Market Report 30th October 2014

USDA reports initial winter wheat crop ratings as 59% good/excellent, compared with 61% a year earlier.   
Market researcher SovEcon reports grain exports to end October at 15.15mln t, up 31% y/y (12.3mln t of wheat compared with 7.46mln t).  
Ukraine’s grain exports rise 31% so far y/y to 11.2mln t – includes 6.3mln t wheat / 3.2mln t barley / 1.6mln t corn. 
 

Ukraine harvests 54.8mln t of grain from 90% of planted area – Ag Ministry projects crop of 64.4mln t (63mln t in 2013).

Crop bureau FranceAgriMer puts French winter wheat plantings at 55% complete (51% a year earlier). 
British wheat heads to US for first time in over 2 years.
US markets continue to firm on harvest delay concerns / technical fund short covering and a shortage of transport.  
Australian wheat production seen 5% below official estimates – most analysts at between 22-23mln t.
 
SovEcon reports Russia’s 2015 wheat harvest ‘may fall 15-20%’ due to poor crop conditions. 

 

Global markets have continued to consolidate over the past week supported by US fund buying. Fund long-accumulation has been the main driver behind the current counter-seasonal rally as they rotate managed money out of energies and equities, and some have increased their exposure in commodities. Fund activity, whether initiating or liquidating a position, has skewed price direction relative to market fundamentals in the past, and the current activity is no exception. Although the US corn and soybeans harvests are well over 50% complete, harvest delays and concerns over South American plantings continue to support prices. US wheat prices remains at a heavy premium over other origins, and the recent strength in the US$ is seen as negative to export potential, already described as ‘routine trade’ at best. 

 

Initial crop ratings for the US 2015 winter wheat crop shows the crop at 59% good/excellent condition, much in line with last year’s 61%. Winter grain sowings in the Black Sea are nearing completion with higher acreage reported for both Russia and the Ukraine, although concerns are already being touted about the condition of the Russian wheat crop.

 

EU wheat exports remain ahead of last season’s record pace, although this is unsustainable. The recent purchase by Egypt ‘picked-off’ a cheap French offer, with others in line with Russian supplies. There are more than adequate wheat supplies across Europe, in particular in France where storage space at the ports is full, causing delivery issues for the futures market. Black Sea exports are running well ahead of last season, and with a third of the season almost completed, both Russian and Ukrainian wheat exports are at the halfway point of the current USDA projection.

 

The UK market continues to be demand-driven, with good spot demand supporting farm gate levels. The recent rally has not encouraged end-users to extend coverage, and farmers are unlikely to chase prices to lower levels. This leaves the likelihood that the current supply squeeze could continue into the second half of the season. Although the UK is expected to return to its net exporter status, the recent rally in price will have seen the UK lose some of its export competitiveness. With over 3mln t still to be exported, that  increases the potential of the UK 2014/15 carry-out being well above the norm. 

 

In summary, the current market fundamentals have been overshadowed by the recent rally and do not support the current price movement, meaning that some degree of price retracing in the coming weeks is likely.
The market remains in a tight price range and has not followed the wheat price rise.

 

This implies that the oat millers have comfortable stock levels and are relaxed in the short term.

 

This continued warm weather is not providing the necessary kickstart for the traditional seasonal off-take for porridge sales. 
•Feed beans have followed the increases seen in soybeans and wheat. 

 

•The human consumption market is very quiet and very much unchanged from last week. Plenty of supply from the UK and France has kept buyers out of the market.

 

•We intend loading another shipment to Egypt w/c 10th November and another during December, drying space will be available late November if required.

 

•New crop 2015-16 has been active based on premiums over LIFFE as feed plus premiums for human grade.
Malting barley

Crop 2014

 

Malting barley prices have gone up over the past seven  days, due to the increase in wheat values and third country export business.
Traders have been short in the Jan-June period and have covered these positions where they can. 
The Oct-Dec market, which has been covered for some time, has not seen the same rise as the post-Christmas period. 

