Friday 22 June 2018

Markets down sharply on the week as supportive USDA data was quickly overlooked as attention returned to politics/weather. USDA headlines:
  • ·         Russian wheat crop est. reduced by 3.5mmt to 68.5mmt, below market expectations (85mmt this season). Decline is believed to be based on a reduction in area due to poor spring planting weather. Leaves potential for deeper cuts if yields deemed to be below average.
  • ·         Ukrainian wheat production left unchanged at 26.5mmt in spite of the recent drought.
  • ·         US 17/18 corn beginning stocks reduced by 2.04mmt to 53.4mmt due to an increased export forecast. Ending stocks were reduced to 40.07mmt (trade est. 42.1mmt).
  • ·         Global 2018 corn production placed at 1052.42mmt, down from 1056.07mmt previously - though 17.65mmt higher than this season.
  • ·         2018 World wheat production reduced by 3.07mmt to 744.69mmt.
  • ·         Russian FOB prices move $3.50/t lower on the week, with July trade reported at $200.50 in spite of all the ongoing new crop production concerns. Likelihood of an earlier harvest may have contributed to the sell-off.
  • ·         US/China trade war dominates the headlines as both nations exchange punitive tariffs. US soybeans/corn are the main Ag products affected, with both commodities selling-off as a consequence.
  • ·         Strategie Grains reduce EU wheat crop estimate by 900k to 139.9mmt. Wheat exports to 12th June placed at 19.15mmt (23.3mmt last season).
  • ·         US funds continue to liquidate positions. Now estimated net short 36.6k wheat, long 29.5k (corn) short 49.4k (soybeans).
  • ·         Euro weakens against the dollar following the ECB’s announcement on monetary policy plans midweek. Sterling also firms relative to the Euro, pressurising London wheat further.

  • ·         Southern Russia and Ukraine continue to look hot and dry for the next 2 weeks. If these forecasts materialise, that will amount to 3 months without any meaningful rain for these areas. Russian spring wheat areas further north continue to suffer from wet conditions.
  • ·         US winter wheat ratings improve 1% to 35% g/e. 91% estimated to be headed versus the 5 year average of 90%. Harvest is also estimated to be 14% complete, ahead of the 10% 5 year average. US Corn Belt receives hot, dry conditions over the weekend and into this week – though temps are expected to moderate, whilst some rains are expected to follow. General perception remains that Corn-Belt weather looks unthreatening.
  • ·         Australia’s ABARES suggest above normal temps and below normal moisture remain a problem. 7-10 day models suggest little respite. Mid-month Climate Outlook suggest Eastern crop areas will remain hot and dry, whilst western areas will be close to normal. Saskatchewan spring wheat crop ratings placed at 83% g/e. Recent rains have helped improve conditions with only 18% believed to be short/very short.
  • ·         Indian monsoon remains closely monitored, with some trade concerns that rainfall levels may be significantly lower than normal.

  • ·         Wheat markets continue to sell-off sharply despite the release of supportive USDA data and ongoing dryness in Southern Russia/Ukraine.
  • ·         US/China trade war escalation undoubtedly contributed to weakness through the week - that combined with easing Black Sea wheat values and generally benign US weather for both wheat harvest and corn crop development.
  • ·         Markets have removed considerable risk premium, whilst US funds have also liquidated their long positions. Given it is still June, trade is conscious crops are far from guaranteed at this stage. In terms of Russia/Ukraine, the Black Sea Futs/FOB trade may need to lead the way to further gains in world wheat markets, with US trade currently the world’s most expensive.
  • ·         Fundamentally, US/Black Sea weather should occupy much of the focus. Add in both currency and geopolitical uncertainty and heightened volatility would seem likely over the coming weeks.

Tuesday 12 June 2018

Market Report 8th June 2018

Markets mixed this week as Black Sea/US weather continue to occupy much of the trade focus.

