International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 10 January 2019

Wheat

Despite US export shipments still being reported 13% down y/y against a perceived 11% increase, the market has gained $5/t on the week. Support is seen coming from reports that the US managed a share of this week’s Algerian tender. Although freight disadvantage meant the US missed out on Egypt, the fact US (on a fob basis) was the cheapest offered, added to the trade optimism. In addition, continued concerns over declining prospects in Argentina due to excessive rains and talk that US farmers may have planted a record low winter wheat acreage helps to underpin the US market.

European markets are unchanged on the week after initial strength, due to the rise in both US and Russian export prices eroding. After missing out on the previous tender, Russia managed to secure all of this week’s Egyptian tender, selling 415,000t of late February/early March shipment wheat. With Russia offering four times the volume traded in the March shipment period, European traders are becoming more concerned that the potential of any substantial increase in EU export demand is receding. In its monthly update, France’s farm ministry slightly lowered its projection for French non-EU soft wheat exports by 100,000t, raising ending stocks by the same amount, to 2.8mln t.

The UK market continues its early new year lacklustre approach, with futures continuing to trade in a very narrow range. Eyes and ears are on the current Brexit debate in the Commons, and with the recent government defeats, the outcome is looking increasingly uneasy for the Prime Minister. The latest vote lost means that ministers will have to come up with revised plans (so-called Plan B) within three days, rather than the three weeks previously agreed in law, if the PM’s EU withdrawal deal is rejected by MP’s next Tuesday.

In summary, the US market currently looks to be underpinned, although key USDA production, stocks and planting data will not be issued this Friday due to the partial shutdown of the US Government. European markets are reeling due to the continued slow pace of exports, and the likelihood that both the length of Russian exports, and key importer cover are both increasing. In the UK, Brexit continues to rule and, with the outcome likely to cause much reaction in the financial and economic sectors and the impending influence upon sterling, it is no wonder that both farmer selling and consumer buyer has slowed, with many waiting for the result and then trying to determine what it all means.

Malting Barley

The current EU malting barley market turned bearish again this week due to French traders trying to sell into a market without many buyers. In the UK, prices are little changed due to most farmers and traders having already sold all they have to market from crop 2018. With the historically high prices we have had this season, this should not really come as a surprise to anyone. Crop 2019 is little changed, with none of the intended EU spring barley area having been sown. If we get reasonable spring planting conditions, then we are likely to see sellers come to the market and prices come under pressure.

Rapeseed

Trade discussion between the US and China continues to affect the US soybean market. The US trade delegation returned today from Beijing reporting “positive” news, although we haven’t seen anything concrete. That said, the rhetoric suggests pledges from China to buy significant amounts of US agricultural goods and this has helped to support CBOT soybeans. In addition to this trade news, ongoing weather concerns in Brazil continue to create a weather market. Soybean crop losses from heat and drought have more than offset the increased US stocks that USDA reported in its December report, and these two factors combined have pushed values of CBOT soybeans up circa $10 since Christmas eve.

In further news from the US, we are still not getting any reports from USDA. President Trump walked out of talks with the senate as it refused his funding request to build his wall along the Mexican border, extending the fiscal shutdown with the administration. This means that we will not get any reports on trade or any numbers from the USDA until further notice.

After falling to a three-month low during the festive period, the Matif has followed the soy market higher. Talk of renewed demand from some of the continental crushers as water levels improve in the inland waterways has helped and, with improving bio-diesel margins, some spot demand is helping to underpin prices.

Going forward, our domestic market will be dominated by currency. The focus therefore remains on Brexit and the on-going negotiations as we approach the “meaningful vote” next week. The PM is widely expected to lose the vote, but what happens after this is far from clear. However, the only thing that all MPs seem to agree on is that a no-deal would be bad.

 

Oats

UK oat market ex-farm values remain unchanged on the week, with farmer sales still few and far between and millers continuing to draw off futures-related contracts for supply. Poorer quality and shortfalls on tonnages due to lower yields remain a common theme, especially on spring oats.

With six months left of this marketing year there remains potential for further price moves. The trade will keep a close eye on the spring drilling and the progress of the crop in the ground, looking to see when we could expect new crop oats to become available. This will be a key factor in determining where we see price direction in the back part of this marketing year.

Seed

Drilling Conditions

It appears at the moment we have some unseasonably dry conditions, which is causing a bit of a dilemma with growers who have spring cropping land ready to drill and seed, either on farm or due imminently. We would remind growers to remember why that land is destined for spring cropping in the first place, and if its due to grass weeds, you’ll most likely still see the long-term benefits of holding off a while longer. In non-grassweed areas there is an argument for looking at drilling now, so long as conditions are good and dry underneath the soil surface as well as on top. We have spring barley/spring wheat being processed as we speak, so if you do require seed now, please contact your farm trader and we’ll try to accommodate your requirements.

Maize

A reminder to get your maize seed requirements sorted promptly so that we can allocate stocks before we start to see the popular varieties sell out.

Peas

We still have a good stock of pea seed to support our large blue and marrowfat buyback contacts. Kingfisher remains the go to large blue, with its excellent colour retention and sector leading standing power.

Fertiliser

Granular Urea

After the surge in prices throughout the Christmas period, the market seems to have stabilised on an international level. The Indian tender announcement is still expected shortly, setting the benchmark for future short-term prices in Europe and providing support to Middle East and Chinese prices. In the UK, significant demand is expected in the coming weeks, with prices likely to firm, as stocks deplete at port side stores. Gleadell has both bulk and bagged Egyptian urea available for delivery Jan, Feb and March.

Ammonium Nitrate

This week CF Fertilisers released new spring terms £15/t below previous levels. With both plants now running, the company appears hungry, and is wanting to compete for business in the Jan, Feb and March period. There is still in excess of 30% of the UK nitrogen market to be covered and these new prices have helped to kick-start the spring market with an immediate uptake on tonnes. Currency will play a big part in the weeks ahead. Any serious drop in the value of the pound could put immediate pressure on pricing, so the vote in Parliament next week could well direct pricing from then onwards. Consideration should be given now to taking any cover prior to that event, so for all CF top up enquiries, please speak to your local Gleadell farm trader or the Gleadell fertiliser desk on 01427 421241.

£/€ £/$ €/$
1.105 1.2735 1.152
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan19 159.00-169.00 166.00-176.00 230.00-240.00 323.00-328.00
May19 163.00-173.00 170.00-180.00 234.00-244.00 327.00-333.00
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