 

Crop 2015

 

New crop malting prices have also gained support. 
Malting prices on the Continent for crop’15 are well underpinned, with good premiums.
There are attractive malting contracts available for crop’15, with Oct-Dec contracts likely to see high demand as harvest contracts are covered. 
Gleadell still has a variety of winter, distilling and brewing contracts available for crop’15 to suit all risk profiles. This includes the non-defaultable pool. 

 


Feed barley

 

Feed barley prices have followed feed wheat prices firmer over the past week. 
Domestic feed homes are well covered pre-Christmas and export demand remains limited from both EU and non-EU countries.  
Domestically, the most competitive prices for feed barley are into the ports.
The US soybean market has rallied, led by strong meal demand but also by some dryness in Brazil and some technical buying. The price has risen over $1 per bushel from harvest lows, although given the size of the US soybean crop it is hard to envisage this upturn lasting.
The MATIF rapeseed contract has followed soybeans upwards, breaking out of its three-month trading range. In the EU we have seen only limited farmer selling recently, but now we are approaching target levels. In our opinion the market has seen the modest gains we were looking for and upside from here is likely to be reasonably limited.  With ex-farm prices about £40/t above harvest lows, we see this as a good opportunity to start putting some sales on the books.

Seed  

With many growers now starting to plan ahead for spring drillings, along with new greening rule measures, spring seed has already been in high demand with certain varieties expected to sell out. Spring wheat variety Mulika is becoming increasingly short and is expected to sell out very shortly so we would urge growers to cover their requirements to avoid disappointment. As quality, high yielding alternatives, Belepi and KWS Willow remain available. 

 

There is still a small tonnage of Daytona pea seed in stock. However, please contact your farm trader to ensure availability as this limited extra tonnage will sell out. 
As Null-Lox contracts are now complete for the forthcoming season, Gleadell can offer KWS Irina, Propino and Concerto. KWS Irina is top of the 2014/15 Recommended List and is currently in macro-malt trails in the UK. 

 

Fert

 

Urea
Last week we saw some life return to the urea market as European demand increased and the latest Indian tender was announced. Egyptian prices had continued to slide until a surprise sale at levels $13/t above previous trades created some confusion in the market. A further sale is now needed to give the market clearer direction on forward pricing, so everyone remains cautious.  Prilled urea has remained firm, with significant demand expected to come from India and Pakistan. This could support even 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, 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.

 

AN
GrowHow’s November terms implement a further £3/t increase and, with a mid-month increase to come, UK AN prices are set to continue to rise.  Europe has seen similar increases with Yara’s 33.5% product increasing by €8/t in October on the back of firm ammonia costs.  Imported products follow the trend seen across the UK and Europe with sharp prices rises, supported by tight supply. Current indications show no signs of a fall in AN prices and those waiting for a correction may be disappointed. 

 

Phosphate
It is likely that we have seen the ceiling in the phosphate market. Prices have come under pressure with European buyers sitting back, anticipating that DAP and TSP prices will correct in the coming weeks. In the UK, many blenders have refrained from re-entering the market for large volumes, buying top-up tonnage to continue supplying a quiet market. However, some large farm enquires are beginning to come forward indicating growers are starting to consider spring requirements. 


MARKET INDICATOR KEY: Upward market pressure Downward market pressure Neutral
£/€ £/$ €/$
1.2701 1.5991 1.2586
  Feed Barley  Feed Wheat
                   Beans Oilseed Rape
£ +/(-) £ +/(-) £ +/(-) £ +/(-)
Nov 14 104.00 -
114.00
Depending
on area
116.00 -
126.00
Depending
on area
170.00
- 251.00 -
256.00
Depending
on area
May 15 112.00 -
122.00
Depending
on area
124.00 -
134.00
Depending
on area
175.00
- 257.00 -
262.00
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.