International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 23 March 2017

Feed Wheat

Competitive prices into Algeria and Saudi, the lowest winter wheat area for over a century, declining crop ratings and funds extending their Chicago short position – a recipe for higher US prices?  No, Chicago is down $5/t on the week as it seems no-one wants to own it!  A shift in the weather models bringing additional rains into the winter wheat areas that should lessen drought concerns seems to have carried a wave of bearish sentiment along with it, although temperatures are still expected to remain above average.

EU markets have followed suit, with Matif old crop down €4/t and new crop (Dec17) taking out the previous contract low of €171 set back last September.  Hopes of additional exports had surfaced from the recent high level of Egyptian purchasing and the current tit-for-tat dispute between Russia and Turkey.  However, the Egyptian hope quickly faded when it was reported that the state buyer (GASC) had rejected 10 cargoes, which equates to roughly a month’s supply, and goes someway to explain the recent hike in purchase activity.  Regarding Turkey, earlier reports of banning Russian wheat were dismissed, although the wording was that ‘they may choose not to purchase Russian wheat’, adding the US, Germany, and Romania to their list of non-tariff free origins for imports.

The UK old crop market still shows little incentive to move lower, down only £1 on the week and on the back of a firmer currency, although new crop (Nov17 more influenced by the macros) is down just over £3/t.  Spot delivered premiums are if anything edging slightly higher, as signs of increased buying activity is met by proud sellers who seem at present reluctant to start discounting offers.

In summary, US wheat is competitive, although it remains unlikely there will be enough pick-up in export trade to dramatically alter the balance sheet.  With the recent buying sprees by Algeria and Saudi, these will all but take care of their old crop demand, leaving only Turkey and maybe Egypt, if they decide the recent drop in the market is worth pursuing.  UK market dynamics haven’t changed, with little incentive by sellers to discount offers on the back of weakness in the futures market, although the drop in value into new crop may encourage selling later in the season, as “not selling” old crop supplies is a non-option given the discount to new crop levels.

Malting Barley

Spring barley drilling in the UK is progressing, but some areas of heavier land are still too wet.  In the South, on average, spring barley drilling is approximately 30-40% complete, with some growers on lighter land reporting up to 75%, East Anglia 50-60%, Lincolnshire 50%, and Yorkshire 25%.  Some growers on lighter land may be complete by the end of next week if a period of settled weather transpires.

For any growers yet to arrange spring seed for the coming harvest, Gleadell has some exciting new malting barley varieties for trial and evaluation, including Chanson, a new spring brewing Null-lox variety, and LG Opera, a new dual-purpose variety which will be trialed for both the distilling and brewing markets.  Following positive cropping trials last harvest, Laureate, another dual-purpose variety, is currently being trialed by brewers and distillers and up for recommendation this May.  This is available for harvest 2017 and 2018.  Please speak to your Gleadell Farm Trader for more information.

Rapeseed

The South American soy crop could produce 13.5mln t more soy than last year, and there are many talking US production up an additional 2.5mln t.  Production away from the soy sector is expected to rise 10mln t year on year, and palm oil production is also in its cyclical uptrend, with production expected to jump 5mln t.

Clearly global oilseeds prices have rallied sharply over the last 18 months and prices are now comparatively high, but as we look forward, the outlook for global oilseed production looks set to rebound amidst an uncertain geo-political background.  Bird-flu cases appear to be expanding and Chinese consumption numbers continue to decline.

With the European crop now up and developing well, the market is starting to feel the pressure of the potential upturn in production, and August Matif contract has slipped some €4 on the week.  This decline has been added to the uptick in sterling, which has recovered by 1.25%, as the UK inflation rate stepped over the Bank of England 2% target this week for the first time since November 2013.  This added to the downtrend in prices with the UK falling £8 on the week.  The global picture currently looks a bearish one.  Comparatively high US soybean prices will encourage US farmers to plant.  Global stocks of all oilseeds look set to rebound, and unless there are weather issues, or a significant downturn in sterling, there is a real potential for prices to go down further from here.

Oats

The UK oat market remains tight, with on farm prices firmer as merchants look to take cover against existing sales.

The continuing favourable weather allows for parts of the UK to commence spring drilling.  However, in some parts, the ground remains too wet to be able to start.

