Market Report 26th October 2014

BAGE reports Argentina’s 2014-15 wheat crop could top 10.1mln t -based on sowings of 4.1mln hectares.  
Russian Ag Ministry declares grain exports as of 15 Oct at 13.3mln t, up 33% year on year (11.1mln t of wheat). 
 
Russian Ag ministry states 2015/16 winter grain plantings complete on 16.1mln hectares – 98% of the intended area.  
Ukraine’s grain exports may hit a record 34.3mln t in 2014/15, including 11.7mln t of wheat.
Ukraine’s winter wheat sowing is 93% complete at 5.7mln hectares. 
Poor weather has damaged Ukrainian wheat quality – only 54% is milling wheat compared with 75% a year earlier.  
Strategie Grains forecasts EU 2015 wheat area stable, at just over 24mln hectares.
Egypt’s GASC purchased 180,000t of wheat for 21-30 November shipment (60,000t each from France, Russia and Romania).
US markets firm on harvest delay concerns and technical short covering.  
Informa reduces U.S. 2015 all-wheat planting estimate to 56.4mln acres, down from 57mln previously.

 

Another week of the same market shorts supporting the short-term with long-term bearish fundamentals still intact.  Harvest delays with U.S. corn and soybeans crops has encouraged some buying interest as analysts look at the potential of delays trimming harvested acreage and yields. US wheat still remains heavily priced, and no offers were made in the recent GASC tender, although it appears the US is willing to wait for the ‘long game’ to develop thinking that export demand will switch when other origins run short.

 

EU markets have firmed with MATIF up €11 on the week, not supported by the GASC tender, but on the technical delivery situation, although cash premiums remain very firm despite the recent rally. GASC ‘picked-off’ the distressed French offer in its tender, with additional French offers in line (fob basis) with Russia. More detailed harvest estimates are coming from the Black Sea, with the Russian wheat crop now seen by many to be over 60mln t (clean weight) and Ukraine projected by the ministry at 23.7mln t. Both these figures would allow additional exports. Although the drop in quality of the Ukrainian crop could add support to the milling sector, this just adds to the already burdensome coarse grain supply across the northern hemisphere.

 

The UK has also managed positive gains this week, trading about £2/t higher despite the recent surge in currency against the €. Spot ex-farm prices continue to firm as merchant shorts look to cover against the backdrop of growers’ reluctance to sell into the rally. At present the market does not feel like it is trading a 16.7mln t wheat crop, and the current illiquidity of supply along with the rise in sterling is seen as detrimental to the UK’s export potential, a factor that must kick in to allow the UK to limit the potential of an above-average carry-out.

 

In summary, the factors of farmer retention, widespread across the EU, and decent spot demand seem to have set the market lows for the time being. However, the longer-term bearish fundamentals would still point against a major price rally in wheat prices. The current market sentiment is sweeping everyone along with it, and it is extremely difficult to swim against the tide. However, at some stage the tide will turn and this rally may prove to be a major selling opportunity for the grower. 
The oat market has remained in a tight price range despite the recent rise in the wheat sector.
This implies that there is good cover within the oat industry and the missing ingredient to stimulate this market is a prolonged spell of cold weather.
The interest for feed oats has risen slightly due to the stronger wheat price, but sellers remain few and far between.
•All bean markets are very quiet. There is plenty of supply to North Africa ,as we have reported previously, with ships on route from the UK and France.

 

•Values for the best quality human consumption grades continue to look good against feed values and feed homes are still very difficult to find.

 

•The quality of material still on farms will start to deteriorate as moisture levels are too high to maintain colour and overall quality. It is therefore very important that top grade parcels are dried as soon as possible.
Malting Barley

Crop 2014

 

Merchant shorts have re-entered the market for small tonnages of Tipple/Propino in December. 
There is also demand for larger requirements in the Jan/March position into domestic homes. 
A lack of sellers in the export market is driving prices higher although domestic values remain capped by limited demand. 
 There is still good demand into export homes after Christmas for Tipple/Propino and some Quench with good premiums available. 
Poor crop conditions in key US and Canadian growing regions may prompt supply concerns although it is too early to tell.  

 

Crop 2015
 
Demand for new crop spring varieties is good into both domestic and export homes. 
 
As with the old crop export market, crop’15 is being supported by a lack of sellers. 

  

Malting prices on the continent for crop’15 are well supported with good premiums, traditionally those premiums are reduced once the crop is planted. 
Growers with winter varieties for crop’15 would be advised to market their grain on contract as open market homes are expected to be very limited.  

 

Gleadell still has a variety of winter, distilling and brewing contracts available for crop’15 to suit all risk profiles, including our non-defaultable pool. 
We have buyback options for the new potential spring malting variety KWS Irina. Please speak to your Gleadell farm trader for more information. 

