Gleadell wishes all our customers a very happy Christmas and a prosperous New Year. Our next market report will be issued on Thursday 4th January 2018.
Thursday 14 December 2017
As expected, the latest USDA report did little to shake-off the bearish sentiment overhanging the wheat complex. Reduced US exports and higher US and global stocks (despite a further upward revision in global usage), just reiterated the abundant supplies of wheat, and at present, limited demand. US prices tried to rally after the report was released, but selling pressure pulled the market lower to hit new contract lows. US federal reserve raised interest rates for the third time this year, although this has resulted in the US$ falling in values against the other major currencies.
EU prices, unfazed by the price action in the US, have their own agenda to deal with. Matif December hit a new contract low as it expired, but with the May position trading just above its recent low (€162.25 on 28th November), this is expected to be retested. Egypt continues to pick-off what seems non-expensive wheat at its international tender. This week it purchased the first non-Russian cargo since late August. The French Farm Ministry, in its last crop report of the year, pegged French soft wheat as being 95% in good, or excellent condition. However, they did reduce the size of the 2017 soft wheat crop by 500,000t and reduced non-EU exports by 400,000t to 9.5mln t, citing competition as the reason for the reduction. Given the current pace of exports, this reduced figure still looks highly optimistic, as with being $20/t out on the recent Egyptian tender, and reports of Argentinian vessels in the line-up, and American sales made to Algeria, they can expect further competition throughout the remainder of the season.
In the UK the market continues to defy gravity as farm prices hold up against global weakness. The defeat by the government on the key vote regarding the Brexit bill may cause a few wobbles, but with sterling holding up well, and uncertainty over domestic usage in the new year, current prices remain attractive to growers and may warrant some selling activity.
In summary, another week, another USDA report and further confirmation of no shortage of wheat. Availability continues to outstrip demand, which leaves the market likely to continue its downward spiral. Fundamentally, wheat doesn’t have a story, and technically its only support is the sizeable short position held by the Chicago funds and when they decide to reserve their position.
The EU market remains firm for crop 17, with buyers finding it difficult to purchase the variety and specification that they require.
In the UK, a lack of available lorries is compounding the logistical problems the industry is facing due to the poor quality of the UK malting barley.
Crop 18 continues to trade around £10 below crop 17 values due to the outlook for an increased EU malting area. Gleadell has various buyback contracts available. Please contact your farm trader for details.
Rapeseed prices continue to slide with values on the Matif rapeseed futures market falling circa €8 in the last week. The French Ag Ministry increased its production number by nearly 500,000t and, with waning season demand and reports of additional purchases of Australian seed, the market continues to come under pressure.
With consumers currently sidelined the market keeps on adding to the already burdensome supply situation with bigger rapeseed (Canola) crops in Canada and now France. In the short-term we really need to see a crop problem in South America to turn around this bearish market sentiment.
December continues to be a month where executing deliveries takes precedent. With the distance some oats must travel to one of the two domestic English mills, competition for freight is high.
Trade-wise, the UK market looks towards the new year. High volumes of oats are being offered in the January position, so millers have been able to keep prices relatively stagnant.
The feed oat market continues to flat line. With no shortage of lower quality, oats prices remain £20/-£30 below cash market milling oat prices, depending on location.
Feed bean prices are unchanged on the week. Buyers remain limited to the East Anglian ports with only small volumes trading and limited farmer selling. The UK is well priced against Baltic origin feed beans to capture any export demand that arises; however, the problem is finding a bid! Even if we see renewed export demand and compounder demand post-Christmas, it remains hard to see any reason for beans to rally, and it is very unlikely that we will see a repeat of last year where feed bean prices rallied circa £30/tt post-Christmas.
Spring Barley remains tight with RGT Planet now getting well sold across the country. We hold our position that anyone wanting to grow malting barley for Harvest 18 needs to get their seed requirements sorted before the Christmas break.
Pea seed is still available for buy-back growers. Speak to your farm trader around availability of contract to secure a suitable variety. Campus and Daytona support large blue contracts while Kabuki offers an excellent package for marrowfat producers.
This week saw Gleadell kick-start its soft wheat campaign for autumn 2018 sowing. Elicit is a newly recommended Group 3 variety from breeder Elsoms. Elicit joins the group 3s with sector topping yield and an excellent agronomy package of which the highlight is a score of 6.4 for Septoria tritici – a disease where Group 3s in the past have struggled to match their feed counterparts. Elicit offers growers a very reliable package of yield, agronomic features and excellent grain quality. Seed will likely sell out due to a lot of end user demand, so booking now to avoid disappointment is advised.
For any outstanding winter seed requirements that need drilling around the Christmas period after root crops etc., please notify the Gleadell Seed Team by 18th Dec, so that delivery can be arranged before the Christmas closure.
Despite a quieter week, global markets have continued to firm. Egyptian origin product saw another increase in prices as the latest sales concluded up another $5/t, now $25/t above the lows two weeks ago. Producers now have little stock to sell for December and have already committed significant tonnes for January, keeping the outlook for prices firm into the new year. In the UK, there has been an increase in urea buying as the recent dip has given an opportunity to those who have further requirements to cover. Gleadell is in a good position to offer urea at attractive levels, with a large vessel of Egyptian origin urea set to arrive in early January.
CF pulled terms in light of the sharp increase seen to gas prices. Gas prices soared across Europe and the UK on the back of news of an explosion in a major gas hub in Austria. The pipeline is a key distribution hub, of mainly Russian gas, to various locations across Europe. UK gas prices for immediate delivery rose by 35% in light of the news, to its highest level in four years. CF, as a substantial user of natural gas, has therefore withdrawn terms to assess the situation before returning to the market.
|Feed Barley £||Feed Wheat £||Beans £||Oilseed Rape £|
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.