The grain market
FEED WHEAT
Markets have consolidated during the past week as improved weather has seen crop ratings stabilise in the US Midwest.
However, the market is waiting for the USDA report due out Friday, with the average analyst estimate projecting another 50mln t reduction in the size of the crop.
Like last month the focus will be not only where the USDA sees the yield, but how they manage to ‘balance the books’ on the demand side.
Help may come with comments that 2011/12 ethanol usage may be overestimated, and further cuts in 2012/13 food, ethanol and export projections may ease the expected downward revision to 2012/13 US corn stocks.
Wheat markets have been dominated by contrasting reports coming out of Russia on the size of the 2012/13 grain crop and the level of exports.
Politics is playing a part in all public announcements from Russia , but we have to remember that ‘ feeding the people ‘ and avoiding massive food inflation are Mr Putin’s main concerns – and the interests of honouring supply contracts or complying with WTO rules, will come a distant 2nd or 3rd.
However it does seem that exporters are safe-ish to export for the months of August, September, probably October and possibly November.
With a brisk start to the season (4.5mln t by the end of August) the likelihood of some ‘political intervention’ over exports seems more of a reality to ensure domestic supplies, especially if further crop reductions occur.
The UK wheat harvest has lumbered into action with quality and yields being reported as very variable.
To date, DON levels do not seem to represent the massive problem that many thought it would, and millers are prepared to wait and see what they get , rather than plunge in to the market at historically very high premiums.
Friday could be one of the biggest grain days for several years, and what the USDA reports and how the trade digests the numbers will be of great interest.
USDA reports US wheat harvest 88% complete – spring wheat 47% harvested with 63% of the crop in good/excellent condition.
Canada’s 2012/13 grain output up 8% to 50.6mln t – USDA attaché.
Russian Ag Ministry states wheat output at 45mln t – overall 2012/13 grain harvest officially stands at 75-80mln t.
Russia to export 4.5mln t of grain in July/August, with 2mln t exported in July (1.8mln t wheat).
Russia rules out grain export curbs for now - ‘tariffs are always possible’ reported the Deputy PM.
Farm Ministry reports Ukraine will have an exportable grain surplus of 21-23mln t in 2012/13 (5mln t wheat / 12.7mln t corn).
Monsanto bullish on Argentine corn area – expects area at 5mln ha, potential 2012/13 corn crop of 30mln t.
USDA reports US corn crop in good/excellent condition at 23%, down 1% on the week.
US analysts report corn yield (average estimate) at 126bushel/acre – total crop 10.97bln bushels (USDA at 146bu/acre and 12.97bln bushels).
China’s 2012/13 total wheat production is forecast to decrease to 108mln t – USDA attaché.
BAGE sees Argentine 2012/13 corn area falling 20% to 3.1mln hectares.
SovEcon cuts Russian crop forecast to 72-75mln t – wheat forecast 40.5-43.0mln t with wheat exports at 8.5mln t.
Strategie Grains lowers UK 2012/13 wheat crop forecast to 14.32mln t, revising yield down to 7.27t/hectare in the process.
OATS
We have finally seen a few samples across the south of England as farmers make a start but, in the main, did not manage to complete their oat acreage before the rain returned.
Colour and screening levels are good but the bushel weights on these early cut oats are 45/48 kg and should improve due to the high moisture levels on these samples.
The oats in Kent appear to be 50/52 kg, probably as a result of less intense weather patterns.
Rain is now expected to return on August 13 as oat millers scramble for supply to tide them over before the bulk of the crop becomes available.
PULSES
The pea crop is just about ready to combine. As previously reported, we expect the quality to be variable, with colour and stain likely to be the main problems.
The bean harvest is still 3-4 weeks away and, until we see the quality available, the market will remain at fixed premiums over wheat.
A note of caution would be that the French bean crop is only 7-10 days away, and they have expectations of 5mt/ha plus yields - better than previous years with regard to size and beetle damage - this could be negative to UK prices.
MALTING BARLEY
Malting values still following the overall grain picture.
Feed barley values have changed little across the week, with the discount to wheat widening slightly for the harvest position.
French yields are reported at up 20%, which is likely to more than double their exportable surplus to 2.5mmt.
Scandinavia is experiencing rainfall – but Danish/Swedish crops remain very healthy in the field and harvest is still at least 10 days away.
Internationally, we can expect Argentina to have another good growing season on barley – with a current crop estimate of 5.2mmt however, increases in export taxes may curb some shipments abroad.
Movement of winter varieties so far this harvest has not been easy, with very few homes taking winter varieties .
Springs are just around the corner – with just small amounts of Charmay having been harvested so far.
Gleadell can still offer very attractive premiums for crop’13 – on winter, spring and Null-Lox varieties. Null-Lox is currently harvesting at under 1.70 nitrogen and approx. 6.2 t/ha.