  •  Private forecaster’s cut Russian wheat crop estimates. Sovecon est. down 3.9mmt to 73.1mmt. IKAR est. down 2mmt to 71.5mmt. Russian Grain Union place production at 68- 69mmt. If correct, would amount to a 21% decline on this season’s 85mmt produced.
  • Ukrainian winter wheat yields estimated down 15-30% according to the state hydro meteorological centre as a result of prolonged dry weather. Ukraine’s Ag council have also suggested up to 50% of the grain crop could be lost if conditions don’t improve.
  • German Farm Co-Op Association suggest wheat production will be circa 22.89mmt, down 6.5% on last year.
  • Private analysts forecast Polish wheat production down 8% on last at 10.7mmt. Dry conditions have been stressing crops as in Germany.
  • IGC estimate UK wheat production at 14.6mmt for 2018 (14.837mmt this season).
  •  External markets will be closely watched this week following a tense G7 summit at the weekend and with a further US/North Korea meeting planned. Negative outcomes for either (or re. the US/China situation) would likely add weakness to Ag markets.
  • US soybeans trade falls to a 6 month low as good conditions in the US and uncertainty around Chinese demand pressure the trade lower.
  • US funds estimated net short 3.7k wheat, long 124.3k (corn), 9.5k (soybeans).

  • ·         Southern Russia receives some rainfall, though showers are believed to be scattered. Extended models continue to suggest dry conditions and above average temps (though latest models imply rain chances for the next 2/3 weeks have improved marginally).
  • ·         Ukraine receives beneficial rains in parts – though 7-10 day models suggest largely dry conditions.
  • ·         French winter wheat crop rated 79% g/e, down 1% on the week. Corn ratings fall 7% on the week to 77% g/e following heavy rains.
  • ·         Alberta receives good rains this week, boosting crops. Forecasts for the Canadian Prairies for the next 10 days suggest further rains are to be expected.
  • ·         US HRW harvest continues to progress with early yield/quality reports mixed. The next 2 weeks should help clarify how the crop has performed.
  • ·         US Corn Belt weather continues to appear benign, helping crop development and boosting yield prospects.
  • ·         Eastern Australia forecast for better rains after an extended dry period.

  • ·         Weakness from US soybeans/corn filtered into wheat markets this week, tempering gains.
  • ·         Black Sea weather remains the key fundamental feature for the World wheat market. Conditions for both Southern Russia and Ukraine continue to appear problematic for the next 2 weeks and whilst this remains the case, the trade will be well supported.
  • ·         US funds have also reduced long positions in corn and soybeans significantly over the last few weeks, improving the technical outlook.

Wednesday 23 May 2018

2018 Edition of the GrainCo Seed Special Publication

Welcome to the 2018 edition of the GrainCo Seed Special Publication.

Within its pages you will hear about GrainCo's care to ensure that our seed quality continues to exceed industry standards and remains proudly black grass free. In addition find out about the dates for your local GrainCo variety demonstration sites, which range this year from North Yorkshire to Fife in Scotland. 

You can find the latest variety information on all of the leading wheat, barley and oilseed rape varieties, including Clearfield, seed treatments and fertiliser timings. 

To down load your copy click here. Enjoy the read.

Tuesday 22 May 2018

Market Report 18th May 2018

Markets bounce this week following the recent sell-off. Easing of US/China trade tensions combined with resumed new crop supply concerns, act as catalysts.
  • ·         US/China announce intention to put trade tariffs on hold – news supportive to US corn/soybeans markets with increased imports of both to China reportedly being discussed.
  • ·         US funds estimated net short 17.1k wheat, long 228.8k (corn) 71.5k (soybeans).
  • ·         SAFRAS estimate Brazil’s total corn crop for 2018 at 79mmt, down from 88.9mmt last year (USDA’s May estimate 87mmt).
  • ·         Euro continues to weaken versus the dollar, supporting matif wheat (now at 7 month lows). Sterling firms on employment/wage growth data released.
  • ·         US weekly export sales of 985k (corn) 195k (wheat) - further illustrating the lack of demand for US wheat at current levels.

  • ·         US HRW forecast return to drier conditions after showers last week. Forward forecasts at present suggest below normal rainfall for much of the Southern Plains.
  • ·         US Corn planting believed to be circa 75% complete, marginally behind the average for this time of year. Forecast suggested scattered light showers in parts.
  • ·         Canadian Prairie’s remain largely dry, though Western areas may receive some rainfall this week.
  • ·         Southern Ukraine/Russia remain dry but are forecast for some rains. Russian spring wheat plantings continue to progress slowly, though better conditions forecast for the next 2 weeks should boost progress.
  • ·         Australia continues to appear largely dry in the extended forecast (some rains expected for coastal areas). ABARES suggest producers are delaying plantings, hoping for better soil conditions.
  • ·         EU crop conditions largely unthreatening after better rains last week. Forward forecasts also imply more normal conditions for this time of year.
  • ·         France AgriMer suggest corn planting progress at 86% complete

