| 2015-06-25 |    |
There is no shortage of grain in the world but the funds are still short and weather issues, currency volatility and potential political problems are more important than supply and demand – for the moment.
Feed Wheat
Next week’s USDA report, due out on Tuesday, will be the next major signpost for our markets. There is no shortage of grain in the world but the funds are still short and weather issues, currency volatility and potential political problems are more important than supply and demand – for the moment. UK crops generally are reported as being in good condition but UK price levels currently make our wheat uncompetitive for export. Given that we will produce an exportable surplus this coming harvest and the fact that we have a heavy carry over from the current season, something needs to change and the time window for a change is narrowing, although it has not yet closed.
The old crop milling wheat market has all-but drawn to a close with premiums falling to around £24-25 over feed wheat, a drop of 50% from the highs of early 2015. Reduced UK miller demand has been the main contributor to the decline also falling milling premiums on the Continent have offered greater competition to domestic prices; March saw over 40kt imported from Germany alone whilst April saw over 45kt brought in from Germany and the Baltics.
New crop premiums are currently at similar levels to the old crop, close to the 5-year average. With the spread between old and new crop widening, the opportunity is there for growers who can carry their milling wheat over given the £10/t or so carry between July and November. Higher yielding bread-making wheat varieties (notably Skyfall) and a milling premium that has made up a greater percentage of the overall price of wheat has led to significantly higher milling wheat plantings for 15/16. Coupled with the potential for high carryover stocks, supplies of Gp1s and Gp2s could be plentiful next season, making current premium levels look attractive.
Despite the expectation of lower wheat production in Germany compared with this season, there is also an expectation for a high carry-over there too. What’s for sure is that the coming weeks of weather are crucial in determining the quality of milling wheat crops both here in the UK and across Europe.
Feed Barley
Harvest reports from SW regions of France continue to be positive for winter barleys with early yields reported to be around average.
Interest remains in the condition of crops in the drier northern regions of France where localized concerns remain.
UK barley is still struggling to be price competitive in the global marketplace compared to Black Sea origin barley.
Currency strength continues to magnify the issue of UK competitiveness as Sterling remains firm on rising political uncertainty in Europe.
UK winter barley crops look in good condition for the most part. Although initially thought to be around a week behind, improving conditions are now bringing crops on.
Malting Barley
Continued talk of hot, dry weather throughout the main growing regions of France has lifted EU Crop15 malting barley prices again this week.
EU premiums are now €55 over feed. This is a big premium and is probably unsustainable.
Rain and low temperatures in areas of Denmark and Sweden have stirred concerns of damage to crop quality but the significance of these conditions are yet to be seen.
There are few buyers in the market and sellers are quiet.
Rapeseed
The US soybean futures market has traded higher this week with delayed plantings due to wet weather the main reason cited. We also see downward momentum running out on the charts and a short-term reversal posted which encouraged short covering.
The MATIF futures contract has ticked higher throughout the week aided by reduced crop sizes in Europe and dryness in Canada. There has been limited farmer selling across the continent as some bullish inputs offer a more bullish tone.
Sterling strength against the euro remains a hindrance to UK ex-farm prices and adds volatility.
Pulses
Whist winter and spring bean crops in the UK are generally in good condition, farmers remain reluctant to sell forward due to the unpredictability of yield and quality. We continue to see some interest from Egypt for new crop human consumptions beans, however prices continue to come under pressure. France remains dry which continues to cause concerns, but this has not resulted in a rise in UK values.
Oats
The roller coaster weather continues and where oats have had rain this will be beneficial, but overall we need the sunshine to complete crops.
Farmers report fields looking well, short in height and later than average and as a result offers are slow in coming forward.
Recent old crop trades have been at good price levels as farm stocks are finally exhausted.
There appears to be all to play for in the coming weeks.
Seed
Grower enquiries have continued to increase this week with many now making the key decisions on which OSR varieties they will grow for the forthcoming season – seeking out the varieties which will offer them the greatest yield, premiums and disease resistance profiles.
Incentive is proving to be an extremely popular variety again after gaining farmers confidence due its great year on farm last year. In 2013 Incentive topped the Verticillium wilt trials, producing the highest yield despite having high Verticillium pressure in the field.
Incentive’s high yield potential is made up of seed yield and good oil content and the variety exhibits rapid autumn development.
Top of the candidate list for the East/West region is Wembley, which comes from the same breeder as Avatar. Wembley is a restored hybrid with an oil content similar to Incentive. It looks set to be a solid all-round variety with high lodging resistance and good disease scores.
For growers in northern areas SY Harnas should be of interest. SY Harnas, from breeder Syngenta, is top of the North Recommended List. It has an excellent seed yield and a 7 for LLS resistance.
DK Exalte comes from the DEKALB brand and offers excellent phoma and LLS resistance, pod shatter resistance and rapid spring growth.
Amalie, from Limagrain, is the only variety with TuYV resistance, as well as a high resistance to light leaf spot and stem canker. Amalie is an exciting, conventional, open pollinated variety with good gross output potential and high oil content.
The “seed with speed” Campus, from KWS, is the best all-round conventional variety on the RL. Campus has a very high gross output and was the top conventional in 2014. It’s rapid autumn development, good lodging, stem stiffness and disease resistance makes Campus a solid variety.
Fertiliser
Urea
Globally the spot market remains firm, buoyed by immediate shipments to the US to replenish stocks.
After the recent tender where prices ranged up from $303/t fob China, India booked 850,000t. Chinese product is trading at roughly a $20/t discount compared to other markets.
Expectation of a potential price reduction in Q3/Q4 remains. However, new urea plants have been slower coming on stream than expected.
In the UK, prices remain below levels paid by many growers last year. Ouur advice would be to take some requirements at these levels.
Ammonium nitrate
GrowHow hase moved to July terms indicating a £3/t price increase over June levels.
With prices expected to firm further taking tonnes in the short term and using the Gleadell finance package would be cheaper than delaying purchasing.
Imported AN continues to trade at roughly a £10/t discount to UK but with high demand price increases can be expected.
ENhancePro - will you hit your premiums this year?
With milling wheat premiums averaging over £30/t this year, applying a foliar N to maximise the opportunity of achieving 13% proteins makes sense.
ENhancePro from Gleadell is a unique, concentrated, foliar nitrogenous spray used for over 13 years by UK farmers.
Produced from highly bio-available sulphur (ATS) with the inclusion of UV buffers and latex to minimise leaf run-off, ENhancePro has been proven to significantly increase proteins in all milling wheat’s.
Applied at growth stage 69-75 the ideal application window is fast approaching.
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