RAPESEED
Another frustrating week of harvest weather for the UK farmer with rapeseed still in the field and showers continuing to be problematic.
Yields have been variable and are generally lower than the bumper crops we have enjoyed for the last 2 years - with the average of what we have seen to-date around 1.5t/acre, so you could say we are back to normal, however the oil contents are markedly lower than we have become used to.
These yields would put the UK crop back to 2.2mln t, down 500thd t from pre-harvest estimates – however these lower yields have not been replicated on the continent and farmers in France in particular have seen better than expected yields.
EU-27 production has now been revised higher to around 19mln t from 18.1mln t , thereby reducing European import requirements
The rapeseed market has been relatively flat this week as all eyes remain on tomorrow’s key USDA report.
The expectation is for a sharp drop in the production forecast, but question marks remain over how much the USDA will be prepared to cut off their yield forecasts and what they will do with their demand side of the equation especially given the escalating food inflation in what is an election year in the US.
Rapeseed will continue to follow the moves in the soy complex and any sharp breaks in the CBOT soybeans futures will be reflected in our rapeseed values however European rapeseed crush margins look likely to support demand for the time being.
SEED
With a 5-6 day weather window opening for most parts of the UK this should enable harvest to really get underway, and growers to clear winter barley, OSR and make a start into wheat acreage.
As we get wheat land available which will be destined for OSR many growers will now look to cover requirements as acreage permits.
Gleadell are in a strong position to offer your variety of choice for prompt delivery – however it is worth noting a few varieties.
In early trials data Compass has performed well and this is backed up with on-farm performance – echoed with the variety PR46W21. Both varieties have high oil content and high gross output added to solid lodging resistance.
There are a couple of interesting varieties in the candidate pipeline – with Avatar the highest gross output variety practically sold out - however there is some limited availability.
DK ExStorm is a variety certainly worth having a look at – performing exceptionally well in French trials and scoring a 9 for stem canker resistance.
The short hybrid Thorin is an excellent choice in a risk management position within the OSR seed acreage – the variety has excellent gross output scores when desiccated and with its short stem has excellent lodging resistance.
Finally looking at the conventional varieties which have performed very well this season – many growers are reporting good performance from Cabernet, Sesame and Vision which are all available and two other varieties from British breeder Mike Pickford Osprey and Kite have had excellent early trials results – with high oil content, medium maturity and good stem stiffness.
Nearly all of the varieties above are available for delivery within 1-2 days and this will become extremely important as we move towards optimum drilling time for OSR.
Many of our suppliers are now processing winter barley seed and this is also available for delivery next week in many instances – so that the seed is on farm for when you require it.
FERTILISER
Urea
The urea market remains very quiet in Europe and the UK. The continuing global firmness, due to intermittent buying activity in the US and Latin America, has made a correction very unlikely in the short term, although we have seen prices ease slightly over the past week.
Current market conditions are nervous and it is unknown whether this sporadic buying will keep the market supported, so producers are unwilling to adjust their price ideas and buyers are willing to wait for a correction so a definite stalemate is present.
Farmers in the UK and Europe are more concerned about harvesting and the likely quality of the crop so until harvest is well underway the market is likely to remain quiet. Traders feel it is too risky at present to take any positions so continue to watch from the side lines only.
ALZON 46
Interest in Alzon 46, the new stabilised nitrogen fertiliser, being marketed exclusively through Gleadell in the UK, remains high.
Delaying the whole time sequence of nitrification from being applied to being available in a nitrate form, unlike a urease inhibitor, Alzon 46 is a more efficient, more environmentally friendly fertiliser and will be available to the UK farmer for Oct/Nov delivery.
Ammonium Nitrate
Global activity in the AN market is slow as buyers are not ready to make purchases at current price levels.
Producer offers have increased by $5-10tonne from last week in the Black Sea and it is unlikely that new business will be concluded at these levels. In the UK, both imported and national demand remains slow as harvest progresses.
Phosphates
In Europe, there is speculation that producers are to increase prices because of fluctuations in the euro against the US$.
However, any price increase is likely to be marginal as demand is down and higher prices could further impact on consumption.
Potash
The potash market remains lacklustre on a lack of clear market direction. Retailers in North America and Europe are buying on a hand-to-mouth basis on concern of being stuck with high priced stock.
There are worries that global prices could decline if second half 2012 Chinese prices are settled below levels agreed for Q1/Q2.
Sulphur
Gleadell are offering “granular NS” a compound fertiliser containing 27.5N/11SO3/6CaO as a little and often approach to the application of sulphur in the Spring.
All nutrients are in readily available form allowing easy uptake.
This approach to sulphur and nitrogen application will provide adequate supply of these nutrients at all the main growing phases and limit potential losses through leaching.
Guaranteed as 95% 2–5mm this is a high quality product and an excellent addition to the Gleadell range of fertilisers.
Farming News Daily Supporting British Pig Farmers
Source: Argentine Beef Packers S.A.