Gleadell

International Grain, Seed and Fertiliser Merchant

Market Report 29th January 2015

Feed Wheat
  • IGC raises global corn production 10mln t to 992mln t, wheat left unchanged at record 717mln t

  • Canadian 2015/16 all-wheat production estimated at 30mln t, up from this season – stocks projected near record low

  • Ukraine exports 8.6mln t of wheat so far this season (since 1 July) – 8.7mln t of corn and 3.8mln t of barley also shipped

  • Ukraine sees 72% of winter grains in good condition, 18% seen as weak – 97% of planted area emerged

  • Argentina’s Ag Min increases 2014/15 wheat production to 13.9mln t – talk of additional export licences being approved

  • Traders agree with Ukrainian Ag Min to limit milling wheat exports – total exports seen at 12.8mln t (above USDA estimate of 11mln t)

  • Russia’s IKAR estimates 2015/16 grain production at 86mln t (104mln t this season) – wheat at 50mln t (59mln t this season)

All markets continue to ease as the reality of ample supplies, reports of improved weather and general bearish fundamentals weigh on values. US markets have fallen $12 over the week, pressured by a firm US$ and the relative slow export pace. Exports are running at 58% of the season’s projection and need to increase significantly,to over 550,000t per week to meet the current USDA figure. Although futures and US export prices have declined, US wheat is still priced between $8-15/t above European supplies. In addition, reports of better crop estimates out of Argentina could push the government to release additional export licenses, while Ukrainian officials projectwheat exports 1.8mln t higher than the current USDA estimate, which could easily offset any further decline in Russian exports, assuming internal politics do not affect grain movement.

EU prices have eased, trading down €9 on the week, despite exports continuing their strong pace. Talk of potential changes to Egypt’s buying spec that might be to the detriment of French supplies added to the bearish tone. Cheap Polish and Romanian supplies continue to undercut Black Sea prices and, with Russian interior prices remaining firm, little or no grain is going to government intervention, with no takers. Election results from Greece and the potential debate over the re-alignment of the country’s debt continue to throw uncertainty over the euro, with some experts believing that Greece’s exit may even support the failing currency. But if Greece goes, who else follows?

UK values continue to weaken as the pound strengthens, down £7 on the week. The currency’s recent rise has done little to improve the UK’s competitiveness on export markets, and with a marked surge in exports required in order to erode the already larger-than-normal carry-out, the UK will need to move lower in value to compete with alternative feed grains – especially maize – that is readily available across much of the EU.

In summary, this season US markets have built in every premium going, whether they be linked to weather, politics, export/supply issues or new crop worries. In most cases, the reality has been far removed from the rumour. US prices, therefore, have always been heavily priced, and now it seems the US is starting to feel the pain with its slow export pace. Black Sea export restrictions have been removed from market sentiment, with additional supplies readily available from other key exporters. Although there could well be new crop weather issues these would have to be translated into actual major crop losses to change current market sentiment. There is no shortage of old-crop cash wheat, so new crop as of now is not an issue.

Oats

The relatively slow domestic market has perhaps encouraged a few exports off the south coast to eat into the surplus in this region.

In the West Country it is believed more oats are being fed on farm due to the significant haulage cost to oat millers.

Spring oat planting levels remain uncertain as other commodities appear more rewarding.

Pulses
  • Old crop human consumption grades remains very firm. North African states are building stocks for Ramadan, which takes place between 18 June and 17 July this year . Supply of old crop is limited and demand will be limited to this short window of opportunity.
  • Feed bean markets have been limited to short covering as fresh buyers acclimatise to the lack of fresh offers being made to the market.
  • New crop prices are still following LIFFE wheat with premiums for edible upgrades available subject to minimum specifications.
Malting & Feed Barley

Malting Barley

  • The old crop market is now reliant on trade shorts, which are short-lived as we progress towards the end of the season.

  • New crop prices are weaker. They are following the old crop market and have been further pressurised by an anticipated 10% increase in the UK spring area and an overall increase in the EU area.

  • New crop premiums remain attractive and growers should consider contracting some tonnage at current levels.

  • Gleadell has a wide variety of contracts available for both winters and springs, including the new spring variety Irina and the dual purpose variety Octavia, boasting high agronomical performance.

  • Global production of barley for the 2014/15 season is recorded as 5% lower than the previous crop year due to an overall lower planted area.

