International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 15th February

Feed Wheat

US market is unchanged on the week, but really that doesn’t tell the full story! Continued weather concerns emanating from Argentina have spiked the soy complex higher, especially soymeal, with spill-over support entering the grain pits. Additional support initially came from reports of drought conditions expanding across the US Southern Plains, which are seen to be potentially stressing the winter wheat crop, although the North West forecast of increased rain chances over this weekend has cooled the wheat market, trimming earlier gains.

 

EU prices, although about a euro lower, are actually $4/t higher on the week, as a weakening US$ exerts pressure on MATIF. European cash prices have firmed, not only as a result of the recent Saudi tender, but also on further rises in Russian prices, again on export demand (Egypt). Russian wheat exports were placed a/o Dec 31st at 21.3mln t, up 60% on last year, and with favourable weather expected to continue, it is envisaged Russian values will remain the benchmark for other origins. EU wheat exports continue their slow grind, reported as 12.6mln t (soft wheat) being shipped a/o Feb 6th, down 17.5% on last year. The current pace prompted the French farm office to reduce its non-EU soft wheat exports for the fourth consecutive month, to 9mln t, from 9.3mln previously, raising closing wheat stocks to 3.25mln t in the process.

 

UK LIFFE is trading about £1.50/t higher on the week, despite a move back above $1.40 against the US$. As we have mentioned in previous reports, while LIFFE seems to be currency and politically driven, day-to-day physical prices show little, if any, movement. Official data for December showed wheat exports at their lowest monthly level since July, at just 25,000t, with imports reported in excess of 115,000t. With uncertainty surrounding the actual date, if at all, of the recommencement of operations at one of the major UK ethanol plants, the UK balance sheet is growing heavier by the month, leaving the potential for a squeeze on the forward carries. This leaves nearby values still looking attractive to growers.

 

In summary, it’s all about weather, albeit current weather issues in South America, or perceived weather issues in the US in relationship to new crop production. Funds, by the end of this week should be running with a long book on soy, but a a declining short position in corn and wheat. Until more details can be obtained on actual Argentine losses, we expect the soy markets to stay on the ‘buy side’, but how much sentiment spills over into the grain is another story, as these markets have differing agendas.

Malting Barley

Significantly high rainfall has created logistical problems along the French river system which is keeping old crop prices firm.

Domestically, buyers are generally covered for the remainder of the season, although there are a few buyers of low nitrogen barley.

New crop prices are showing sensitivity to changes in the weather forecast. Wet conditions throughout the malting barley areas in Europe are causing some delays to sowing, although buyers remain relaxed on the whole because the potential impact on yield is minimal at this stage.

Rapeseed

Weather concerns in South America return to the forefront, with hot and dry conditions in south Brazil and the whole of Argentina now under some crop stress. Argentina accounted for 48% of world soymeal exports in 2017 and reduced farmer selling has seen soybean crushings decline, stemming global meal supply. A rally in soymeal prices since the start of 2018 has moved crush margins to profitable levels, which will mean US crushers will run at full capacity. South American production has been amended down 7% year-on-year already, with every additional day of dryness further reducing crop prospects.

 

The Matif market remains isolated, with prices struggling to break out of the recent trading range. The weak US$ against the € has helped to counteract the soybean price rally, with MATIF values again almost unchanged on the week.

UK crushers remain aware of the heavy UK balance sheet for 17/18, with farmgate prices static to marginally supported by a slightly weaker £/€ rate. With crop issues being confirmed in South America, there is more interest in the growing crop than the one in the shed.

Pulses

With the sustained rally in soymeal and other mid-range proteins, beans are currently looking competitive in the formulations and we have seen some renewed compounder interest this week. This, combined with a lack of farmer selling in any real volume, has caused feed bean prices to firm slightly. There remains limited interest in human consumption beans with the firm £/$ rate not helping matters.

New crop bean contracts linked to LIFFE wheat futures are still available as is the Gleadell marketing pool in all positions.

Seed

Clearfield OSR

The Clearfield production system has established itself as a crucial tool to keep WOSR in arable rotations as broadleaf weeds, SU herbicide residues, erucic acid contamination and pests all put pressure on the crop’s place in rotations. When looking at gross margins, WOSR is still by far the best break crop, but really it should be treated as a cash crop to maximise margin opportunity. The Clearfield system goes a long way to rectifying these concerns as the herbicide choices provide an excellent level of broadleaf weed control – which are thought to be contributing to the erucic acid concern through ad-mixture in the sample. Clearfield varieties also have a high SU tolerance due to their Imazamox resistance which, in conjunction with the hybrid vigour, allows plants to grow away from pest pressure as quickly as possible. Gleadell has a great range of Clearfield varieties to offer from breeders DSV, Limagrain, Dekalb and Pioneer.

 

Spring Seed

Spring seed remain tight across all commodities. Limited stocks of spring barley are available, but all other cereal options are increasingly hard to source. Pea seed remains OK to service buyback contracts and beans should be booked as a priority now the sowing window is approaching.

Fertiliser

Granular urea

The urea market has edged higher this week and the outlook for March/April would suggest this trend will continue.

A lack of exportable tonnes out of China has forced prices higher in Asia, to the extent that the Asian markets have become an attractive destination for Middle East and Russian urea.

The increased movement is having a knock-on effect in the West, leading to firmer levels.

These are deterring UK importers from stepping in to buy further tonnes and UK stocks of urea are starting to get low ahead of the spring.

 

NPK/PK

It is a growing concern from suppliers that a quiet autumn/winter period is going to lead to a larger than usual spring market and a bottleneck with deliveries.

In order to aid suppliers in servicing this market, growers are being offered a flat price to book requirements between now and April.

CF is offering this across their whole range, as well as priority delivery to those that book under the current offer, rather than delay purchasing until March/April.

With a number of product shortages already a concern, those who typically delay purchasing should strongly consider taking advantage of the current offers and book requirements.

£/€ £/$ €/$
1.126 1.404 1.2465
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
Feb 18 125-133 129-144 155 289-294
Nov 18 128-136 131-146 158 291-296
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