International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 11 January 2018

Feed Wheat

The US market is about $1/t weaker on the week. USDA is expected to lower US exports and raise stocks in this week’s report, due to the ongoing slowness of exports. That, combined with large global supplies, continues to pressure markets. However, some concerns over dry conditions in the US Southern Plains, and the likelihood that US winter wheat plantings will show another yearly decline, is seen as offering some support, especially with the hefty short position still held by the fund managers.

European prices are marginally higher on the week, mainly due to a weaker euro. Exports remain slow, down 20% y/y as of Jan 2nd.  With Egypt continuing to secure cheap offers of Russian wheat and Argentinian wheat priced $20/tonne below French into Algeria, time is gradually running out for exports to dramatically increase. France’s farm office yesterday lowered its forecast for non-EU soft wheat exports for the third consecutive month, to 9.3mln t, but with only 2.76mln t shipped as of end November, where they think over 1mln t per month is going is anyone’s guess!

The UK market has finally got up to speed after the festive break, although dynamics seem little changed. Despite thoughts that the market may take a breather with the prolonged shutdown of one of the UK’s ethanol plants, end user and merchant shorts still show good demand for spot wheat, albeit indicating their reluctance to ‘chase the market higher’ or pay any market carry for deferred months. The balance sheet would still point to adequate supplies for the season, which would argue that current ex-farm prices remain attractive levels for growers to extend their selling activity.

In summary, the USDA will report, again, burdensome supplies of wheat, although some degree of adjustment on various countries’ export numbers is required. The extreme cold snap in the US has abated, although new crop dryness concerns are growing, and there is the potential of risk of winter kill, due to the crop’s vulnerability in parts of the EU and Black Sea if the weather turned more seasonal. This leaves the market open to short-covering, especially if the US planting report generates further surprises.

Malting Barley

The 17/18 market remains supported by the number of buyers and the low availability of quality barley left on farm.

Domestic consumers and traders are struggling to find fresh supplies of quality barley from the UK harvest, whilst seeing increasing problems with high moisture and the subsequent effects on germination.

Prices for the 18/19 crop are little changed on the week. Trade is thin and buyers are relaxed on more positive 18/19 supply and demand projections.

Gleadell has contracts available for a range of malting barley varieties, including the newer spring varieties Laureate, Diablo and Chanson. Contact your local Gleadell farm trader for more information.

Rapeseed

The US soybeans market hit contract lows this week ahead of USDA’s supply and demand updates tomorrow evening. There are beneficial rains forecast throughout Argentina, which should help, but with some areas only receiving 40% of their normal rainfall through the last two months of last year, there remains a very real threat if these rains do not arrive. Despite this threat to the new crop, farmers in South America are sitting on record stocks. Even if we do see some declines in potential this year, we are going to need to see a crop disaster for the currently neutral to bearish market outlook to really change.

In Europe, crop conditions remain favourable and in the east plantings have expanded again. The Ukraine’s winter sowings have jumped, and some pundits are putting the crop in excess of 1mlnt next year. Given the potentially burdensome carryout in the EU this year, there is a real threat that imports from the Ukraine could undermine prices in Europe next harvest.

The UK also continues to struggle with its old crop balance sheet. On paper there is too much rapeseed left in the UK this campaign. Imports in the autumn and a better crop in 2018 have left us with a heavy supply situation – we remain a long way from export parity. Without support from a weaker £ or a major crop problem, it is currently difficult to see what is going to support our domestic rapeseed prices.

Seed

Planet and Concerto have both followed on from Laureate in becoming sold out this week. We have seen a high number of spring barley enquiries recently, which has put pressure on available varieties. We would advise growers to cover their requirements as soon as possible, as well as ensuring seed rates are correct to avoid disappointment if top-ups are needed after varieties have sold out.

Spring wheats are much the same story in respect of availability. KWS Cochise and KWS Chilham are both sold out, and Mulika is now getting very tight.

Spring beans remain available; however, Lynx is becoming increasingly limited.

For spring oilseed rape growers, we have Lumen and Dodger available. Lumen, from breeder DSV, is the top-performing variety on the AHDB’s Descriptive List 2018/19 and features the highest gross output at 105%. Dodger from Bayer offers high yield and high oil content and its vigorous growth aids establishment.

The maize market is now starting to wake up. Gleadell has a solid portfolio of varieties to cover both forage and AD needs. Please get in touch to discuss individual variety advice for your area.

Fertiliser

Nitrogen

Markets have remained firm this week. Urea producers have started to sell February stocks and Egyptian origin urea sold this week at $266/t FOB, up slightly on January prices. Exports from China, typically one of the largest shippers of urea, are dropping dramatically as production cuts and rising domestic prices continue. Ensuing supply problems will help support markets in the first quarter of 2018, as seasonal demand increases. Gleadell’s vessel of Egyptian origin urea is now on the water with an expected arrival in just over a week. For any buyers of bulk or bagged product, there is still a small tonnage available for delivery January/early February.

Ammonium nitrate prices are unchanged on the week. CF has kept open its offer for January-delivered Nitram, offering a discount over its February terms. Where available, imported products continue to sell at a small discount to UK product. However, with a firm European market, imports remain limited.

Nitrogen markets look set to remain firm into the spring, so now is an excellent time to look at any further UAN requirements. Gleadell has terms available for spring tank fill, and on a cost-per-unit basis, levels are attractive against other nitrogen sources.

NPK

Demand will start to pick up as we head towards spring and will come as a welcome relief to blenders, who have been under pressure to push tonnes into a quiet market. January terms offer the best value currently, with February and March terms indicating a £5/t per month increase. Whether these increases hold will all depend on when the majority of spring demand surfaces. Gleadell’s Alternative Fertilisers are now available for spring delivery and offer exceptional value over bagged product. The range of ash products are perfect for spreading prior to spring cropping or onto grassland and contain a range of secondary and trace elements required by the crop.

£/€ £/$ €/$
1.127 1.3465 1.194
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
Jan18 121.00-131.00 132.00-145.00 149.00 301.00-306.00
May18 125.00-135.00 136.00-148.00 153.00 305.00-310.00
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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Lindsey House, Hemswell Cliff,
Gainsborough, Lincolnshire DN21 5TH.

Company Number: 534118