Frontrunner - 1st February 2019

WHEAT

• Slow UK trade

The domestic wheat market slowed to a crawl this week. A lack of fresh news, combined with sterling strength, saw both old and new crop prices slip lower.Despite Defra's estimate showing a surplus on the UK balance sheet, the old crop premium to new crop remains resolute. Spot feed wheat is trading at £25/t above harvest prices. That gap will have to close at some stage. Unless adverse weather affects crops and helps to lift new crop prices, the old crop premium is vulnerable.

• France secures business with Egypt

In their latest tender earlier this week, Egypt bought 360,000 tonnes of wheat for March shipment. However, there was a notable change in the origin of suppliers with France and Romania each selling 180,000 tonnes.This was the first French sales of this kind since July 2017. Russia has dominated wheat exports to Egypt this season taking over 70% of the trade prior to this but they were uncompetitive for this tender. The cheapest Russian offer of $255.00 fob (free on board) before freight was over $7/t above the lowest French offer and $12/t above the lowest offer from the US. Despite this, high freight costs from the US leave them too expensive to compete.

• Russian export pace slows

Wheat shipments from Russia slowed notably in January hitting 1.9 million tonnes compared with 3.7 million tonnes in December. In total this season wheat exports amount to 26.5 million tonnes compared to the target of 35 million tonnes. However, as the available wheat supplies move further north away from the ports, haulage costs are more expensive leaving Russian exports less competitive. Depleted availability is raising questions about the accuracy of the estimated Russian wheat crop size.

• Cuts to EU export target

The slow EU-28 soft wheat export pace has led the European Commission to cut its estimate to 18 million tonnes, from the previous estimate of 20 million tonnes. Wheat exports up to 27^th January hit 9.2 million tonnes compared to 12.5 million tonnes at the same time last year.

• Extreme weather raises concerns

Both sides of the world have endured weather extremes recently and seen records broken. Australia had its hottest month on record in January with temperatures above 40 Celsius for several days. The average temperature across the country was above 30 Celsius and similar conditions are forecast to persist until April. On the other side of the world in the US Midwest temperatures were lower than at the North Pole with minus 41 Celsius in Minnesota. Grain elevators and processing plants halted operations temporarily. Such conditions would cause significant winterkill for planted crops and highlight the reasons why these are spring cropping areas, mostly maize and soybean.

BARLEY

• Barley market remains volatile

It has been a turbulent week for old crop malting barley, with prices dropping significantly during the week. The export market fall resulted in UK merchants buying back export cargoes to sell barley into the premium domestic market. However, the additional supply was not matched by demand and domestic prices also slumped under the weight of offers.

Feed barley has also had a difficult week, with the discount between feed wheat and feed barley now the biggest it has been since harvest. Despite this discount, barley still is relatively expensive compared with maize. Therefore it is unlikely feed barley will displace significant volumes of maize in rations unless it becomes more attractive through further price falls.

• Risk management key for barley growers

With plenty of uncertainty in the next year we can expect volatility in the barley market and pools will continue and to help manage the risk of marketing crops. Frontier's feed and malting barley pools are still open. Please contact your local farm trader for more information.

​OILSEED RAPE

• Progress in trade talks

We have had a week dominated by trade talks in Washington between the US and China. Early nervousness about the outcome has latterly seen more positive noises coming from both sides. President Trump posted on Twitter, "China's top trade negotiators are in the U.S. meeting with our representatives. Meetings are going well with good intent and spirit on both sides." He added, "China does not want an increase in Tariffs and feels they will do much better if they make a deal." US soybean markets have reacted positively to this news.

• Physical prices static

Elsewhere the market lacks any news on crop development or shifts in oilseeds inventories.UK physical prices look set to end the week at the same levels as Monday morning. In the meantime, traders continue to watch the value of sterling as Brexit negotiations enter a crucial period.

 PULSES

• Beans - an attractive crop

As the UK experiences its first blast of proper winter weather it's easy to forget that in a few weeks time the seed drills will be in the fields and the spring bean crop for harvest '19 will be under way. Although yields were generally disappointing last harvest, prices have been buoyant and we detect that farmers would like to plant more beans in the UK this spring. Their ability to do this will be limited by seed availability, although farm-saved supplies may go some way to solving this potential problem.

• £35/t premium contract for beans

The new crop market will remain difficult to read until we know the extent of the spring sowings. However, it is generally a good idea to sell forward on the back of a high priced spot market. Contracts with a £35/t premium over November wheat futures as a feed base are available from Frontier. Pool marketing is another option; both are worth discussing with your local Frontier farm trader.

 FERTILISER

• Urea market well covered

Urea markets have started to slide as producers struggle to find homes for product. European customers are well covered and, with the main usage period rapidly approaching, there is little scope for new shipments to these markets. As a consequence, the granular urea price has dropped to $280/t from some factories, and weakened in the UK too.

• Options for spring requirements

Changes in the urea market have stimulated the main ammonium nitrate manufacturers and importers to review pricing and competitive offers are available in many locations.

Supply of nitrogen sulphur grades remains tight but can still be found in most areas.

PK prices are being buffeted by currency and pre-Brexit nerves. Many blenders are reporting limited additional capacity for February. Prompt action is recommended to avoid delays to delivery.

For all nutrition products and advice growers are advised to contact their Frontier representative for details.

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