International Grain, Seed and Fertiliser Merchant

Market Report

Thursday 28 February 2019

Wheat

US markets have slipped further over the past week as fund managers continue to build on their already net short position. Talk of record cold temperatures across parts of the US winter wheat areas and data showing crop ratings declining from November in all states, except Kansas, has provided little support to a market driven lower by a continuous sluggish export program. Although wheat sales are slightly higher y/y, shipments remain 8% lower y/y, with traders almost resigned to the likelihood of further increases in US closing wheat stocks.

European prices have followed the US lower during the past week, with new crop values getting within €2 off the yearly low set back in March 2018. Although Russian export prices have weakened, they are still higher than French, German and Baltic supplies, which should allow exports to further decline over the next few months. Despite various rumours, the Russian agriculture ministry again denied that export quotas had been set on exporters for grain shipments, maintaining a 42mln t export outlook for the season.

UK old-crop values are virtually unchanged on the week, although new crop prices are down £2/t on the week, pressured from a rise in sterling to a near two-year high. Supporting the rise in the pound is the possibility of a delay in Brexit, although this depends on how voting goes on the Prime Minister’s Brexit deal and a sequential agreement from the EU to extend the deadline.

In summary, US markets have reset contract lows and both the EU and the UK got close to taking out yearly lows set last March. With US, EU and Black Sea export projections all looking heavy, the concern now for the trade is, how big is international demand, and how big is the export long, and when does the market liquidate facing the huge market inverses? US/China talks will provide support, especially if wheat is included, but weather seems to have been placed on the back-burner for now with much colder temperatures set for the US and Australia potentially facing its third consecutive drought season.

Malting Barley

It’s been a busy week with plenty of EU buyers, mainly booking crop 2019. There have been fewer UK buyers, but nevertheless, business has still been done. EU spring barley plantings continue to make very good progress, and if the weather forecast is correct, we can expect some countries to have nearly completed their intended area by the end of next week. We estimate the English area to be 65% complete, which is very early for this time of the year.

Rapeseed

Chicago soybeans have come under pressure in the past week as spill over selling from wheat and corn has weighed on the market. The ongoing failure of US grain exports to meet USDA’s forecast export pace, and the uncertainty on the US/China trade deal, has seen markets continue to slide. To add to this negative tone, the weather conditions in Brazil have improved and the market continues to struggle to rally given the lack of supportive news.

In Europe, Matif rapeseed futures have stabilised, but cash prices remain under pressure. A shutdown in one of France’s major crushing plants and a lower rapeseed crush than expected, combined with the impending arrival of Australian imports, is weighing on the physical market.

Despite the relatively calm Matif, the UK has seen a sharp appreciation in currency. The availability of well-priced French rapeseed in the UK has resulted in farm-gate prices falling £5-6 on the week. However, this still leaves UK prices expensive against import opportunities. Brexit, and the speculation of an extension to the March 29th deadline, is being perceived by the money markets of lessening the chance of a no-deal and sterling has rallied as a result. This, and an increasing end-of-season carryout, is adding to the overall bearish tone of the old crop market.

Pulses

New crop faba beans have shown great resilience over the last week, with the market ignoring the falling wheat market and firmer sterling to settle unchanged. Support is coming from shipper’s determination to cover in forward new crop sales that have been made over the last few months, with very little coming forward from farm.

At current levels beans are worth a significant premium over wheat, almost double what it was this time last year. It is therefore unsurprising that the domestic feed compounder is showing little interest to include beans in winter formulations.

After an aggressive move higher last week, the old crop feed bean market appears to have stabilised. Shippers are gradually filling existing export commitments and domestic shorts are also getting covered. Human consumption beans remain very firm, although this market has all but finished trading, with few parcels left on farm.

New crop pea buybacks remain available for both large blue peas and marrowfat peas. Please contact your farm trader for further information.

Seed

Spring Cereals

There is little change this week in terms of availability. We still see RGT Planet and Laureate very near sold out and other spring barley varieties still available in limited quantity. Spring oats remain extremely tight; however, we have a small balance of WPB Elyann to offer growers needing a break crop.

Pulses

Gleadell still has a limited amount of spring bean seed left; please contact your farm trader for latest stock updates. Spring pea seed is still available to service our market leading large blue and marrowfat buyback contracts.

Winter OSR

Early order deals are available across all of our OSR portfolio. Please talk to your farm trader for bespoke variety advice to match your requirements.

Fertiliser

Granular Urea

The increase in demand over the past two weeks due to good weather has stabilised all nitrogen prices. Granular urea vessels have traded this week at $15/t above the floor seen two weeks ago. The market may firm further as just in time orders are becoming difficult for suppliers to execute. Second applications and the stability in the market suggest that the market will remain active as warmer weather continues. Ordering now to avoid delays on delivery would be recommended. Energy prices currently remain above January prices following OPEC+ supply agreements. This could have an impact on producer costs if energy prices continue to firm, so this also needs watching.

Questions about the future of straight granular urea in the UK continue to be asked following DEFRA’s publication of the Code of Good Agricultural Practice (COGAP) for reducing Ammonia Emissions. The use of urease and nitrification inhibiters remains a very topical subject and products are now available in the UK to combat issues associated with using urea-based fertilisers. ALZON® neo-N is a granular urea compound with dual stabilisers added during the granulation process to reduce the risk of volatilisation and leaching after application. Produced by German producers SKW Piesteritz, this product is available today. For further information and enquiries on ALZON® neo-N, contact the Gleadell fertiliser desk on 01427 421237.

Ammonium Nitrate

Demand for ammonium nitrate has increased on the Continent as European farmers come back into the market. Parliament has set the date for the next vote in Westminster on Brexit. A no-deal scenario could see tariffs of 6.5% on imported fertiliser. This could cause a hike in prices overnight, with the severity of the price hike being determined by the strength of sterling. Equally, a softer Brexit (Theresa May’s deal) may have a positive impact on sterling. Any delay in the process could create a certain level of stability, however uncertainty will continue to cause fluctuations in the currency market. CF prices has consistently been the most stable throughout this turbulent time and an excellent way to mitigate risks when buying ammonium nitrate.

£/€ £/$ €/$
1.166 1.329 1.1395
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Mar19 133.00-143.00 157.00-170.00 248.00-258.00 300.00-305.00
May19 135.00-145.00 159.00-171.00 250.00-260.00 302.00-307.00
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