The crop market
The NFU crop estimate of 13.25mln t would suggest further tightening of the UK balance sheet as the yield, projected at 6.7t/hectare, would be the lowest since the late 1980’s. The NFU reported that yields have been depressed by abnormally high rainfall across the UK since early summer, and that the average results hide extreme variations across the country. Import amounts continue to rise as millers turn to imports to blend or replace UK supplies. The import figure could rise as far as 2.5mln t – or higher. A figure not seen for many years and one that has put a cap on milling premiums.
European markets have edged a few Euros higher during the past week, supported by declining export availability from the Black Sea region, growing uncertainty over Southern hemisphere wheat crops and the improving outlook for EU supplies.
Until today’s USDA report global markets (US) continued to weaken, as harvests progress across the US mid-west. With markets focused on the corn and soy numbers, wheat continues to have underlying support, with declining export availability from the Black Sea, plus a growing concern for Australian wheat production due to on-going dryness. US markets may fluctuate in the short-term, although the long-term fundamental support remains intact.
The USDA report today produced initially firmer markets across wheat, corn and soy markets. The USDA announced slightly lower corn yields and lower end season stocks than in September. Soy bean production and stocks were estimated at higher than in September but the initial market reaction was higher – suggesting that a lot of the bearish news is already in the price. US wheat stocks
Australian hopes for wheat crop diminish in the key growing state of Western Australia – whilst needed rainfall has arrived in the East.
The Ukraine ministry increased the allowable wheat export figure to 5 mln t from 4 mln t.
UkrAgroConsult cuts Ukraine’s 2012 grain crop forecast to 42.4mln t due to smaller-than-expected corn crop.
Russia doubles forecast of grain sales from inventories to 1mln t in attempt to ease domestic prices as Russian Ag Ministry raises 2012 harvest forecast to 71mln t and cuts exportable surplus to 10mln t.
French AgriMer sees 2012 soft wheat crop at 36mln t, non-EU exports at 9.5mln t, stocks at 13-year low of 1.8mln t.
NFU reports lowest wheat yields for 25 years (6.7t/hectare) as UK wheat crop is projected at 13.25mln t
The consensus at the European Bourse in Edinburgh last week was that the milling oat market would remain steady.
We saw samples on the trade stands from Sweden and Finland with bushel weights of 61kg with good colour, some of which will be delivered to the UK miller to ease his quality problems.
The domestic market remains congested in the short term with the supply challenge yet to come for Jan/Jul.
The continued wet weather especially in the south creates uncertainty about winter sowing.
The pea market remains fully supported with good demand for good coloured/sized large blue and marrowfat types.
It’s a good time to plan forward, spring planted peas tick a lot of boxes with weed control being one significant benefit - buyback contracts are available with good values being offered.
Beans also remain firm as the weather and wet ground conditions have prolonged harvest and kept the crop from the market. Shorts still drive the market and price feedback from Egypt does not currently reflect ex farm values being paid in the UK.
Little trading across the EU export market, although the discount of crop’13 has continued to narrow against old crop.
The risk remains that growers will plant less new crop malting barley in the UK and throughout the EU, which will give 2013 prices support.
Limited spot demand from UK maltsters for both winter and spring varieties as most homes have dried-up in the nearby.
Gleadell still have buying interest for winter and spring varieties for a range of destinations and for both higher and lower nitrogen levels.
Gleadell are maintaining a focus on winter malting varieties for crop’13 through the Tadcaster Growers Club with Molson Coors UK. The Club will launch in Harvest’13, offering growers a rewarding home for Flagon, Cassata and SY Venture – with the chance to earn financial benefits for low moisture and screenings.
Gleadell continue to have a wide-range of contracts on all winter, spring and Null-Lox varieties - including non defaultable , pool and buyback contracts as well as a competitive range of premium over futures contracts for Harvest, Oct-Dec and Jan-Mar.
Many growers are turning their attention to spring cropping now, however for anybody looking for autumn seed we have availability of a small number of both wheat and barley varieties – and some Wizard beans.
We have seen strong demand for spring barley in particular Null-Lox malting type varieties – backed with very attractive buyback contracts, the varieties Cha Cha, Charmay and Cheerio are proving exceptionally popular.
Other spring options include peas where we have excellent contracts available on a range of marrowfats and large blue peas, and spring beans including the varieties Fuego, Pyramid and Fury.
We also have a further requirement for acreage for the new Canadian red wheat variety 5603HR – a yield and agronomic improvement over AC Barrie for inclusion in the Hovis 100% British loaf, we also have a limited availability of the new spring wheat Mulika – with good yield improvement over Paragon and group 1 quality this variety offers good potential returns.
Gleadell can also offer spring oats, other varieties of wheat and spring barley, on top of spring oilseeds – OSR and linseed.
Please contact your Gleadell Farm Trader for more details.
The global urea market remains firm with the outlook looking positive after another Indian tender closed this week. India secured 1.3mln t and have a further similar amount to buy pre-Christmas. This will support the market throughout Q4 and with Brazil and Pakistan to yet re-enter the market the price may firm further. Feedback from the FMB conference in Madrid last week confirmed that to date an estimated 100,000mt of urea has been traded in the UK with a typical annual market of 250-300,000 tonnes depending on plantings etc. The bull run is yet to hit the UK due to a late harvest and drilling to finish but buyers will re-enter the market soon to secure their requirement.
AN prices continue to edge higher as availability from producers is tight. AN national prices in France have increased by €9/tonne and CAN by €5/tonne. Several European producers have switched to ammonia production or have closed due to maintenance and have no availability for October. AN prices are still £20 lower than this time last year and with prices set to rise further as demand increases we could see imported product become very tight in the coming weeks.
Sentiments remain bearish in the phosphates market on sufficient supply and a lack of demand on a global level. The market remains supported however demand is expected to pick up further as Pakistan and India enter the market for finished grades. In the UK, demand remains steady and prices stable as blenders compete for tonnage across the UK. Buyers are yet to fully come to the market in the UK but product is moving and the outlook looks positive for the coming months.
This week the sulphur market remains quiet although end users are expected to return to the market at some stage. Sulphur producers in the Middle East are citing this as a potentially bullish factor going forward and in the UK the demand for nitrogen sulphur products will remain high.
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