International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 30 November 2017

Feed Wheat

As the US returned from its Thanksgiving holiday, traders sold both the wheat and corn markets, pushing prices to contract lows ahead of first notice day.  Although demand for US wheat remains sluggish, with current export shipments down 6% y/y (against the perceived 5% reduction projected by the USDA), pricing of better quality is seen as ‘competitive’ against other origins and may feature in the upcoming Saudi tender.  USDA reported wheat acreage is likely to decline further in their baseline projections, putting the area to the 2018-19 marketing year at 45mln t, down from 46mln acres this season.  Reduced area and declining winter wheat crop ratings should provide support long-term, although the forecast is seen bringing moisture into the main growing states, which in turn may reduce current dryness concerns.

EU prices, like the US, traded down to fresh contract lows this week, before bouncing higher.  In its latest tender, Egypt again purchased only Russian wheat at this week’s tender, with the Romanian offers seen between $5-10/t too expensive.  Although it is envisaged that France will get the majority share of the Algerian business, it is thought at least three Argentinian cargoes were included.  The Saudi tender will test how much German/Baltic quality wheat is left, with US HRW seen as a potential alternative.

UK futures on the week had been down £4/t, as news of a Brexit divorce bill settlement sent sterling sharply higher.  However, and even though sterling remains firm, futures have recovered on the general global bounce, to be currently trading just £2/t lower on the week.  While the drop in futures encouraged some ‘better sellers’ in the deferred position, against few buyers, spot prices hardly moved as merchant shorts bid for supplies into an increasingly ‘logistical-driven’ market.

In summary, all US and EU markets hit contract lows this week, and that includes the UK if you take the calendar year (yearly low was set last December), but do markets feel they are at the bottom?  Recent tenders (Egypt/Algeria) show no shortage of global cash wheat, and the trade will determine whether the ‘bounce’ is the start of a firmer trend, or just a ‘another dead cat bounce’.  Long term prospects have signs of supportive factors (US plantings/crop ratings and the fund shorts), but short term it’s all about too little demand and too much supply.

Malting Barley

Buying interest for 17/18 crop has increased following growing concerns regarding the supply of quality barley across the EU for the rest of the season.

Pre-and post-Christmas prices in the 17/18 market are trading near parity due to the lack of sellers in the nearby position.  However, the firmer sterling has not helped UK prices and has capped export values.

18/19 prices are drifting.  Values are supported by the 17/18 supply situation, but also pressured by the projected increase in spring barley plantings in the EU as a whole.  The replacement of older spring varieties in favour of newer and higher yielding varieties, such as Planet and Laureate, is also pointing to a bigger supply next harvest.

For growers looking to contract for 18/19, the Gleadell grain pool is open for both spring and winter malting barley varieties in all movement periods.  Please contact your local Gleadell farm trader for more information.

Rapeseed

There is little fresh news.  The CBOT soybean market has drifted on the week on relatively light volumes, however we are maintaining a close eye on developments in South America as dryness, particularly in Argentina, is starting to raise some concerns.

In Europe the rapeseed market has fallen sharply this week.  At the time of writing, Matif rapeseed futures are down circa €7 on the week, as crushers are largely covered in the nearby positions and crush margins have started to ease from the recent highs.

In the UK, currency continues to dominate farm gate price movements.  Sterling had drifted as domestic political instability had created some nervousness in the money markets, but following reports in the Telegraph on Tuesday evening that Brexit negotiators had agreed an outline agreement on the divorce settlement, sterling rallied sharply with the sterling/euro rate now up nearly 2.5 cents.

The perception is that, with the divorce settlement agreed, negotiations can move towards trade and the wider issues that will affect the UK’s long-term economy.  However, with the Irish border and labour movements still to be finalised, the volatility in the currency will remain.

Oats

Free market oats have continued to firm into the new year.  Movement pre-Christmas is tight, but the market continues to trend upwards into the Jan/Feb/March position.

DEFRA released its first UK 2017/18 oat balance sheet yesterday evening.  Total availability of oats was estimated at 1.076Mt for 2017/18.  This is 12% higher year on year and attributed to a rise in production.  However, the question will be how much of this production will make milling spec, considering the quality issues that have made themselves apparent this year.

Seed

This week has seen increased demand on spring seed as cropping plans get established.  The supply situation on cereals is unchanged from previous weeks, with our advice remaining that requirements get covered this side of Christmas.  A reminder that Laureate spring barley is sold out and the two new KWS spring wheats, KWS Chilham and KWS Cochise, have limited stocks left.

Beans

Lynx remains in good availability along with Vertigo as our main recommendations to growers buying in new seed.

Peas

Following a re-launch of pea buybacks for the spring 2018 planting, we have good availability of the marrowfat pea Kabuki, with excellent colour retention and early maturity, and the large blues Daytona and Campus.  Daytona well respected for its colour retention, and Campus being very stiff strawed aiding harvestability.

Maize

We have our full portfolio of Maize for 2018.  A wide range of varieties are available to cover all forage and anaerobic digestion needs.  We will have in place an early order discount for orders received before Christmas.  Please get in touch to discuss individual variety advice for your area.

Fertiliser

Granula Urea

The recent up-tick in the granula urea market had encouraged producers who had previously reduced their output to start manufacturing at capacity again.  However, with India cancelling its recent tender, some of these manufacturers are now looking to move some material, and these values are coming under some pressure again.

Given these recent cancellations, we expect to see buyers being forced back in to the market soon, and view the current dip in prices as a good opportunity for those with material still to buy.

Gleadell is in a strong position, having vessels loading in Egypt shortly, and can offer urea at extremely competitive terms for Jan-Feb delivery.

Ammonium Nitrate

CF released new terms earlier this week, indicating an increase to all prices from the previous offer.  Terms are now for a January movement and offer a discount for early January delivery for anyone that can take product.  Terms remain competitive compared to European values, which are trading at much higher levels, however long-holders of imported product are now starting to move stock at a small discount to UK blue bag.

£/€ £/$ €/$
1.1355 1.345 1.1845
Feed Barley £ Feed Wheat £ Beans £ Oilseed Rape £
Dec17 122.00-130.00 130.00-145.00 150.00 308.00-313.00
May18 125.00-135.00 135.00-147.00 155.00 313.00-318.00
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