Gleadell

International Grain, Seed and Fertiliser Merchant

Market Report 5th March 2015

Feed Wheat
  • Australia's research bureau ABARES sees country’s 2015/16 wheat crop at 24.4mln t, a rise of 3% year-on-year.

  • Russian domestic prices fall – stronger rouble and increased farmer selling – government state sales also adds pressure.

  • Russian government reports 2015/16 grain crop may reach 100mln t – improved crop condition ratings of winter grains.

  • Egypt’s state buyer GASC purchases 110,000t of Russian and Ukrainian wheat – inventories already in the country.

  • Indian wheat quality likely to improve – crop seen at 94mln t, down from 96mln t last season

  • HGCA survey shows English / Welsh wheat area down 7% as of 1st December at 1.69mln hectares – likely increase in post-December plantings.

  • Internation Grains Council sees smaller 2015/16 global wheat crops – large carry-over stocks should ensure large overall supply.

  • Corn sowings may prove victim of Russian / Ukraine ‘fall-out’ – farmers facing financial problems.

  • Ukraine sees higher than average winter grain losses after poor autumn weather.

US markets moved higher last week on persistent cold weather across much of the US, which coincided with the month-end to bring a few shorts to the market. Monthly crop ratings continue to slide in the plains, where drought conditions are intensifying. Crops in the mid-west showed some improvement, despite the cold Arctic blast witnessed over the past few weeks. US exports remain routine and behind the pace required to reach USDA’s projection, and with the US dollar firming, the outlook still remains negative.

EU prices remain underpinned due to a record export pace, with shippers executing large programs in France and Germany, and the weaker euro. The stronger rouble and exports curbs have lowered domestic prices in Russia; in addition, farmers need cash ahead of the spring sowing campaign and ex farm sales have increased. Sales from state stocks by the Russian government are expected to add to the price pressure.

UK futures and delivered premiums for feed and quality wheat continue to weaken as further increases in sterling nullifies hopes of further export trade. Domestic demand remains mainly hand-to-mouth, with end-users reluctant to extend coverage given the apparent ample supply scenario. One crumb of comfort came this week, with news that the HGCA survey pegged English/Welsh wheat plantings,as of 1st December (for the 2015/16 season) about 7% lower, at 1.69mln hectares, against the final 2014/15 planted area. Unlike last year, where little wheat was apparently drilled after 1st December, this season the HGCA noted that late winter / spring sowings are gaining attention due to their potential contribution to black-grass control, so they are likely to become more important to the total area. However, even allowing for this the total area and therefore, the crop, is projected considerably lower, although this will partially be offset by higher carry-in stocks.

In summary, it appears that old crop is slowly grinding to a halt – ample supplies are limiting demand, and lower prices are not encouraging farmers to sell. New crop has a bit of a story around it, with weather concerns still evident in the US and parts of the FSU. Although the numbers for 2015/16 would still project ample supplies and a continued bearish trend, crops in most cases are not even planted yet. This leaves weather scaremongers and speculators ample scope to have their day. Russian officials meet next week to discuss the current export stance, but as long as the trade feels uncertain about export taxes being prolonged, actual trade is unlikely to develop, as the outcome will be a key driver in the future price direction for new crop, and to a certain point old crop as well.

Oats

The old crop market limps along with the few parcels that surface being absorbed into May/June positions.

The weather window next week should see a start on spring sowing on lighter land in England which in turn should begin to clarify the thought process on the spring oat acreage.

Pulses

The bean market at present is dominated by the political situation in Egypt and the government’s attempt to dismantle the currency black market, which has been the main source for obtaining foreign currency to cover importers’ requirements. The effects of this action have stalled any further interest from the buyers and has caused those shippers that have sold in US dollars to suspend shipments until the situation has been sorted out.

Values for new crop remain linked to LIFFE wheat.

Malting & Feed Barley

Malting Barley

  • The firmer currency has further pressurised FOB values, pulling crop 2015 malting prices slightly lower

  • Old crop buying interest, along with the number of sellers, has come to an end with limited trade shorts and minimal premiums available.

  • The bearish trend of the wider grain market is capping the number of crop 2015 buyers while they watch the market drift lower.

  • The HGCA/AHDB winter planting survey showed UK plantings are in line with last season, with 0.371 million hectares planted by the 1st December 2014.

  • The perceived agronomic and economic advantages of spring cropping are expected to contribute to the 10% increase in UK spring barley area and lead to an overall increase in total UK planted barley area.

