International Grain, Seed and Fertiliser Merchant

Market Report

Friday 8 March 2019

Wheat

The lack of any fresh news regarding the US/China trade talks, and no further purchases of US products, has left the market void of any positive news. Exports are still seen dragging last season’s pace and although sales are running slightly ahead, time and demand is gradually running out for the US to substantially increase both. Funds continue to build a short position, which again has pushed US wheat futures to post new contract lows this week. Reports that heavy snow cover and rainfall may delay US spring plantings did little to break the current downward sentiment of a market trying to find or buy demand.

European prices are lower on the week, but have held up well in the face of the US weakness and a firmer euro. Another decent EU shipment week, helped by further upward weekly revisions, and an average French vessel line-up is trying to lend support. However, with the assumption that EU stocks will increase further on lower exports and domestic use, and no current perceived new-crop weather issues, exportable surpluses in the EU, Russia and the Ukraine are also building ahead of harvest, when early season demand is expected to shift back into the Black Sea region.

The UK market is lower on the week, following the general global downward trend as the trade waits for the key Brexit vote next week. Fundamentals remain unchanged, with lacklustre farmer selling, although merchant short-covering continues to underpin spot premiums.

In summary, another week and another US contract low. No fresh positive news regarding the trade talks seems to have triggered the US into sell mode, despite growing concerns over US weather and spring planting prospects. The EU is all about demand for the remainder of the season. As for new crop, demand should revert back to the Black Sea. The UK will be driven by whatever is decided next week in Parliament. USDA reports are out later today, with little expected to excite the market.

Malting Barley

Another quiet trading week for both old and new crop malting barley. The weather throughout the EU continues to favour spring malting barley plantings, with some countries nearing completion. The UK has also seen good planting progress over the last week, with many areas in England 70-90% complete, although the South started a little later and is around 50% sown. Scotland has also made a good early start. Overall spring crops have gone into reasonably warm, good, moist, seed beds. The recent and forecast rains can only help crop establishment.

Rapeseed

The market has continued to slide this week, as ongoing trade issues between Canada and China have effectively closed the door on fresh export business for Canada. As a result, Winnipeg canola futures have fallen sharply. Canada will need to find fresh export outlets, but this currently looks unlikely and could well add to the growing levels of global old crop stocks.

In Europe, there has been some resolution to the strikes that have plagued the crushing industry in France. One of the largest plants in the north is still not operating and the export market continues to see offers of well-priced material from northern French ports. Across Europe that market continues to feel heavy, with up to 25% left unsold is some areas, driving old crop prices down to levels that could make it worthwhile carrying through to new crop.

The planted area for 2019 harvest in Europe maybe down, but the crops have come through winter well. In the Black Sea it’s a similar picture and temperatures in the five-day forecast are showing no signs of significant cold, so we could conclude that the threat of winterkill has now passed.

The burdensome old crop and potential new crop supplies have put pressure on the market. However, the dispute between Canada and China has the potential to bring some additional oil demand to Europe. China has bought a cargo of Russian rape oil and is rumoured to be seeking further non-GM oil from Europe. This could increase crush demand and reduce stocks, so we expect the market to hold around these levels in the short term until we get greater clarification.

Pulses

The rally in large blue peas appears to be coming to an end, with values stable over the last few weeks. Many of the UK micronisers are covered to the end of old crop and UK peas are expensive on the export market against competing origins. This means only limited demand from buyers of specialist cleaned products where certification such as BRC is imperative. New crop pea buybacks remain available for large blue and marrowfat peas.

Old crop feed beans have firmed £2 on the week. Buying interest is limited to the ports with most shorts to consumer homes now covered and fresh domestic business non-existent. Imported peas are buyable at £35/t discount to beans, so extruders who require pulses are using peas in favour of beans.

New crop beans are unchanged on the week, with sterling and the LIFFE wheat market virtually unchanged too. Interest from domestic feed compounders has been non-existent to date, with beans remaining uncompetitive against other proteins. Buying interest on the export market has also dried up. New crop contracts linked to LIFFE wheat futures remain available and the Gleadell marketing pool on all positions is still open.

Seed

Spring Cereals

A lot of spring cereals went into the ground this week into very good seedbeds. Seed supply across the board is now tightening as we get well into the season. Oats and wheat are more or less sold out and barley has the leftovers of less popular varieties available, and that’s about it in terms of the cereals.

Pulses

We still have a limited amount of Lynx spring bean seed available. However, we are now seeing reduced stocks of large blue peas, as over the past few weeks there has been a lot of interest, so please speak to your farm trader for latest stocks and terms on our excellent buyback contracts. This spring is ideal to try peas, if they are not usually in your rotation. A nice warm and dry seedbed, for most across the country, will ensure the crop gets off to the best possible start. Additionally, peas are consistently at the top of our gross margin calculations for spring cropping options, and also support an excellent seedbed and start to the following wheat crop.

Fertiliser

Granular Urea

The market remains relatively unchanged since last week. Most March tonnage has been sold in key areas globally, so prices should hold until suppliers begin to negotiate April shipments.

In the UK, competitive spot prices suggest that there is a desire to keep product moving. However, Brexit uncertainty makes it difficult to judge market sentiment.

A hard Brexit could result in additional 6.5% tariffs on imported material if the UK were to leave on the 29th March on WTO terms.

There are mixed reports of fertiliser applications across the country, with some holding off for higher soil temperatures, whilst others are starting to talk of their second applications already. Farmers should be mindful of the timing of their urea application to minimise losses or consider using inhibited urea such as ALZON® neo-N, as the government continues to discuss ways in which ammonia emissions can be reduced.

Ammonium Nitrate

The UK ammonium nitrate market has corrected this week due to new CF terms being announced on Tuesday. UK ammonium nitrate, Nitram, dropped around £15/t and is available for delivery throughout March. This price correction has occurred from the previously weakened imported ammonium nitrate market in February, despite prices looking stable to firm due to increased demand on the Continent and in the UK.

Sterling continues to trade higher than last month, but unpredictability in the currency market makes trading decisions difficult with less than 28 days until Brexit. CF terms could be pulled at any time so for any enquiries into CF or imported AN contact the fertiliser desk on 01427 421277 or speak to your local Gleadell farm trader.

£/€ £/$ €/$
1.1615 1.134 1.131
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Mar19 130.00-140.00 154.00-167.00 245.00-255.00 294.00-299.00
May19 132.00-142.00 156.00-168.00 247.00-257.00 296.00-301.00
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