FEED WHEAT

Over the past week grain markets have seen much volatility, mainly moving higher on falling US crop ratings and declining Black Sea prospects. US corn ratings fell another 5% points to their lowest level since 1988, as drought conditions expand. With the likelihood of another yield cut by the USDA in August, US stocks will be historically low at the end of this season, igniting the ‘battle for acres’ debate for the 2013/14 planting season.

The bullish trend was sharply interrupted earlier this week as an improved weather outlook for the US led to heavy selling. The market’s reaction to the improved forecast anticipated that soybean condition would improve with rain, and that while storms will not boost corn prospects, they could stabilise the losses. In addition, mounting Spanish and Greek debt concerns sent the Euro to a 2-year low against the US$, raising further concerns over global economies and future commodity demand.

In summary, market fundamentals remain bullish, but like all bull markets they need continuously feeding. Any change of sentiment, in whatever form leaves the markets open to profit-taking, and the recent up’s and down’s we have witnessed this week are likely to continue.

USDA reports US wheat harvest 82% complete, 80% last week – SRW harvest complete with HRW harvest 93% complete.

Excess ethanol credits may dampen demand for corn – USDA may be overstating ethanol demand for 2012/13 by as much as 10%.

US corn sowings could hit 100mln acres next year as historically low stocks intensifies the ‘battle for acres’ for 2013/14.

The Russian ministry estimates 2012 grain crop at 80-85mln t – unchanged from previous estimate and above analysts views.

French wheat yields continue to beat forecasts with some estimating the crop at over 36 mln t.

USDA reports corn crop in good/excellent condition at 26% down 5% points on the week – rainfall is forecast which may reduce further losses although most pundits think that the damage done to date is irreversible.

US corn yield is estimated at a 10-year low as drought expands – average analyst estimate of 130.8bu/acre against current USDA projection of 146bu/acre.

Kazakhstan’s Ag Ministry cuts its grain crop forecast for 2012 to 12.8mln t – exports at 10mln t compared with 12.1mln t last season.

EU grain yield outlook hit by continued dry weather in southern and south east Europe – MARS lowers EU soft wheat yield to 5.57t/hectare.

Australia’s 2012/13 wheat crop projected at 25mln t by Rabobank, down from the record 29.5mln t last crop year.

Heat reduces corn prospects in Eastern Europe – Hungarian and Romanian crops damaged by dry weather – lower yields.

PULSES

Commodity markets continue to be highly volatile and, with beans following wheat and French premium over Matif wheat falling with expectations of above normal yields, the UK is uncompetitive with other supplies.

Peas are now under pressure from the hot weather and trade expectations are low regarding yield and quality.

Buy backs are still available for beans and peas 2013 harvest.

MALTING BARLEY

EU malting values continue to track the overall feed grain market.

The discount of feed barley to feed wheat has widened of late, which has held the price rise back a little.

The quality of winter barley cut so far across the UK has been positive, although varied in many southern areas. Nitrogen levels are trending towards 1.70 which is encouraging. Yields around 7.0t/ha.

Null-Lox varieties in the early-harvesting areas will be ready next week, highlighting Null-Lox’s proven benefit in addition to its establishment benefits. The yield prospects also look very good indeed for Null-Lox.

Swedish and Danish crops still look very good in the field and are attracting the most export buying interest.

Gleadell can still offer very attractive 2013 contracts for winter and spring malting varieties as well as for Null-Lox. We have premium over wheat futures and non-defaultable contracts both available to book now.

RAPESEED

Soybeans, which have been the market leader in oilseeds, have once again posted a cycle high in the last week in July. This time it would be fair to say that it wasn’t all down to longs capitulating or rain arriving in the US Midwest but as much to do with the Eurozone crisis arriving back on centre stage. Soybeans have posted a $1 correction this week and look set to retrace further although the market feels there could be more issues to come from the US weather problems.

The rapeseed harvest is now under way in the UK, early reports on yields are around 3.5 tonnes/ha with mixed views on quality at this stage. Matif rapeseed prices have dropped €25/tonne on the back of soybeans retracement. We also have a natural carry between Aug & Nov rapeseed futures, something we haven’t seen for some time. Harvest ex farm prices are back trading around £364 and £374 for Nov depending on location and farmers now appear happier to sell something with harvest underway.

Global financial and commodity markets have been heavily influenced by the ongoing Eurozone crisis with Spain leading the way. Spanish 10 year bond yields have jumped to 7.55% this week which financial forecasters believe is unsustainable and would suggest Spain requires a full-blown bailout. Greece acknowledging that they are behind with the implementation of required austerity measures is doing nothing to assist confidence. Growth has slowed down in China and in Europe, even the powerful countries such as Germany are about to be downgraded due to their Eurozone liabilities to member countries.

SEED

Focus on Oilseed Rape

This week has seen a number of growers looking to cover additional OSR seed, with a number of varieties proving popular.

The variety PR46W21 has been very consistent over the past 4 seasons. Prices for this variety are set to rise from 1st August 2012 so we urge growers to cover requirements prior to this date. Other varieties of interest have been Compass, Avatar and the short height hybrids Troy and Thorin.

Growers looking for varieties with excellent stem canker resistance should look no further than DK ExStorm, the variety has RLM7 gene resistance along with pod shatter resistance - in early trials in France DK ExStorm has performed very well.

Other varieties of interest should be two conventionally bred varieties from British breeder Mike Pickford. Kite and Osprey have solid gross output figures along with excellent standing power and oil content.

Hopefully next week we may start to see some winter barley trials results and with seed processing starting next week we will be in a position to deliver promptly.

FERTILISER

Urea
The Indian purchase tender announcement has been the main focus of the urea market this week. Awards were finalised and 1,190,000mt have been booked in principle but apart from the US buying, buyers elsewhere have been absent from the market awaiting a clearer picture on market direction now the tender is closed. Continued US demand has caused the spread between granular and prilled urea to widen as July/Aug arrivals are required to allow sufficient time for internal distributions prior to the river system closing in mid-October. In Europe and the UK there is still much uncertainty with minimal demand and it would appear that anyone who can wait is doing so. Brazil may enter the market shortly, however apart from this news there does not seem to be much to support the market at these levels going forwards.

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
The Ammonium nitrate market remains stable globally. AN offers have eased due to cheaper ‘one-off’ sales in the Black Sea. However CAN prices have increased in line with expectations and distributors have started pre-stocking in anticipation that activity is likely to increase over the next few weeks as market confidence improves.

Phosphates
Pakistan and India bought significant quantities of Australian DAP. Together with demand in Central and Latin America, these sales are likely to keep the international market ticking over.

Nevertheless, the weather is casting a darkening shadow across the major markets. The on-going drought affecting the US Midwest could significantly reduce crop yields and the demand for fertiliser for the fall application.

Potash
The surge in grain prices has lifted the global potash market this week and although a further rally is unlikely as levels are high, there is speculation that the influence of contract negotiations in China may be settled at a premium to the last quarter price. In Europe, distributors have started collecting potash since the corn rally as corn prices globally has improved buying confidence.

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.