Market Report 25th September 2014

Agriculture and Agr-Food Canada estimates Canadian all-wheat production for 2014 at 27.71mln t, in line with current projections.
Russian grain exports reported at 9.9mln t a/o Sept 17, up 26% including 8.6mln t of wheat, 1mln t of barley. 
 Russian harvests 90.8mln t of grain a/o Sept 22, off 75% of total intended area – wheat 54.8mln t bunker weight.
Ukraine’s grain exports reported at 7.4mln t a/o Sept 19, including 4.3m t of wheat, 2.6mln t of barley.  
Ukraine harvests 39.6mln t of grain a/o Sept 22, up 15% y/y – total harvest seen at 63mln t. 
Ukraine’s grain stocks reported at 23.4mln t a/o Sept1 – up 15% y/y. 
Strategie Grains raises EU-28 2014/15 soft wheat production to 146.6mln t, up 2.5mln t from last month and 10.1mln t y/y.
Strategie Grains raises EU-28 corn production to 71.3mln t, up 3.1mln t from last month, and 7.1mln t y/y. 
Argentine Ag ministry project sharp drop in 2014/15 corn plantings – expected area to fall to 5.6mln hectares (down 8%).
Frosts hurts immature northern US corn, soybean crops more than initial estimates.
Egypt’s GASC purchases 55,000t of US SRW wheat for October 20-31 shipment. 

 

Another week of markets retesting both contract and multi-year lows, as dry weather is seen speeding up US corn and soybean harvests. The move to a new low in Chicago has seen some short-covering enter the market prior to the US quarterly stock report due to be released next Tuesday. The sale to Egypt of 55,000t was, like the French sale the week before, a ‘bargain offer’ as the price was below replacement. US prices still remain at a hefty premium over other origins on the export markets.

 

EU prices (futures) have continued to fall as the MATIF falls to what is, or might be, feed wheat! Reports that 17mln t of this year’s French soft wheat crop is third grade (4.3mln t last year), and that only 46% of the crop has Hagberg numbers over 220 (99% last year) shows the quality issue facing the French this season. Export silos are full, and EU exports licences, although running in line with last year’s record pace, are mainly confined to German and Eastern EU origins.

No real change in the UK market this week with buyers, when you can find them, purely concentrating on nearby requirements. The Scottish no-vote saw the expected rise in sterling, a move that is deemed negative to UK wheat values

In summary, every-one is looking for the floor to this market! The world does not have an overall supply issue regarding wheat, but may have a serious quality issue later in the campaign. The recent rise in Black Sea values has resulted in Russia losing its competitive edge in global export markets, as German and Baltic wheat moves into prime position, but ones asks the question for how long? Russian intervention is due to commence next week, with talk of 5mln t being ‘purchased’. Russia will have to export more wheat, but at current prices buyers will shop elsewhere, therefore, further price reductions are needed to encourage buyers. This could be the next catalyst for lower global prices.

 

The main feature is the lack of demand pre January for milling and feed oats which just happens to coincide with a lack of farm offers.


A considerable unravelling of supply will therefore come to fruition in 2015 which would be helped by a cold snap in November to fill the supermarket shelves.

 

The low prices of feed wheat and barley have curtailed oat demand in the compound mills where once again lower temperatures would encourage usage on the farm.
• Buying interested in human consumption beans has moved forward to November/December. UK beans are being loaded in Immingham and other UK ports this week and next week, hence consumers are fairly relaxed with regard to fresh purchasing.
• Feed remains difficult to sell with limited buying interest.
• Green peas are at last attracting some interest from the micronising sector, with values reflecting that at £220-240/t ex farm, depending on colour.
• Marrowfat types are in demand and should command a healthy premium over the large blue sector.
Malting barley 

 

Crop 2014
Malting values have traded slightly weaker this week in line with wider grain markets. 
Pre-Christmas homes remain limited as Maltster demand is absent from the market with merchant shorts being the main homes to fill.
Export demand for UK malting is limited for the Oct/Dec period - demand remains good for Jan-June. 

 

Crop 2015
 We have seen good demand for crop’15 contracts especially in the harvest and Oct-Dec   positions. 
Due to the three-crop rule, blackgrass control and unattractive sugar beet prices, we expect demand for spring barley contracts to be high.
We continue to see good support for Pre-harvest buyback contracts. 
Gleadell still has a variety of winter, distilling and brewing contracts available for crop’15 to suit all risk profiles. 

