International Grain, Seed and Fertiliser Merchant

Market Report

Friday 2 March 2018

Feed Wheat

As one report commented this morning ‘did someone just wake up a sleeping giant’, referring to the 21 cent/bushel (£5.50/t) rise in the US market yesterday. For some time now, concerns have been accumulating around the dryness in the main US HRW growing areas, and its potential impact upon yield and final 2018 production. Although the official weekly crop ratings report, released by the USDA, will not commence until next month, the monthly reports for key states have showed a marked deterioration in the crop and well below last year’s ratings. With a cold snap expected to enter the southern plains, with little or no snow cover to protect, this has triggered a surge of short-covering on the potential of lower 2018 output.

EU prices, buoyed by the movement in Chicago, have also firmed this week, up €4/t. Cash premiums have eased, leaving French wheat still above Russian (on a comparable spec), but German/Baltic getting much closer. The rise in Russian prices is mainly due to a continued demand for export wheat, as logistics tighten on weather and farm prices remain firm on the strength of the rouble. The EU commission revised lower their outlook for 2017-18 common wheat exports to 24mln t, which still looks too high against the current pace. In their initial forecast for 2018-19, the commission estimated EU common wheat production at 140mln t, down from 141.6mln t in 2017-18.

LIFFE also gained some support from rising global values, but is still mainly driven by movement in sterling, which over the week has weakened on less than positive vibes over Brexit. The move higher, by just over £3/t, has left physical cash sellers demanding more for their wheat, although end-users and market shorts seem reluctant to chase the market higher, hoping for a scale of retracement to occur.

In summary, the onslaught of winter weather seems to have stirred up the market, especially in the US, where the rationale for the increase has been well known for several weeks. The USDA threw a few crumbs of comfort onto the table last week, projecting US wheat acreage for 2018 higher than expected. However, while this may provide a scale of security over 2018 production, at present, final harvested acreage and yield are deemed more important than planted acres, especially with talk of greater crop abandonment. The fund managers will determine how long this bull-run lasts, as in this week’s position report they were showed still holding a sizeable market short. One word of warning, the current spike in prices has not been witnessed since the market moved to its high in July 2017, where the sheer weight of global supplies then pulled the market back to its December low. The world still is holding record wheat inventories at the end of this marketing year, so crop issues must result in major crop losses for a market to retain its strength – remember, bulls need constant feeding!

Malting Barley

Malting premiums continue to tighten as a result of firm feed barley demand. There are very few buyers in the market for crop17 malting barley and any demand is focused mainly on late April/June movement.

New crop prices are drifting on a lack of fresh news, but they will remain sensitive to any changes in weather conditions at this time. The main spring drilling window in western Europe has begun and any negative weather stories could lift new crop prices in the short term. However, it is still early days and buyers are not overly concerned at present.

Gleadell has numerous malting barley contract types for Crop18 for both springs and winters, including the Gleadell grain pool which is a lower risk option for any new malting barley growers.

For growers already looking ahead to Crop19, Gleadell can offer buyback contracts for the new winter barley variety, Craft. Craft boasts higher yields than SY Venture, strong agronomics, and it has gained provisional approval for brewing.

Rapeseed

Rapeseed prices continue to influenced by the upward momentum coming from CBOT soybeans as weather concerns in Argentina continue to undermine the size of its crop.

However the burdensome stock situation in Europe is not allowing the Matif rapeseed futures to follow on a one-to-one basis as record import volumes and falling demand is undermining the market.

Currency continues to be a key influencer for UK farmgate prices and the slip in sterling this week has pushed prices back to circa £300/t ex farm in some areas of the country.

Fundamentally there is more than enough rapeseed available and there is  nothing wrong with the developing crops at this stage. The on-going Global and European weather situations need to be watched, but we believe that this uptick represents a good opportunity for growers to add to their sales.

Oats

The UK oat market has seen little fresh news over the last week to spark any major change in the market. Oats still appear to be well offered in the market, and support to prices has remained low. As such, we have seen an ex-farm price varying between £115-125/t, depending on location and variety, with millers paying a premium for good quality Mascani.

The winter crop in the ground on the whole looks well, with the recent snow cover leaving no real cause for concern. Attentions will soon shift to spring drilling.