  • ·         Markets consolidate following on from the circa 50c sell-off in CBOT wheat of the last few weeks, with weather/politics supporting the rally. Weather continues to principally dictate direction and in spite of improved weather outlooks in some areas of concern, issues in some parts of Aus/Can/FSU/US remain unresolved.
  • ·         That said, old crop Global wheat stocks are burdensome and US funds have significantly reduced shorts in wheat, also building a significant long in corn - removing some underlying technical support.
  • ·         Expect volatile trade to persist, as the weather outlook continues to occupy much of focus. Geo-political/currency influence will also remain closely monitored, particularly until there is more clarity around what the US/China situation will ultimately mean for Ag S&D’s.

Tuesday 15 May 2018

Market Report 11th May 2018

Markets fall this week as neutral USDA data and improving weather
outlooks for US/EU/FSU help drive the sell-off.
  • US 2018/19 all wheat production placed at 49.56mmt, up 2.2mmt from the April report
    (above trade est. of 48.2mmt). HRW production estimated 17.6mmt – down 14% y/o/y.
  • 2018/19 World wheat ending stocks (subtracting China and India, who typically do not
    participate in wheat trading) estimated at 115.7mmt – over a 6 year low.
  • USDA lower 2018/19 Global corn carryover by 36mmt (largely due to historic reductions
    from China).
  • 2018 Brazillian corn output reduced by 5mmt to 87mmt (trade est. 88.5mmt).
  • US funds estimated net short 41.8k wheat, long 219k (corn), 94.6k (soybeans).
  • Stats Canada report March 31st wheat stocks at 16.4mmt (500tmt lower than trade
  • Sterling weakens somewhat as the BOE decide to hold interest rates - supporting
    London wheat.
  • US/China trade talks recommence this week. Trade will be conscious of potential spill
    over from external markets. Soybean/corn markets likely to be the most sensitive to
  • US Corn Belt planting progress estimated at circa 57% complete versus 63% average for this time of year.
  • US Corn Belt weather shows showers for the next 2 weeks, though models on thurs/fri did
    indicate the heaviest rains would fall further south than originally predicted.
  • US HRW areas forecast for better rains this week.
  • Drier forecast for Argentina should boost harvest progress.
  • Brazil’s Southern Safrinha corn area is due for beneficial rains next week – though questions
    remain as to whether they will come too late to materially improve crops.
  • Ukraine corn planting 83% complete versus 90% this time last year. 6/7 weeks of dry weather have been stressing winter crops, but forecast indicate better moisture next week.
  • Russia and Eastern Europe more generally should also benefit from these rains next week,
    following on from 2 months of drier than normal weather.
  • Alberta reports spring wheat seeding progress at 8.7% versus 30% average for this time of year. Australian conditions continue to look dry, with little respite in the forecasts.
  • USDA data featured briefly before market attention quickly returned to weather and crop conditions.
  • US Corn Belt planting weather appears more favourable than first forecast, whilst rains for US HRW areas, as well EU and FSU this week are expected to boost crop conditions. Presence of the sizeable US fund long in corn may have contributed to selling late in the week.
  • UK wise, sterling weakness and a tighter wheat carryover into next season continue to provide support. Winter wheat conditions will remain closely monitored as such.
  • In short, weather continues to be the primary focus, with emphasis on the US/EU/FSU in particular. Traders will also be conscious of potential geo-political/currency developments with US/China trade talks scheduled this week.

Tuesday 8 May 2018

Market Report 7th May 2018

  • Markets rally sharply on the week as risk premium is built for challenging crop conditions in parts of US, SA and Black Sea.
  • ·         US weekly exports reported at 1.9mmt for corn, well above market expectations. Wheat underwhelmed with just 328k reported (450k/week required to meet current USDA targets).
  • ·         US funds estimated net short 52.8k (wheat), long 210.9k (corn) 124.3k (soybeans).
  • ·         Saudi Arabia buys 545tmt wheat – believed to be German/Baltic origin. Iraq also announces a tender for 50tmt wheat from US/AUS/Can origin.
  • ·         Ag Rural cut 17/18 Safrinha Brazilian corn production by 4.5% to 57.2mmt. Total corn output placed at 87.6mmt (USDA 92mmt).
  • ·         Stats Canada suggest Canadian farmers intend to plant 25.3m/a total wheat area 2018 (up 12.8% on this season).
  • ·         Sterling will be closely monitored this week - BOE interest rate meeting scheduled for Thursday 10th .
  • ·         AHDB data shows UK barley usage in animal feed production of 934tmt, up 20.9% on this time last year.

