Market Report 11th February 2016
- Feed Wheat
- US markets are down 19c/bushel over the week ($7/tonne) although they have bounced mildly in recent sessions as the market moved into oversold territory. A weaker US$ was also supportive, although prospects for US wheat markets still look gloomy. US exports, running 12% down year-on-year, left the USDA no choice but to lower its projection by 25mln bushels, to the lowest seasonal figure since 1971/2. With the US still heavily overpriced, and export competition extremely fierce, don’t be surprised to see further cuts to this figure, sending US ending stocks higher.
- EU MATIF prices are down €4 on the week, although the firmer exchange rate means no change in US$ terms. A sizeable shipment program in Rouen has allowed spot cash premiums to firm, but forward positions remained pressured by the Tunisian sale, sold well below replacement value.
- UK prices, also lower during the week (down £2.80/t) are being mildly supported by a weaker currency and good spot demand, especially from shippers. Although delivered prices have fallen, cash premiums have risen as a supply squeeze forces buyers’ hands in covering both domestic and export requirements. However, like the EU markets, the need to keep the UK competitive in the face of increased competition will keep forward prices on the defensive.
- Since the turn of the year, UK futures have fallen almost £15/t, and the rise in the MATIF yesterday stopped a run of 10 successive down days. However, the fundamentals remain intact – too much supply chasing too little demand. With waning export interest and no apparent weather problem relating to new crop, it may take a major political, economic or currency-related event to turn the market around.
- Milling Wheat
- UK milling wheat demand remains with millers and flour customers largely out of the market in the nearby positions. Trade shorts have offered some opportunities over the past few weeks, however demand is so low that premiums have remained suppressed. Premiums over feed have traded to historically low levels across most areas, with ample supplies of domestic full-spec milling wheat continually coming to the market. However, premium spreads between the South and the North West have widened recently, with feed wheat prices comparatively firmer in the South.
- Low protein milling wheat markets continue to look good value in comparison with full spec markets, with the spread narrowing to £2-3/t. However, on an export basis the UK continues to look uncompetitive for additional Algeria and Tunisia business – with recent tenders confirming this.
- Malting & Feed Barley
- The USDA increased its estimate of global barley production by 300,000t and left demand unchanged.
- The UK was not competitive in this week’s Tunisian tender and therefore UK barley values will have to fall before we are able to secure business to third country destinations. As a result prices into the ports have come under pressure this week.
- The current narrow discount to wheat in most parts of the country means that many consumers still feel that barley is too expensive to significantly increase the usage in their feed rations.
- Malting barley usage by UK consumers between harvest and December 2015 fell by over 5% compared to the previous year. Reports suggest the UK, on average, drank over 100 million fewer pints in 2015 than 2014.
- UK maltsters are well covered for the rest of the season and demand for next season remains limited due to good supplies from last harvest. The main focus is now on the weather pre- and post-harvest 2016. Prices have continued to drift on the lack of fresh fundamental news and currency is the only factor currently having any impact.
- The Chinese beer market has not escaped the impact of slowing economic growth, and domestic brewers are being hard hit by falling demand. However, global malting barley supply is tight as a result of last year’s variable harvests in the southern hemisphere, notably Australia.
- US soybeans have been steady on the week following Tuesday’s USDA report, which left an unchanged picture of an ample supply of soybeans. We are seeing soybean meal weaken with bean oil firming.
- MATIF rapeseed futures continue to drift lower as weak margins and large imports weigh on prices.
- The UK market is seeing a lack of farmer selling as old and new crop drift slightly below target levels; equally crushers aren’t chasing seed. However, export opportunities remain for old and new crop as a lack of farmer selling in certain parts of Europe is tightening supply in some areas. The strength of the euro against the pound continues to support UK prices and we feel there is further upside potential in exchange rates.
- Spot demand continues for the remaining winter oat parcels.
- Spring oat prices are lagging behind but they are now harder to source.
- Many farmers are considering planting spring oats but clear intentions have yet to evolve.
- Human consumption values have fallen slightly despite sterling weakening against the dollar over the past week, as demand starts to drop off. Many of the merchant shorts that have supported the market over the past few weeks appear to be getting covered and feed values have started to pull back on the back of reduced demand.
- Demand for large blue peas remains strong for both feed, micronizing and human consumption quality material.
- Spring barley has continued to be a popular choice for growers; RGT Planet and KWS Irina have gained interest due to their yield potential. A small amount of Propino remains available but is sure to sell out due to its familiarity with growers on farm.
- Spring wheat varieties, including Mulika, are starting to become short so we would advise growers to cover their requirements if they want the opportunity to reach the premium markets. KWS Alderon remains available for growers looking for a high yielding Group 4 feed wheat.
- Large blue pea varieties Daytona and Campus remain available.
- There has also been in interest in maize for biogas this week, please enquire for variety choices.
- Gleadell’s early order rebooking campaign has continued with hybrid oilseed rape variety Windozz and conventional variety Campus. Windozz is the highest yielding hybrid variety on the new E&W Recommended List with a high seed yield and solid oil content making an excellent gross output. Campus was well supported by growers last year and is sure to be so again this year. Campus has a solid disease resistance profile and has performed excellently in sites with known Verticillium wilt.
- A gas pipeline explosion has effected supply to 3 Egyptian Urea producers.
- Across Europe demand has improved and is forecast to continue in the coming weeks.
- While some have delayed ordering , delivery is now becoming an issue as a number of importers have moved on to March or even later deliveries.
- At 47p/kg urea provides exceptional value for money compared to other N sources and as a first dressing will fit most fertiliser systems.
- Gleadell have a high quality Egyptian Urea available for February delivery.
- In the UK, the AN market remains unchanged as CF continue to be dominant.
- The premium is minimal between the superior UK product and imported AN, leading to many now taking the decision to switch.
- CF also offer a number of services aimed at improving efficiency and farm profitability such as N-Min testing.
- To find out more or book this service, please speak to your Gleadell Farm Trader.
- CF’s granular compound range offers a grade to suit most fertiliser programmes.
- There are a number of benefits of using a compound over a blend including spreading to widths of 36m.
- One granule contains all nutrients so this guarantees a greater number of landing sites and an even distribution of nutrients.
- This is particularly important for Phosphate that is relatively immobile in the soil and the number of P landing sites is important to improved spring yield.
- Priced competitively to blends this year gives many the opportunity to return to using compounds and experience the obvious benefits for the first time.
|Feed Barley £||Feed Wheat £||Beans £||Oilseed Rape £|