Market Report 24th July 2014

USDA expected to raise wheat / corn yields on improving harvest reports / ideal weather conditions  
Russian wheat prices continue to drift lower as harvest accelerates  / crop forecasts increase
Russia has harvested 20.5mln t of wheat a/o July 17th -  yields reported at 3.61t/hectare, up over 13% y/y 
Egypt’s GASC purchases 235,000t (120 Russian / 60 Romanian and 55 Ukrainian) for 1-10 September shipment – no French / US offered

French wheat harvest advancing slowly – increasing concerns about damage to crop quality – rising cash premiums for milling quality but feed levels falling   
Flood losses prompt a cut to Canada’s harvest hopes – AAFC trims overall production by 3.6mln t to 71.2mln t, down 21% y/y

BAGE forecasts Argentine farmers will plant 4.2mln hectares of wheat, down 100,000 hectares from previous estimate – the ministry estimate is  at 4.5mln 

 

The downing of MH17 last Thursday produced a ‘knee-jerk’ reaction as the tragic event pushed all commodity prices higher. However, by Friday’s close the markets had given back all the gains, portraying a picture that Thursday hadn’t happened, a fact that the families of almost 300 innocent victims will always remind us that it did indeed happen. The fall-out from MH17 is less clear, with the US already looking for the ‘smoking-gun’ before throwing the sanctions book at Russia, while the EU, although showing signs of a tougher stance towards Russia, is still aware of the various political, economic and energy ties between the EU and Moscow. Whether the current unrest between Russia and the Ukraine softens or escalates will have a major play in the price direction of all commodity markets, especially if grain export supplies are disrupted, or at worst, halted.

Turning back to the routine market fundamentals, the US markets have continued to weaken, pressured by harvest supplies, improving winter wheat yields and crop ratings which should support a rise in corn / soybean yield projections in the next USDA report.

US exports remain behind the USDA projection, both for old crop corn and new crop wheat, which during harvest should witness increased sales activity which currently is being lost to other origins

EU values had been unchanged on the week, before a sudden rise in futures today took values up about €3/t. Growing concerns over the quality of French wheat has traders looking to Germany in order to secure supplies. If the French do have a major quality issue, this again raises the debate as to whether is it bullish or bearish for MATIF futures. Export cash premiums have risen, leaving MATIF as no guarantee of export quality, and if you have export milling quality, why would one deliver to futures which is only feed wheat with a 76kg spec? Rainfall has swept across much of France, into Germany and then Poland, increasing quality fears in its wake.

UK prices are about £1/t lower on the week, as reports of early wheat being cut keeps prices on the defensive. Old crop premiums have all but disappeared, as market shorts become more relaxed that new crop supplies could fill old crop requirements. With the quality issues in mainland Europe, if the UK ends up with a ‘better-than-feed’ crop, prices could be supported as the UK may be able to tap into some export demand. However, if it is just average feed, the UK has a major problem, as the likelihood of increased ‘feed’ supplies in the EU, and the potential for cheaper corn prices could drive prices even lower.

In summary, EU quality remains a key factor and how this slots in with Black Sea supplies – more EU feed wheat, more Black Sea quality wheat and less Black Sea corn demand. Globally, grain supplies are not an issue, it is just a quality issue. Crops are getting bigger, and if the USDA does increase corn yield (some estimates are at 170bushel/acre) next month, market longs that are still left may be heading for the exit. One crumb of comfort is that markets can’t continue to fall, but even when you are at market / multi-year lows, trying to predict the actual bottom of the market is almost impossible.

                   

• The combines are slowly progressing into the winter oat crop with reports of decent yields and early bushel weights up to 53kg/hl.
• The millers with their carryover from the large 2013 crop are in no hurry to purchase further tonnages.
• The current low grain price is creating uncertainty on the farm as to which commodity the farmer will release in the August/September pressure period.
                   

• Human consumption markets remain weak with a lack of buying interest.
• Feed markets are also very lack lustre with no direct consumer interest.                   

Malting Barley
Crop’14

EU malting premiums are reducing but are still at good levels.

The UK winter barley harvest has seen above-average yields, good quality and low nitrogen.

The first spring barleys have been cut and although it is very early, good yields and low nitrogen have been seen.
Harvest demand will remain very limited due to pre-harvest cover from buyback contracts.

Open market malting quality barley may have to move to feed homes if movement is absolutely required .

The Oct/Dec position also has limited space and growers who want movement into a quality home should consider selling.

Crop’15

Talisman, the new top yielding winter malting barley is available on contract.

Talisman seed is limited so we would advise booking early to avoid disappointment.

SY Venture and Talisman will be the two main winter varieties in demand from maltsters.

Other winter varieties will have very limited demand and will all be available only on a buyback  contract.

We now have a limited contract for low nitrogen Odyssey with the benefit of a nitrogen fallback to 1.85.

We have various 2015 buyback contracts available including our popular malting pool which is non defaultable.

 

Feed Barley

Grain markets have dipped further since this time last week with feed barley values drifting further lower.

£100/t ex-farm has now been broken and with little to support feed grain markets this downward momentum may continue through harvest.

European barley harvests have progressed well with high yields across the Black Sea and mainland Europe; many analysis-groups, such as Strategie Grains, have recently increased their EU production estimates.

Export markets remain quiet with very few destinations available. European levels, including UK, remain expensive compared with the Black Sea for bigger shipments further afield.

The UK barley harvest is circa 40% complete and yields are looking good but with some variability.

