Market Report 20th November 2014
- Feed Wheat
USDA reports winter wheat crop ratings at 60% good/excellent, unchanged on the week and compared with 63% a year earlier
Ukraine’s grain exports to 19th November put at 14.2mln tonnes – includes 7.2mln tonnes wheat / 3.3mln tonnes barley / 3.6mln tonnes corn – total exports raised 7% to 36.7mln tonnes
Ukraine’s 2015 winter wheat area reported up 5% year-on-year at 6.4mln hectares
Russia’s Ag Ministry reports exports to 12th Nov at 13.2mln tonnes wheat / 2.2mln tonnes barley / 0.66mln tonnes corn – total grain exports forecast at 30mln tonnes
Strategie Grains raise EU-28 2014 soft wheat production by 300,000t to 147.7mln tonnes – exports estimated at 26.8mln tonnes with end stocks projected at 17mln tonnes
France set for 1st big wheat export to US in 12 years- 45,000t of feed wheat to be shipped in next few weeks
Winter conditions hit US upper mid-west – stalls corn harvest – may lose acreage / yield
Drought to delay soy planting / harvest – may affect corn plantings
US markets have weakened during the week as the advancing corn/soy harvests and prospect of record supplies weigh on prices. US wheat has also weakened pressured by lower corn values, although weather concerns in both Russia and the US in relationship to the 2015 crop has limited the losses. In addition, reports that continued dryness in Australia will trim final production numbers, and the lack of any additional Argentinian export licences, continues to support. Fund managers are still short US wheat although their influence is slowly diminishing.
EU exports continue at near record pace, supported by a lack of Black sea wheat being made available for export, despite attractive prices due to the weakness of the rouble. French stocks projections have been trimmed recently due to an improved export outlook, but still are projected at a multi-year high. Ukraine’s 2014/15 grain exports have been revised higher, and Black sea wheat plantings are now complete, with the final wheat area higher than originally projected.
In the UK, the pre-Christmas short market is slowly being covered. Official data placed the UK as a net imported to the end of September, and with the recent rise in wheat prices and declining oil prices, does not bode well for future domestic demand, especially from the Industrial sector. With the festive break a matter of weeks away, growers will have to make major marketing decisions when they return in the New year, as the likelihood of increased wheat stocks looms larger on the horizon.
In summary, the market is caught between good spot domestic / export demand, along with farm retention (bullish) and long term fundamentals projecting ample stocks (bearish). The recent rally in the market hasn’t encouraged buyers to extend coverage, and likewise hasn’t encouraged growers to sell the market lower. As the markets move into 2015, it may be a battle of ‘who needs to move first – the end-users or the grower’. One thing is for certain, northern hemisphere crops are now made, and apart from the final throws of the US harvests, are safely ‘tucked away’. Support for old crop prices had been driven from delayed US harvests, record US fund shorts and new crop weather concerns – well, one is now ticked off, one is slowly having a lower influence, leaving only the new crop weather concerns as the major supportive factor – and we are all aware how quickly a weather-related market rally can change – just go back to last winter and see how the market has ended up!
December will no doubt be another quiet month with lack lustre demand from most directions and no cold weather in the forecast tending to keep prices under control.
A few feed oat parcels are surfacing but as compound demand is slow these parcels are being rolled into 2015.
The projected 13% drop in UK oat plantings released last week for harvest 2015 are no great surprise and given trend yields the supply could begin to tighten.
- Feed beans traded higher on limited supply causing human consumption to follow suit – demand remains strong with limited supply to the market.
- We are starting to see major quality deterioration of samples collected and tested recently, this is being caused by high moisture content and open fronted storage on farm . It’s important that stocks are retested to confirm what they can be used as.
- 2015-16 pool commitment reflects the big increase in planted area for both winter and spring varieties, the pool is still open for Harvest movement September-October, November-December and January-March. If interested please contact your Farm Trader.
- Malting & Feed Barley
Feed barley has continued to trade it’s own market this week and has not been tracking the moves seen in wheat prices.
The barley market continues to be driven by third country export demand which is trading at a premium to North European markets.
The domestic barley market is restricted by limited demand at current discounts to wheat, this is especially the case in the Southern region
Gleadell are a buyer into various export and domestic homes both pre-Christmas and into the New Year.
- UK malsters are well covered for crop’14. Demand is limited pre-Christmas but there are attractive prices at some UK ports for spring varieties in the New Year.
- DEFRA’s Early Bird Survey results were released last week for Crop’15. The results indicate a 12% increase in winter barley area and a 9% increase in spring barley area, mainly due to the 3 crop rule and varietal improvements.
- Gleadell continue to have attractive options for new crop winter, distilling and brewing contracts, including our non-defaultable pool.
