International Grain, Seed and Fertiliser Merchant

Market Report

Friday 9 February 2018

Wheat

US market is unchanged on the week, as a slightly negative USDA report dampened the recent continuation of fund buying, which along with new crop weather related issues, had been underpinning the Chicago market. US export projection was trimmed by 25mln bushels, raising stocks to over 1bln bushels, although the USDA reported a more bullish outlook for corn exports, mainly due to lower Argentinian and Ukrainian production and export availabilities.

EU prices are about €2/t up on the week, as a slightly weaker euro and rising Black Sea prices supports the move. In addition, following the recent purchase by Saudi Arabia, the numbers would suggest French wheat being in pole position. This has firmed cash values, although traders also report that some German and Baltic wheat may have been done, but why pay $10/t more, given the current price spreads? The fact that the French should get the majority share only compensates for the volume of Algerian business lost this season to Argentina (more vessels in their export line-up) and other African destinations, to the Russians, which overall shouldn’t greatly alter their balance sheet. Of more interest will be if Pakistan, now seen exporting wheat, can make the spec. Another mediocre week from Brussels would project seasonal EU exports at best 22mln t, and although the USDA lowered its projection yesterday to 26mln t, this is still too optimistic.

UK LIFFE is about £2/t down on the week, although in most of the country, physical prices remain unaffected by movements on LIFFE. The market remains currency driven, as earlier in the week. LIFFE gained on a weaker pound, only to dip again yesterday as the BOE hinted at earlier and larger interest rate rises, which pushed sterling back above the $1.40 mark, before slipping back later in the day. Market dynamics continue to project increased movement of grain from the south/ east, into the north/west, as higher delivery premiums cover the extra haulage.

In summary, the US wheat outlook diminished slightly yesterday, but the size of the fund-short and new crop weather issues is still seen providing underlying support. EU show little signs of substantially increasing its export outlook, despite the recent Saudi business, with Russian values continuing to drive the cash market. In the UK, LIFFE is becoming increasingly influenced by currency fluctuations, whether it by ongoing Brexit issues and the perceived ramifications, or by the BOE’s monetary policy. The USDA global outlook showed minimal reductions in total overall inventories, which should continue to provide resistance to any potential market upside.

Malting Barley

Premiums for low nitrogen crop17 malting barley remain firm as buyers struggle to find available supply. High nitrogen barley is not difficult to find, and any long holders may now struggle to find available markets for borderline-testing heaps.

The weather forecast remains unsettled. Wintry showers are likely to continue hampering late winter drilling and many growers are turning to spring barley as an alternative option.

Seed supply remains tight and growers are urged to book sooner rather than later.

Rapeseed

The oilseeds market remains in a state of flux. The USDA report released yesterday saw a 1 mlt t reduction in the Argentinian crop, more than offset by a 2 mln t increase in the Brazilian crop. With overwhelming stocks in the region from last season, South American exports have been increased by 2 mln t, whilst the US export figure was trimmed. Unsurprisingly, US carry out stocks were increased to reflect the downturn in demand, exceeding trade expectations. South American weather issues remain a discussion point in the trade, although there is precipitation forecast for the weekend and yesterday’s USDA will give the trade a new focus, and a reminder that even with a potential South American crop downgrade, there are still plenty of soybeans available.

Values on the Matif contract are almost unchanged on the week, having ranged at the lows of the downtrend that has been present since the start of November 2017. Physical buyers remain reluctant to follow any uptick on the futures market.

The Bank of England interest rate decision on Thursday was supportive for sterling, which has ranged over the past week and is back to similar values from a week ago. Whilst the current interest rate remains unchanged, BoE governor Mark Carney was positive on UK economic growth, and it is expected that a rate rise will be implemented in May. The combination of bullish currency/bearish crop report may mean UK prices continue to slide.

Oats

The oat millers appear well supplied for this stage of the season. This has subsequently put pressure on market values as milling oat supply has not waned. Sellers have therefore been pushed into the May/June position.

The £/euro rate leaves the UK uncompetitive for the export market.

Winter crops look well, and the harvest quality will be crucial for a smooth transition into the 2017 campaign.

Pulses

Supplies of Baltic feed beans are getting tight and therefore at current parities they are almost €10 more expensive than UK beans into Spain and Italy. The UK is therefore well placed to capture export demand as and when it arises. However, at current levels buyers are unwilling to commit, with a firm freight market and firm £/€ putting replacement cost at a similar level to ex-store values.

Human consumption demand from the UK remains thin, and with a large vessel of Baltic beans currently on route to Egypt, this is unlikely to change in the near future.

Gleadell has a new crop bean buyback linked to LIFFE wheat futures and the marketing pool is still available for peas and beans. Please contact your farm trader for further information.

Seed

Spring Cereals

Supply of spring cereals seed remains very limited across all species and varieties. Please call your Gleadell farm trader for updated stock availability at point of order.

Maize

At first glance choosing the right maize variety can look like a daunting task, as there is a raft of hybrid varieties from various breeders in the market place, some on the NIAB descriptive list and others not. Choosing a maize variety is not a difficult as it may seem and can be simplified greatly. Please call the Gleadell seed desk for bespoke advice on variety selection for this spring.

Peas

Pea seed remains in good supply to service our Kabuki marrowfat and Campus and Daytona buybacks. Peas still show the best gross margin return on our gross margin calculations and should be strongly considered this spring. As a reminder on drilling dates, peas treated with Wakil-Xl (mainly marrowfats) should not be sown between 29 September and 1 April.

Fertiliser

Granular Urea

Markets continue to firm as a tightening Chinese production is squeezing the global market.

Activity increased in Europe as a favourable €/$ rate allowed buyers to cover in further requirements ahead of the spring.

In the UK, stocks are dwindling as we approach first applications and only a few importers have urea available.

With this in mind, prices have remained stable, but as stocks fall further, prices may start to edge higher.

Ammonium Nitrate

There is little change with pricing of AN this week. Availability looks likely to be a key factor this spring, even before the market starts to gather pace, products are already short.

CF has kept the pressure on importers throughout the season, and as a consequence, the UK market has traded at a discount to the rest of Europe.

Vessels that would usually be intended for the UK, have been diverted elsewhere in Europe, where a further €15-20/t can be made.

Due to this, imported product has remained tight all year and CF are starting to have limited availability for Sulphur and NPK grades.

DoubleTop and Singletop are sold out for February and there are reports that DoubleTop is close to selling out for the year.

£/€ £/$ €/$
1.1345 1.392 1.2265
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Feb18 124.00-132.00 128.00-143.00 152.00 286.00-291.00
May18 127.00-135.00 130.00-145.00 155.00 287.00-292.00
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