  • The USDA forecast continues to show a gradual increase in production over the next 10 years and is supported by an expected increase in planted area from some of the key barley producing countries, notably in the EU.

Feed Barley

  • The latest HGCA supply and demand data pegs the UK barley surplus at just over 2 mln t.

  • Barley values have weakened over the past seven days as pressure from wider grain markets and a slowdown in export demand has been negative for prices.

Rapeseed
  • The CBOT soybean futures market continues to look technically weak but as yet hasn’t moved aggressively lower. With weather currently looking non-threatening the bean market lacks any bullish story.

  • The MATIF rapeseed contract has moved aggressively lower throughout the week with the May futures contract down roughly €15. There has been some farmer selling across Europe and poor crush margins, but, with prices moving lower, farmer and merchant selling have almost ceased in the UK. In view of the European balance sheet it’s hard to make a bullish story for old crop rapeseed but equally will we see farmers throwing in the towel and selling at these levels?

  • The Euro came under continued pressure early in the week, but there could be some market support as a lot of negative news for the euro/pound exchange rate has been priced in.

Seed & Fertiliser

Seed Market Report

A high number of enquiries this week have started to put some pressure on the most popular varieties, including spring barley Propino. KWS Irina is a quality alternative that is a step ahead in terms of yield with a 4% national, eastern and northern region yield advantage over Propino.

 

A small quantity of spring beans and peas remain available. However growers have been taking advantage of what is available so we would advise growers to ensure all requirements are covered.

 

Autumn 2015 may seem a long way off but Gleadell can offer many new and exciting varieties. For winter wheat growers Reflection is the highest yielding variety on the 15/16 Recommended List. Its high specific weight and earlier maturity has already seen this variety generate a considerable amount of interest. KWS Lili is a Group 2 variety that has an excellent untreated yield with consistency across regions including light and heavy land. As well as being the highest yielding breadmaking wheat on the HGCA Recommended List for 15/16 it has a national yield on par with varieties such as KWS Santiago.

 

For oilseed rape growers Incentive is a hybrid variety that was very popular in the 2014 season, combining a high yield potential and good oil content. Campus is a new conventional on the 2015/16 Recommended List which has been branded “the seed with speed” due to its rapid autumn development. Along with this, Campus has a solid disease portfolio and a high yield performance. Wembley, from breeder LSPB, is top of the 2015/16 candidate List for winter oilseed rape varieties with a gross output 110% of controls, medium maturity and good all round disease characteristics – it is definitely a variety to watch out for.

Fertiliser Market Report

Urea

Some confusion over urea prices is evident in the UK. Replacement values now stand about £305/t delivered to farm, but small stocks in some areas are being sold for less. As stocks reduce prices are likely to move higher in the short term, but cheaper oil prices will eventually filter through to production costs. Prices could edge down before the application window closes in May.  Something that has ‘clouded the water’ in recent days is The arrival of a large Chinese granular vessel in Liverpool, the first into the UK, has clouded the waters somewhat. Its cargo is starting to find its way onto farms in certain areas. No reports on quality have yet been received but Gleadell will continue to offer product from recognised areas and has product to offer for February and March delivery.

 

Ammonium nitrate

European ammonium nitrate markets continue to strengthen. CAN prices in Germany and France rose again this week in advance of a planned factory closure for annual maintenance in late February. This decision is likely to keep AN supplies in Europe tight as we enter the usage period. In the UK GrowHow also increased nitrogen and nitrogen + sulphur prices. Imported AN values are also moving higher as replacement material arrives. Haulage is now becoming a huge issue, so taking all of this into account our advice remains that anysSpring requirements are ordered sooner rather than later.

 

Sulphur

Sulphur + Nitrogen will be in many cases be the first application – the importance of applying Sulphur is well documented. Gleadell has imported two grades of ammonium sulphate to cover this demand, a 2-4mm standard grade or a 2-5mm premium grade. Both are high quality and priced very competitively on a pence/kg basis and are available now for February delivery. Please contact your local Gleadell Farm Trader to discuss your requirements.

 

NPK/PK

The phosphate market continues to firm, as reflected by NPK and PK blend values in the UK. A number of the smaller blenders have now run out of product for February as they await new vessels.  Prices will continue to increase so farmers should order now to lock into current values and guarantee delivery.

£/€ £/$ €/$
1.3375 1.5125 1.1305
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
May 2015 106-116 117-117 215 248-253
Nov 2015 110-120 120-130 160 249-254
NB: Prices listed may vary depending on area.