Pulses

Old crop beans remain very quiet from both sellers and buyers.  As Ramadan approaches, it’s noticeable that there is increased demand from Egypt and possibly Sudan.  The only viable supply in volume is Australian.  This has caused UK values for so-called human consumption grade spring to increase, which in turn has hardened feed values.  The reality is, can shippers find enough good quality to meet contract specs?

New crop beans remain quiet.  Values against other protein sources looks high, causing buyers to sit out for the time being.

Old crop peas are still required, and pools are still open.

Seed

This week Gleadell launched their hybrid barley campaign for 2017.  Whilst winter barley area has been declining over the past three years, hybrid barley sales were up by 20,000 ha in 2016.  On the new 17/18 Recommended List, hybrid barley varieties outyield conventional two-row barleys, with Bazooka coming in at 5% above the highest yielding conventional on the list.  Their early maturity makes for excellent entry for OSR and for spreading workload.  Their disease resistance profile is solid, reducing risk, and it has also been shown that their competitiveness can help with blackgrass suppression.  Volume, the oldest of the hybrid varieties, remains available, however, its availability is now becoming limited as newer varieties with increased yield potential come forward.  Bazooka was new to the recommended list last year and proved to be extremely popular, and has already been heavily supported again this year.  A new variety for this year is Sunningdale, performing well in all regions, especially the north.  We would urge growers to cover their hybrid barley requirements in order to ensure their preferred variety is available, as supply will not meet demand on the most popular varieties.

Looking towards this autumn and oilseed rape options, the photo below highlights the massive benefits of drilling hybrids when going late.  These plots were drilled 28th September to see the effects of late drilled OSR to get around flea beetle damage.  The plot on the left was a conventional variety and on the right a Hybrid.

Three high yielding hybrid options for this autumn are Windozz, Aquila and DK Exalte.  Windozz from breeder RAGT, is proven to be very consistent and has solid disease scores.  Aquila from Limagrain, is slightly later to mature than Windozz, which makes it a good partner variety in order to spread the harvest workload.  Aquila is also very high yielding, exceptional for disease, including an 8 for stem canker, and very good pod shatter resistance.  Although DK Exalte narrowly missed out on making the recommended list this year, it proved to be very popular as its on farm performance was better than that of trials, perhaps due to its disease resistance profile and growth type.  Another variety to keep an eye on is Sparrow, the new hybrid candidate variety from breeder DSV.  Sparrow is one of the highest gross output varieties on the list with excellent oil content and good disease scores.

Fertiliser

Ammonium Nitrate

CF Fertilisers continues to respond to any market changes, making clear its intention to recover market position.

Last week we saw the CF price correction welcomed by all.  Importers of AN have been forced to react and have reduced prices in line for March and April movement.

Volatility can buck upward as well as downward forecast trends, and the positive sentiment seen in global markets six weeks ago, has now weakened. Prices could now swing either way – much now depends on the demand level that surfaces.

Urea

The urea market continues to remain quiet.  No new deals have been concluded in Egypt with a wait-and-see approach being taken from traders globally.

Prices have drifted lower over the past six weeks but, to encourage buying, a significantly lower offer from manufacturers would be needed to restart a market.

Egyptian producers are at 80-90% capacity, so as stocks build, manufacturers may be forced to lower their levels.

In the UK, urea stocks are lower than normal for this time of year, and traders’ minds are now refocused on balancing pricing and currency against forward thoughts of where a market may start for the next campaign.

ENhancePro

One of the leading foliar sprays in the UK for ENhancing proteins in Milling Wheat.

ENhancePro terms are now available from your Gleadell Farm Trader.  Don’t let your crop fail at the last hurdle.  ENhancePro is a concentrated foliar spray available for delivery in bulk and IBC’s.

£/€ £/$ €/$
1.159 1.2495 1.078
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
May17 117.00-127.00 144.00-153.00 162.00 344.00-349.00
Nov17 109.00-119.00 128.00-138.00 155.00 311.00-316.00
NB: Prices listed may vary depending on area.

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

“Although Gleadell take steps to ensure the validity of all information contained within the Gleadell Market Report , it makes no warranty as to the accuracy or completeness of such information. Gleadell will have no liability or responsibility for the information or any action or failure to act based upon such information.”

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

Gleadell trade under AIC contracts which incorporate the arbitration clause.

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.

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Company Number: 534118