lower than UK-produced Nitram on a 220kgs per hectare nitrogen crop requirement. However, we are not considering this offer as we believe there may be quality issues related to spreading and compaction. . CF and Yara continue with current pricing, but look out for other products arriving in the UK. Both of CF's plants are now back up and running producing Nitram and nitrogen sulphur grades. Hauliers will want to get products on farm over the next few weeks.

• PKs
  

Although the market is quiet, farmers can look to the early spring as the next opportunity to apply nutrients to crops. The markets remains nervous around political issues and currency will drive the next price move. Nervousness around holding too much stock as March approaches could also lead to spring supply problems. Our advice would be to order as soon as possible in order that haulage can be organised in January rather than waiting until spring to buy.

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