In the EU , Maltsters have bought a significant amount of malting barley in the last few weeks and are now well covered until April/June 15. It is a similar story in the UK although there are probably more opportunities after the New Year, February onwards. Internationally the market is quite short due to crop problems in various countries. Therefore we may see extra export demand for EU and UK barley sometime in the future. The 2015 market has also been active with growers selling into the market, taking advantage of the higher values. There are a few harvest contracts still available for SY Venture although these are filling quickly. There are more contract options for October onwards. There is also a limited demand for Pearl into Yorkshire, Talisman into the Midlands and Flagon into East Anglia.
Following the trend of the last few years, harvest homes for spring barley are very limited as Maltsters now tend to carry over old crop and buy new crop from October onwards. Growers needing harvest movement should contract while there are still homes available. The main demand outside of Null-Lox barley is currently for Propino and Concerto. We have various contracts available for both varieties, harvest onwards. Although not fully approved yet in the UK, we have a limited amount of contracts available for Irina – the new high yielding spring from KWS. Irina looks a very exciting variety. The other variety to note is Odyssey although currently contracting options are limited.
The most popular contracting options are Pool followed by premium over wheat futures. We also have Min, Max, fixed price, and price to be agreed to name but a few.
Soybeans have traded lower throughout the week breaking through the uptrend which began in October, the market remains volatile and we feel the risk of further losses are now a real prospect.
The matif rapeseed futures market has remained within a fairly tight range throughout the week. The market is quite flat with little new fundamental drivers, crush margins are ok for spot positions and we see limited farmer selling in Europe. In the UK farmers have continued to sell seed around the £250 ex farm mark with sterling weakness aiding UK prices. We see trade shorts dominating the spot positions and price action has been flat with no clear direction.
- Seed & Fertiliser
Seed Market Report
Certain spring commodities have remained under pressure this week however there is now some potential to import spring beans – therefore growers may soon begin to see some availability once again.
Daytona pea seed continues to remain available, however it is limited. Peas are a great way of fixing nitrogen as well as counting towards EFAs (Ecological focus areas.)
Spring barley availability remains stable with KWS Irina leading the way for yield potential due to its 4% national, Eastern and Northern region yield advantage over Propino. As well as its impressive yields, Irina is a short stiff variety with good disease resistance.
Spring wheat variety Mulika has now sold out with many suppliers due to its high yield and grain quality making it very popular with growers – Belepi and KWS Willow remain available as alternatives. Both varieties can be sown until April and have sound disease packages.
Looking forward to 2015/16, the new HGCA Recommended List will be launched on 1st December, so watch this space for more details on the new varieties that have been added.
Fertiliser Market Report
A product exclusive to Gleadell in the UK and successfully promoted at the UK Croptec event this week at Peterborough. Used extensively across Germany, this innovative stabilised nitrogen fertiliser guarantees consistent high quality, with a large granule, averaging 3.5mm with a bulk density of 800kg/m3 Alzon is proven to spread accurately at widths of 32m. The nitrogen stabiliser is added during production so is completely incorporated with each individual granule. This allows earlier and higher application rates without the risk of nitrate loss or luxury uptake and reduced costs due to the fewer passes required. Developed for the Northern European climate the nitrification inhibitor creates a sustained release of nitrate for up to 15 weeks and should be strongly consider as part of any fertiliser programme. Gleadell can offer a price and delivery on a February basis but the amount of available product is restricted so talk to your Gleadell Farm Trader today for some attractive terms.
Global markets continue to be confused, lacking any real direction. In Egypt the continuing saga around gas supply continues and although that may be starting to ease food security issues are now the concern. Looking to produce more wheat for internal consumption has meant that the Government have put legislation in place forcing producers to supply more and more fertiliser to their home market. Tonnes available for export will continue to be restricted during the Dec / January period so pricing today remains stable, although the £ / $ rate is not helping and at $1.56 / £1 will only put further pressure on imported pricing. In the UK, granular urea buyers have once again started to surface, many stepping back into the market to finish buying their remaining tonnages which are still very attractively priced when compared to ammonium nitrate levels.
Imported ammonium nitrate continues to be delivered to farm at a sizeable discount to UK product, whose values continue to mirror the march upwards in European pricing. Demand remains low as buyers continue to hold off and a squeeze upwards in pricing is now a definite not a likelihood – logistically it will be impossible to execute or offer a just “in time” delivery service which may now be required by many. Imported AN replacement levels for Jan shipments have moved upwards by approx. £10/t and so this market will eventually move higher in line with UK pricing. Changes in transport legislation will also force more hauliers out of the fertiliser business adding further pressure to pricing, buying at least some of your requirement today is a safe and recommended option.
With nitrogen showing further signs of firming and phosphates/potash stable we would expect to see a steady increase in NPK prices as we enter January. There is a huge UK Spring market to service and to avoid disappointment Gleadell would advise taking product pre-Christmas and will offer a flexible finance option to encourage this.
|Feed Barley £||Feed Wheat £||Beans £||Oilseed Rape £|