Market Report 26th March 2015
- Feed Wheat
US markets have traded higher over the past week supported by weather concerns in the US and southern parts of Russia ,and a weaker US$. A return to drier weather in the US plains earlier in the week drew some short-covering, spurred by reports that showed drought expansion in key growing states. US wheat prices are starting to add risk premiums although actual prices have retreated with rain now forecast =for the US plains. To confound the problem, this may cause corn prices to rise as it slows US plantings.
EU prices are slightly weaker on the week internally, but up $6/t due to the recovery against the dollar. Although EU soft wheat exports slowed last week, they still achieved an impressive 780,000t, bringing the year-to-date figure to 23.7mln t, against 21.9mln t a year earlier. EU crop agency MARS reports that Ukrainian and Southern Russian winter grains may have suffered winter damage, although Russian officials placed winter-kill losses lower than previously reported. In addition, the Ukrainian government says it may raise its cap of 1.2mln t on shipments of milling wheat through June after favourable growing conditions for this year’s winter crop, and that the decision on export limits would be revisited in late April, early May.
The UK market remains one of good spot demand but limited farmer selling – this is getting monotonous! LIFFE prices, up £1/t on the week, are actually $5/t higher as sterling has firmed against the dollar. Export interest in the deferred positions is non-existent. In addition, animal feed demand should decline into the summer. Unless the UK can tap into export demand, and that will mean a significant drop in farm levels (assuming currency parity remains unchanged) the likelihood of a huge increase in stocks draws closer.
In summary, it remains old crop fundamentals against new crop weather and politics – as this week ends, weather is showing signs of improvement, but politics (exports) remains uncertain. As the week progress, if more favourable weather conditions support a bearish move on Black Sea exports, market dynamics could be a completely different ball-game. Russian wheat from the 1st July could be about €35/t cheaper, and that could mean a tricky marketing situation for the harvest period. Until then markets will continue to trade weather and wait for the US planting report, due out next Tuesday, which may provide a few surprises!
- In England generally good drilling conditions have been followed by gentle rains to start the march towards harvest.
- The market still remains unsure as to the level of husked spring oats in the ground.
- The old crop market drifts along with the odd parcel trading for May/June but the millers are close to their required tonnages.
- New crop offers are sparse as growers wait for price direction.
- Unfortunately the situation this week is a mirror of last week, exports to Egypt are on hold until the currency situation changes. This is affecting buyer’s interest in both old and new crop.
- Feed bean buyers remain restricted to buying against finished product sales only.
- New crop large blue buybacks are still available for existing growers that have open priced agreements.
- Malting & Feed Barley
New crop malting prices have found some support this week from the weaker GBP.
Buying interest is quiet for both old and new crop in the UK which is keeping a lid on prices but crop 2015 premiums remain attractive.
Maltsters across the EU are well positioned with a good supply of carry over stock.
Australia are reported to have an export surplus of 1.8 million tonnes of good quality barley.
Spring plantings have progressed well across the EU and UK, particularly in France and Germany.
Forecasts show UK spring plantings are set to benefit from favourable weather over the next couple of weeks.
Barley prices have moved weaker over the past week.
Despite the wider picture, shorts into selected ports have provided some firmer pricing for April/May movement.
Export demand remains limited in both old and new crop positions.
Spring barley plantings have progressed problem free for the most part both in the UK and on the continent.
Domestic consumers have shown interest in barley for quick movement creating opportunities to place feed barley in the nearby positions.
Significant volumes of old crop have been sold in France and Germany as the MATIF futures have ticked higher and made premiums more attractive. Crush margins remain poor but demand remains in spot positions. The rapeseed market continues to lack any impetus and we see a stand-off between farmers wanting higher prices and crushers, facing poor margins, unwilling to pay more. At present it remains difficult to make a bullish story for a move significantly higher.
In the UK we seen some farmer selling but not in huge volumes. Farmers continue to target higher prices and euro strength has helped. We would advise farmers still holding old crop to sell at these levels.
The new crop market remains quiet and illiquid, – European farmers are little sold and we would have a neutral view on new crop, plantings are down across Europe but we should in theory have a large carry out. We don’t see crushers keen to buy new crop and it’s all very flat.
- Seed & Fertiliser
Seed Market Report
Once again this has been another busy week on seed, especially for top-up deliveries. For spring bean growers we have a small tonnage of Fanfare available as we near the end of the main drilling period. Spring barley varieties; Sanette, Concerto, Odyssey and a small tonnage of KWS Irina remain available. Spring wheat continues to be available, although supplies are getting tight. Large blue pea, Daytona, also remain available.
Looking ahead to Autumn 2015 Gleadell has an excellent oilseed rape portfolio for both hybrid and conventional growers. Campus is the best all round conventional variety on the new RL list and was the top conventional in 2014 in both England & Wales and northern regions, making it an excellent choice for growers in all areas. It is stiff strawed, with solid disease ratings including light leaf spot (LLS). The on-farm favourite, Incentive, has established well on farm this season and is looking well, consequently it is already proving to be a popular choice with growers for this coming season.
A few more varieties to look out for are SY Harnas, DK Exalte and Wembley. SY-Harnas, a hybrid variety which is top of the northern Recommended List with excellent seed yield and a 7 for LLS resistance. DK Exalte features many of the traits from the DEKALB brand including excellent phoma and LLS resistance, pod shatter and rapid spring growth. Finally, Wembley from LSPB which is top of the candidate list for the E/W region and looks a solid all-rounder. HOLL (high oleic low linolenic) oilseed rape varieties are available, please contact your farm trader for more details.
For wheat growers Reflection is a new group 4 hard from Syngenta and is the highest yielding variety on the 2015 Recommended List. Reflection is earlier maturing than its competitors as well as having a very high untreated yield and specific weight. Another variety, KWS Lili, combines yield and premium potential and is the highest yielding milling variety and is consistent across soil types and regions.
Fertiliser Market Report
On the global market, recent offers suggest prices could ease, but there is significant potential demand looming from India, Pakistan and Egypt.
In the UK, urea is trading at 5 year lows, although the weak US $ means imported prices are higher than earlier in the year. Nevertheless, grower interest remains keen as urea is till available on farm at approximately 61p/kg N compared with imported ammonium nitrate at approximately 76p/kg N and UK AN priced even higher. The cool, damp weather is also helping demand as it reduces the risk of N losses through volatilisation.
Gleadell has quality granular urea in store and is well positioned to offer prompt delivery. .
Demand in the UK is slower than usual as applications are behind the norm. Imported product is being pushed onto the market at a discount to try to restart trade. GrowHow has held prices despite increases across Europe and remains in a good position to get product onto farm at within 5-7 working days.
Another AN-based material on offer is ammonium sulphate (21N + 60So3). Gleadell has two high quality grades available for UK farmers. Grassland users particularly should look at ammonium sulphate this year as a cost-effective solution to providing the right amount of nitrogen and sulphur.
In the UK prices have moved to lower levels encouraging buyers into the market. At these levels many are considering this a good time to pick up any final tonnages required and with blenders now moved to April deliveries we urge any buyers to order as soon as possible to make sure product is delivered promptly.
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