Pulses

Old crop feed beans have been supported on the week with fresh export demand to Spain, weaker sterling and limited farmer selling.

New crop buyers have been unwilling to follow the London wheat market higher on a one-to-one basis. We have seen some demand from compounders this week in small volumes, but many are still sitting out the market and have not made the decision as to whether they are going to include beans in their formulations. All eyes are now focused on spring plantings which are expected to be lower year on year, however, this reduction will be negated somewhat by the increase in winter plantings.

Gleadell’s marketing pools for peas and beans remain open and new crop buybacks for marrowfats, large blues, yellow and maples peas are available. Please contact your farm trader for further information.

Seed

Spring Drilling

The cold snap has enabled some growers to plant spring beans and cultivate seed beds, before cereals and smaller seeds are drilled. Our advice on cereals is that you would be better holding off until ground conditions are warmer and a fine tilth around the seed can be created rather than travelling on a frost to get the seed somewhere near the field, left to the mercy of birds, slugs and anything else that may eat the seed before it germinates. Regarding seed rates, we are still early for cereals so the standard figure of 350seeds/m2 should still be fine in most cases. However, where seed beds are not overly fine or bad grassweed pressure is expected, then seed rates should increase anywhere up to 400 seeds/m2.

Seed Availability

Spring seed remains pretty well sold out across most varieties now. Liaise with your farm trader for the most up to date availability. A lot of stock has already been delivered on farm, so if top ups are required, let us know ASAP to avoid having to grow different varieties or paying excess delivery charges.

Maize

The maize seed market is still very active, with a lot of growers now making variety decisions. As soon as the weather does clear and the spring workload suddenly explodes with spraying and top-dressing, it will be the perfect time to get in touch and have a chat about variety advice and get cropping plans nailed down for this spring. This late temperature drop will not help soil temperatures and could therefore push maize planting back later in the spring therefore a vigorous variety will be key.

Fertiliser

Granular Urea

Buyers have returned to the market after the announcement of a new Indian tender was made at the end of last week.

With the already diminished supply for March/April shipment, traders have now entered the market to take long positions, and prices firmed.

As Europe is hit by snow storms, appetite for buying remains low and markets are yet to react to the firmer FOB levels.

In the UK, with any chance of applications of nitrogen looking a while off yet, demand is steady.

No new shipments of urea are likely to arrive now as we enter March, so close to the first application window, stocks of urea are tight

If further tonnes are required, our advice would be to get your requirement booked. Gleadell have granular urea on site to offer for March delivery.

NPK/PK

Levels for potash are starting to creep up as old stocks diminish, and suppliers are now moving onto new material bought at a higher cost price.

Phosphate markets have started to firm by a couple of dollars, but with product already in the stores, suppliers are holding prices for now.

NPK/PK sales are significantly down year on year and blend prices are extremely competitive compared to raw material costs.

Buyers for grassland fertilisers are yet to enter the market, however when they do, this will boost demand greatly.

£/€ £/$ €/$
1.1275 1.3745 1.2185
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
Mar18 128.00-138.00 130.00-145.00 158.00 299.00-304.00
May18 130.00-140.00 132.00-147.00 160.00 301.00-306.00
NB: Prices listed may vary depending on area.

NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.

“Although Gleadell take steps to ensure the validity of all information contained within the Gleadell Market Report , it makes no warranty as to the accuracy or completeness of such information. Gleadell will have no liability or responsibility for the information or any action or failure to act based upon such information.”

Gleadell Agriculture cannot accept liability arising from errors or omissions in this publication.

Gleadell trade under AIC contracts which incorporate the arbitration clause.

Terms and Conditions of Purchase.

On every occasion, without exception, grain and pulses will be bought by incorporating by reference the terms & conditions of the AIC No.1 Grain and Peas or Beans contract applicable on the date of the transaction. Also, we will always, and without exception, buy oilseed rape and linseed by incorporating by reference the terms & conditions of the respective terms of the FOSFA 26A and the FOSFA 9A contracts applicable on the date of the transaction. It is a condition of all such transactions that the seller is deemed to know, accept and understand the terms and conditions of each of the above contracts.

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Lindsey House, Hemswell Cliff,
Gainsborough, Lincolnshire DN21 5TH.

Company Number: 534118