 

Feed barley
Feed barley prices have been trading at a premium to feed wheat in some areas of the country, supported by current export positions. Prices are more attractive closer to the ports as exporters look to supply old export sales. 
There is little fresh demand for feed barley exports and UK export prices are struggling to remain price competitive against other origins.
Domestic demand is limited pre-Christmas due to the narrow discount to wheat that feed barley is currently trading at. 
Throughout the week soybeans and canola have continued to weaken on early reports of good yields.

In Europe and the UK we have seen limited activity in the physical market. However,  the MATIF rapeseed contract broke out of its recent trading range helped by news of a fire at a European crushing plant. It dropped €10/t early in the week before regaining those losses towards the end of it. Some farmer selling has been seen following the move lower.

Sterling has rallied significantly against the Euro over the week weakening UK physical values.

 

SEED
Now that we have reached the main drilling window for winter cereal seed we have started to see growers looking for top-up orders.
For growers who have decided to delay drilling until October Belepi should be the variety of choice. Belepi has a very wide sowing window (October through to early April) and is very vigorous in the spring, outcompeting blackgrass. With a yield equivalent to leading Group 3 and 4 wheats it is ideal for drilling following root crops and maize.

KWS Glacier winter barley seed has now sold out, but  KWS Tower remains available. It is the joint top two-row variety for yield so remains a quality alternative.
The top two malting varieties SY Venture and Talisman also remain available for growers.

Winter bean seed continues to be extremely tight. We would urge growers to cover their requirements urgently.

Looking forward to the spring, Gleadell will be able to offer both Mulika and KWS Willow, both high performing spring wheats. Mulika is now the market leader and combines a very high yield potential with superb grain quality. KWS Willow has a wide sowing window and good disease resistance, including resistance to mildew and yellow rust.


FERTILISER
Urea
A more subdued week after last week’s Indian tender saw signs of cracks starting to develop with lower offers being submitted. This could mean we have seen the ceiling; the market has reacted and traded down by over $10/t. Low grain prices continue to be an issue in most major markets including Brazil, Europe and the US, and Chinese producers have lowered their urea values to encourage buyers back to the market. Going forward a correction in the market is now a possibility as talk of gas supply issues in Egypt start to ease and producers at last may see an opportunity to step up production.

Alzon ® 46
A product used widely in Germany and a new approach being adopted in the UK. This stabilised nitrogen fertiliser is a large granule, averaging 3.5mm with a bulk density of 800kg/m3. A nitrification inhibitor is added during the manufacturing process so is completely incorporated within each individual granule. The use of this is environmentally friendly product involves less work and it can be included in any fertiliser programme.  Gleadell can offer Alzon on a November and December basis.  If you are starting to plan your options for next year this is a product well worth considering. With urea and ammonium nitrate prices firming, Alzon is currently a very cost-effective alternative.

AN
UK producers moved to October terms this week, up a further £5/t from September. Imported AN prices have also firmed. Globally, the AN market continues to firm after a $30/t increase was seen in the ammonia market this week.

There are still significant AN tonnages to be sold in the UK with the market potentially 20% back on deliveries when compared to last year. This means an ever-increasing likelihood that a huge bottleneck will develop. Taking product now and financing it will be a cheaper option in the longer term than waiting to purchase at a later date.

P&K
Blenders have again released new price lists this week for NPK and PK blends specifically.  Nitrogen prices are up and phosphate stocks, which were previously sold at below replacement, have now disappeared forcing blenders to re-evaluate their prices. NPKs are available through Gleadell for October-December delivery. Please contact your Gleadell Farm Trader for more information.

 

 

MARKET INDICATOR KEY: Upward market pressure Downward market pressure Neutral
£/€ £/$ €/$
1.2809 1.6298 1.2720
  Feed Barley  Feed Wheat
                   Beans Oilseed Rape
£ +/(-) £ +/(-) £ +/(-) £ +/(-)
Nov
14
95.00 -
111.00
Depending
on area
99.00 -
111.00
Depending
on area
172.00
- 231.00 -
236.00
Depending
on area
May
15
101.00 -
106.00
Depending
on area
105.00 -
117.00
Depending
on area
177.00
- 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.