 

Feed Barley

 

Feed barley is slightly firmer on increased export interest.
Feed barley demand pre-Christmas remains light. 
Domestic demand limited at the current parity to wheat.
The MATIF rapeseed futures market continues to trade within a range currently unable to break higher or lower. The European physical market remains a picture of plentiful supply but with farmer retention across the continent it is difficult to buy seed in volume. Crush margins are attractive, particularly in spot positions but price action tells us at present crushers are unwilling to drive prices higher. 
In the UK the market mirrors the continent, buying physical seed is difficult as we’re below farmer selling levels and a lack of liquidity poses a problem for all market participants.  The euro has risen against sterling this week, which has aided UK domestic prices.

Seed

 

For spring barley growers looking to take a step ahead in yield this yield, KWS Irina is a new variety on the 2014/15 Recommended List. As well as its outstanding yield and a solid disease package, Irina is a relatively short and stiff variety with low lodging scores. KWS Irina is currently in macro-malt trails in the UK and has been showing high malt extraction levels.

 

Supplies of spring wheat market leader Mulika are coming to an end. An alternative is KWS Willow, the top yielding spring wheat sown in the autumn that can be sown right through to mid-April. Willow has a good disease package, with very good resistance to mildew and yellow rust as well as excellent grain quality to ensure access to the premium markets. 

 

A limited tonnage of large blue Daytona pea seed has become available for those growers looking for an alternative spring break crop or to meet greening guidelines. Please contact your farm trader to ensure availability as this extra tonnage will sell out. 


Fert 


Urea

It has been a slow week for global urea markets. Prices have continued to correct, however this week has shown the smallest fall since values began to slip three weeks ago, suggesting that the floor is not far away. Small quantities have been booked at $350/t FOB Egypt this week, equating to roughly £285/t on farm. With supply constraints from major exporting origins no longer an issue, attentions turn to the demand outlook for the next shift in direction of the market. Currently demand across Europe remains low as distributors are unwilling to take stock with farmers not buying. Asking prices for prilled urea have moved above the $290/t FOB China with significant demand expected to come from India and Pakistan supporting these higher levels.

 

Alzon 46
Extensively used across Germany and an approach becoming more popular throughout the UK. This stabilised nitrogen fertiliser guarantees consistent high quality and with a large granule, averaging 3.5mm with a bulk density of 800kg/m3, Alzon is proven to spread accurately at widths of 32m. The nitrogen stabiliser is added during production so is completely incorporated with each individual granule. This allows earlier and higher application rates without the risk of nitrate loss or luxury uptake and reduced costs due to the fewer passes required. Developed for the Northern European climate the nitrification inhibitor creates a sustained release of nitrate for up to 15 weeks and should be strongly consider as part of any fertiliser programme. Gleadell can offer the product on an October to February basis.

 

Ammonium nitrate
Traditionally AN and urea markets have shared similar trends, but with increased demand from markets such as Brazil and the lack of new AN plants being developed, we are seeing a “de-coupling” of these markets as AN stocks tighten. In the UK, prices continue to firm with UK producers moving levels up a further £3/t this week and price increases indicated for November and December. Currently demand remains quiet, though with 40-50% of the UK nitrate market still to be done and the window for spring delivery tightening, it is felt that the market will begin to pick up over the forthcoming weeks.

 

Phosphate and potash
We are starting to see numerous large enquires for NPKs, indicating attentions are turning to spring requirements. Gleadell is offering spring grades on a range of delivery periods from now through until February and with finance available growers should strongly consider locking in at least some cover at these levels. To find out more about prices and delivery options contact your farm trader.
 

 

MARKET INDICATOR KEY: Upward market pressure Downward market pressure Neutral
£/€ £/$ €/$
1.2624 1.6013 1.2261
  Feed Barley  Feed Wheat
                   Beans Oilseed Rape
£ +/(-) £ +/(-) £ +/(-) £ +/(-)
Nov 14 100.00 -
107.00
Depending
on area
111.00 -
121.00
Depending
on area
170.00
- 241.00 -
246.00
Depending
on area
May 15 108.00 -
115.00
Depending
on area
119.00 -
129.00
Depending
on area
175.00
- 247.00 -
252.00
Depending
on area


Speak to your Gleadell contact to see how we can help you in challenging grain markets

 NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.

Gleadell Agriculture cannot accept liability arising from errors or omissions in this publication.

Gleadell trade under AIC contracts which incorporate the arbitration clause.

GRAIN PASSPORTS

Please do not use your old grain passports. Many consumers are rejecting any loads that turn up with the old passports so please contact your Gleadell farm trader if you need some new passports.

HGCA RISK ASSESSMENT TOOL

Please visit the HGCA online portal for calculating your risk assessment score to go onto grain passports for any premium grade wheat that you may be having collected. www.hgca.com/mycotoxins

Terms and Conditions of Purchase.

On every occasion, without exception, grain and pulses will be bought by incorporating by reference the terms & conditions of the AIC No.1 Grain and Peas or Beans contract applicable on the date of the transaction. Also, we will always, and without exception, buy oilseed rape and linseed by incorporating by reference the terms & conditions of the respective terms of the FOSFA 26A and the FOSFA 9A contracts applicable on the date of the transaction. It is a condition of all such transactions that the seller is deemed to know, accept and understand the terms and conditions of each of the above contracts.