                   

The harvest is progressing in the EU without any major problems. Large volumes of seed are trading out of the Black Sea regions but in Germany, France and the UK there is limited farmer selling.  The MATIF futures market has been very volatile with big daily swings and at these levels calling market direction becomes more difficult. It will now be interesting to see if we have more farmer selling as the wheat harvest begins.

 

In the UK we see little farmer selling and some merchants are cancelling export commitments as the anticipated heavy farmer selling hasn’t yet materialised. The market is quiet for harvest with little inter-merchant trade as the focus turns to harvest logistics.

                   

FERTILISER
 All the attention is now on harvest and a major concern is falling grain prices. The European fertiliser market has entered a period of uncertainty.

Urea
Those looking to buy forward have now probably done so and it is estimated that 50% of the total UK urea market has already been booked as farmers have taken advantage of the attractive offers that have been made available. Any buying interest has now stalled as international prices continue to fluctuate, an on-going tender in India and new business in the US and Brazil moving the market slightly higher over the last few days. Gas supply problems continue in North Africa and supply from that region will continue to be restricted during August/September and this will help to support prices in the short term. In the medium or longer term, prices may struggle to hang on to any gains.

SKW Alzon 46
A product used widely in Germany and a new approach being adopted by many now in the UK. The stabilised nitrogen fertiliser is environmentally friendly, involves less work and can be included in any fertiliser programme. So if you are planning your options for next year this is a product which should be given some consideration.

AN
A slow uptake in the UK to date on both imported and domestic ammonium nitrate. Business in Europe has also slowed down as any immediate demand has now been covered. Imported product is being sold for July/August movement as importers are being forced in to moving product rather than pay for store charges, most considering this to be the cheapest option in a market where the outlook is for the market to trade sideways at best. Producers at some stage will have to generate some buying interest but are sitting tight today.
SKW Piamon 33-S
A granular fertiliser unique to Gleadell in the UK, with 33N + 30SO3 analysis and guaranteed quality this product will suit most arable farm demands. The £ / € rate makes this an extremely competitively priced product when compared to other N + S granular fertilisers on the market. The October and November delivery period with a later payment makes for an even more attractive buy.

Phosphates
Typhoon Rammasun, which hit Southern China this week , has caused extensive damage to both port facilities and phosphate stock in portside stores -  some reports are suggesting losses could be up to 250,000 tonnes of product. There is already a supply squeeze as some buyers enter the market with some last-minute purchasing, so this disaster will only help to add fuel to a market that was already firm. DAP and TSP price ideas have firmed and the outlook remains firm for all producers for the foreseeable future. Gleadell has DAP to offer in both bulk and bags for August delivery so please contact your local Gleadell Farm Trader today to discuss both delivery and finance options. 

 


SEED

Lower seed values from recent weeks remain in force. However, as suppliers have to purchase more expensive as-grown seed we could see these prices rise once again due to demand. Now is a good time to cover your requirements in order to fix these lower values as well as to ensure timely delivery so that seed is on farm when needed.

OSR
With harvest underway Gleadell will soon be commencing oilseed rape deliveries. We can offer both the highest yielding hybrid and conventional varieties as well as Mesurol seed treatment on certain varieties, which may give some early protection against flea beetle.

Incentive, from breeder DSV, is the highest yielding hybrid on the 2014/15 Recommended List. It has performed very well in trials and has a strong all round package. High oil content, standing power and great disease resistance that can withstand pest attack are all qualities that have proved to be very popular with growers.  Gleadell’s key candidate variety is Campus, from KWS, which has performed well in early trails. Campus looks to have a strong all round package and excellent tolerance to verticillium wilt in Danish trials. 

Winter barley
KWS Glacier and KWS Tower are the leading two-row feed varieties in trials results so far and this has resulted in a high amount of interest from growers. KWS Tower has proved to be very consistent in trials over the past few years and has exceptionally large grain, helping with low screening results. KWS Glacier is better suited to heavy land and has a superb specific weight of 70.2 kg/hl.

For growers looking for a six-row feed variety, Volume has performed well in all regions – breeder Syngenta is again offering its cashback yield guarantee once again. New winter malting barley variety Talisman has seen a high level of interest as it progresses into its second year of testing for full IBD approval. Talisman is early to mature, has excellent lodging resistance and outstanding resistance to all diseases, particularly Rhynchosporium – it is the perfect choice for all regions.

Winter wheat
Evolution, the new group 4 hard from Limagrain, has shown very high yields in both fungicide-treated and untreated trials. Its disease profile is strong and offers good resistance to both brown and yellow rust as well as Septoria tritici.

Belepi is a new soft wheat variety that is very vigorous in the spring, out competing black grass and is also resistant to orange wheat blossom midge. Belepi will be marketed outside of the Recommended List; however its high yield and wide sowing window have made it very popular with growers.

Redigo Deter can help to control aphids which are likely to be high this year due to the mild autumn and winter last year. Jockey can help varieties that have a slight weakness on yellow rust as it will give some extra protection against early infections on foliar disease.

Winter bean stocks are once again expected to be low this year so we advise growers to cover their requirements in order to ensure availability.

 

                   
MARKET INDICATOR KEY: Upward market pressure Downward market pressure Neutral
£/€ £/$ €/$
1.2628 1.7018 1.3474
  Feed Barley  Feed Wheat
                   Beans Oilseed Rape
£ +/(-) £ +/(-) £ +/(-) £ +/(-)
July
14
98.00 -
108.00
Depending
on area
115.00 -
125.00
Depending
on area
220.00
- 225.00 -
230.00
Depending
on area

            

Nov
14
104.00 -
114.00
Depending
on area
118.00 -
128.00
Depending
on area
190.00
- 237.00 -
242.00
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.