  • Favourable weather has promoted spring plantings in France which are 35-40% complete, currently ahead of last season but in-line with the average.

  • Gleadell have a wide variety of malting barley contracts available for crop 2015/16.

Feed Barley

  • Barley values have continued to track the wheat market lower over the last week.

  • The return of China to the export market has failed to provide significant demand for feed barley into third country export destinations.

  • Volatile currency has also reduced the competitiveness of UK barley for export.

  • Trade shorts into southern ports have added some support to southern feed barley.

  • Domestic consumers continue to cover small top-up tonnages of barley despite its narrow price relationship to wheat.

Rapeseed
  • Soybeans broke lower this week as the Brazilian truck dispute appeared to ease. We also saw technical (charts) turning negative for short term traders and the US$ continues to rally.

  • In Europe we have seen limited activity in the physical market with current levels unattractive to both farmers and crushers with poor margins for both parties. The MATIF rapeseed market remains range bound, it lacks a story either way and feel it’s a case of who breaks first, the farmer or the crushers.

  • New crop business is not discussed but it’s widely accepted that we will be looking at a smaller crop with lower plantings and some damage in parts of Europe. At present it’s too early to get any clear direction for new crop.

  • In the UK Euro weakness continues to erode domestic prices, we see some farmers tidying up old crop but activity is very limited.

Seed & Fertiliser

Seed Market Report

With temperatures set to rise slightly over the coming days growers will be looking to make headway with their spring drilling. Gleadell is in a strong position to offer prompt top-up deliveries across a number of species.

Spring barley seed remains available, although popular varieties such as Propino and KWS Irina are now becoming limited.

Daytona peas and spring bean varieties Fanfare and Vertigo also remain available for growers looking to grow pulses to conform with the new EFA regulations.

Many growers are now also looking ahead to Autumn 2015 and covering their requirements for the best performing varieties from last season. Campus, from KWS, was on the candidate list in 2014 and after topping many of the trials for gross output among conventional lines it has now been added onto the 2015/16 Recommended List. Campus has been branded “the seed with speed” due its rapid autumn development combined with high oil content, high gross output and solid disease portfolio. Farmer favourite Incentive, also very popular in 2014, remains available this season. Incentive has medium maturity and rapid autumn development, combined with a high yield potential and good oil content. Both Incentive and Campus are available with deferred payment terms.

Gleadell can also offer HOLL (high oleic low linolenic) oilseed rape varieties for specialised markets.

Fertiliser Market Report

Urea

The global market spiked this week after some prompt shipment demand from the US and Europe. It is doubtful that this is sustainable as there are some signs of weakness with little substantial demand expected.  India, one of the largest urea buyers, issued a press release this week stating that any initial reports of fertiliser shortages were untrue and that sufficient tonnages were available. European buying remains slow with sufficient cover for immediate applications. In the UK, we are starting to see first applications applied before buyers return to the market for further tonnes. Many are considering urea as an option for at least one dressing this year and Gleadell, with quality granular and prilled urea in store, is well positioned to offer prompt delivery.

Ammonium nitrate

AN prices in France increased again this week by €5, with the euro falling by 3.5% since the last price rise at the start of the year. In the UK, GrowHow has mirrored this and moved onto March terms with further price increases of £3/t across nitrogen and nitrogen sulphur grades. For GrowHow top-up customers, Gleadell can offer a guaranteed five-working day delivery for all GrowHow grades.  Imported product struggles to move forward in price as longholders compete in a lacklustre market to move tonnes. There are sufficient tonnes sitting in UK stores, however movement still continues to be the main problem that merchants and suppliers face.

Phosphates

Phosphate prices have stabilised over the last few weeks globally, however UK prices seem to be under pressure as blenders compete for business in a domestic market that will be squeezed as top up buyers re-enter the market.

ENhancePro

For every milling wheat grower, ensuring crops don’t fail at the last hurdle is crucial. This year will be a difficult year to ensure protein levels are hit but, given the current low grain prices, ensuring everything is done to secure a premium should be at the top of the list. Increasing yields causing protein dilution and, with further heavy rainfall expected, soil nitrogen levels will be low.  To help hit the all-important protein target, Gleadell is offering free leaf tissue analysis to all milling wheat seed and buyback growers.

£/€ £/$ €/$
1.3806 1.5254 1.1046
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
May 15 105-115 110-120 215 252-257
Nov 15 105-115 115-125 157 251-256
NB: Prices listed may vary depending on area.