  • ·         US Corn Belt planting progress increased to 39% complete (above most trade estimates). 44% the 5 year average.
  • ·         Forecasts for the week suggest light rains are to be followed by heavier towards Friday, potentially hindering field work. Prevent plant dates are 2/3 weeks away, so there still appears a good opportunity for the crop to be planted.
  • ·         Kansas Wheat Tour estimated average yields at 37b/a versus 48b/a last year and a 5 year average of 41b/a.
  • ·         US winter wheat plantings improved by 1% to 34% g/e
  • ·         US spring wheat planting progress increased from 10% to 30% last week (51% average for this time of year). Forecasts for the Northern Plains suggest some rains over the next 2 weeks, though not of enough severity to hinder plantings.
  • ·         Argentine Corn harvest delays continue, with wet weather expected for much of this week. Extended forecast do suggest drier conditions are upcoming however.
  • ·         Ukraine corn planting progress reported at 63% complete versus 53% this time last year.
  • ·         Southern Russia/Ukraine continue to look hot/dry for the next 2 weeks, with little change evident in the extended outlooks for May.

  • ·         Market strength continues as ongoing weather issues in US/SA/FSU provide enough doubt around 2018 supply to justify additional risk premium.
  • ·         USDA data due for release on Thursday will be the next fundamental target for the trade. Risk of consolidation pre-report is a possibility given the extent of the recent rally, also bearing in mind the sizeable longs in corn/soybeans.
  • ·         That aside, US/FSU weather will likely continue to be the key drivers day-to-day, with the ongoing US/China trade situation also likely to be monitored for developments.

Friday 27 April 2018

Market Review April 2018

Finally, a more settled spell of weather over the last two weeks has seen a huge amount of activity in our region with farmers desperate to catch up with drilling, fertiliser application and spraying.  Most spring cereal and bean crops on light and medium bodied land have now been drilled, with only the trickier, heavy land remaining. I am often asked how late spring barley can be drilled; the answer completely depends on individual conditions at the time, all I will say is that many customers I deal with harvested successful spring barley crops in 2016 that weren’t drilled until May.

The last month has also seen an advance in old crop prices. May’18 feed wheat is currently trading between £154-£156/t, with those willing to hold on until July/early August likely to make £160/t. This is down largely to the re-opening of the Vivergo plant in Hull, furthering the demand for feed wheat in a region already in deficit. Moreover, dwindling on-farm stocks and the sense that harvest is certainly not approaching quickly is not incentivising many people to sell.

New-crop is remaining fairly level with values trading at £144-£146/t and £149-£151/t for harvest and November respectively. Most regular forward-sellers have likely taken cover at, or near, these values and until either markets move upwards or crops markedly improve, it is unlikely that many people will be enticed to sell much new crop at these current levels. Few growers in the region would at this point imagine they are heading towards a bumper harvest, especially with the condition spring crops have been drilled in (or not drilled!). If at least one of Ensus or Vivergo is running throughout the back-end, demand for feed wheat in the North will remain strong, and so unless the pound strengthens significantly, values will remain relatively firm.

Old crop feed barley has continued its meteoric  rise, now virtually at parity with feed wheat depending on location, and only £7-£8/t less than full spec milling wheat! Whether the demand for barley will reduce as farmers turn stock out remains to be seen over the next few weeks, however with very little left on farm, prices are unlikely to nose-dive. New crop barley also looks more attractive, with forward prices £10-£12/t below wheat, but again you would imagine a lot of next year’s trade will hinge on how well spring barley crops perform.

Oilseed Rape (OSR) continues to be the dog of this marketing year; old crop values remain at £284-£286/t (depending on location) and are seemingly range-bound to a maximum of around £290/t. It seems at this point as though OSR has run its race, with large imports in the winter meeting the demand from the UK crush. One can never rule out a late rally but it certainly feels unlikely at the moment. New crop values are equally uninspiring; £286/t for November, with harvest £10/t less, is hardly likely to induce much forward-selling at this point.

Fertiliser markets are gearing up for the new season trade to begin, with prices for AN and Urea expected in the next month. That said, there are still reasonable old-season offers available for those with purchasing still to do. Imported AN is some £23/t cheaper than UK product at the moment, with May delivery at £219/t and NPK products, such as 20.10.10, still available at £245/t.