| 2013-05-16 |  |
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The market expected big crop numbers from the USDA, and they did not disappoint! The forecast for record US soybean/corn crops, along with record global wheat production, has projected a bearish sentiment upon the markets.
Feed Wheat
However, the slow pace of US corn plantings, new crop US wheat ratings, and reports of dryness in Southern Russia/Ukraine and Australia, has traders cautious over taking aggressive short positions.
European values have mainly drifted lower on the weaker US markets, although some support has been evident from the lower exchange rate against the US$. EU exports continue their strong pace, although these may temper with the likelihood of increased shipments coming onto the export market from Russia during May/June. If crop potential in Europe is realised export markets to N Africa and within the EU to Spain could be fiercely fought over .
The UK remains installed as a major importer, with imports to the end of March reported at just over 2.1mln t. Shipment programs are already in place for the remainder of the season, as the UK milling industry looks to offset the poor 2012 harvest quality. Additionally, with talk of UK/EU harvests expected ‘later’ this season, old crop stocks will have to extend further into the 2013/14 marketing year, supporting further imports.
In summary, it all looks pretty bearish. The ‘record’ crops reported by the USDA will come under much scrutiny in the months to come, as many believe the slow US corn planting pace will eventually trim acreage and yield, and that the ‘optimum outlook’ for global wheat production is too high. One could argue a good case for a 25-30mln t drop in global corn output, along with a 10-15mln t drop in global wheat output, given current weather problems, although losses of these proportions could be more than offset by a reduction in the projected 110mln t increase in total grain usage! The big caveat is, of course, that we still have some time to go, and weather to experience, before crops are made.
USDA projects record US and Global 2013 corn output, at 359mln t and 969mln t respectively, Global wheat output estimated at a record 701mln t.
Ukraine’s 2012/13 grain exports reach 21.3mln t, including 6.6mln t of wheat – this compares with 18.7mln t in 2011/2012.
SovEcon sees Russia likely to export 1mln t of grain in May-June, this will exceed official forecasts.
Brazil facing a flood of corn as second crop develops – the total crop is seen at record 78mln t.
Egypt plans to only purchase 4-5mln t of imported wheat this year as it expects higher local production.
USDA report 32% of the US winter wheat crop in good/excellent condition – mainly due to a further deterioration in the Hard Red Wheat crop.
USDA report corn crop 28% planted against 85% last year and 65% as 5-yr average – the slowest pace since 1984.
China’s 2013-14 corn imports are estimated to rise by 85% despite forecasts of increased production to 214mln t.
The market expected big crop numbers from the USDA, and they did not disappoint! The forecast for record US soybean/corn crops, along with record global wheat production, has projected a bearish sentiment upon the markets. However, the slow pace of US corn plantings, new crop US wheat ratings, and reports of dryness in Southern Russia/Ukraine and Australia, has traders cautious over taking aggressive short positions.
Oilseed Rape
It’s been a fairly slow week on oilseeds with the fundamentals relatively unchanged, the now familiar story of tight old crop bean supplies against the large South American crop continues to be the main talking point with old crop beans firming against new crop. The National Oilseed Processors Association released the April crush figures which came in below expectations but had little effect on the market. The attention is now turning to US plantings.
The matif rapeseed has gained around 7 euros this week ticking higher on low volume trade and aided by the weakness of the Euro/USD. This has had little effect on UK domestic prices as the market is dominated by merchants short covering on old crop. The export market remains an option for old crop but there is insufficient volume coming off farm for this market to become liquid. We feel there is little reason for farmers to continue to hold old crop seed.
On new crop OSR we still have the combination of a lack of crush demand and a lack of farmer selling. With the exception of the known problems in the UK and some problems in areas of France, the European crop on the whole is looking in very good condition. Crush margins remain poor for OSR and rapemeal/oil remains expensive compared to bean and palm meal/oil.
With weak economic data from France and Germany sterling remains firm against the Euro hindering domestic rapeseed prices.
Malting Barley
Moisture added to UK crops aid development after warm temperatures last week.
Better premiums seen on Springs and Winters this week as feed prices followed feed grains lower last week.
Although conditions remain favourable across Europe and Scandinavia most EU malting areas have been planted late and will require good conditions to continue until harvest.
We still have requirements for winter malting barley, including harvest movement. This includes the new Variety SY Venture.
Gleadell’s crop ’14 Null-Lox contracts are still available following a very successful start to the ’14 campaign we also have crop ’14 contracts available for new Variety SY Venture.
Oats
Old crop oat supply has just about been exhausted but the miller appears to have a relaxed approach to this situation.
There are different reports surfacing on the winter and spring crops which are now being held back by the continued lack of temperature.
Most parts of the UK have had welcome rain but backward and patchy winter oats in particular are not coming to the market as concerns remain over potential yields.
Pulses
Demand for old crop Human Consumption beans is still very slow, but with the religious season soon upon us we believe demand will re-appear for the very best material later in the season.
Feed beans are still very much trading hand to mouth, supply is limited and difficult to find.
New crop beans have maintained a premium over feed wheat of between £40-50 pt dependent on location with premiums for fixed spec contracts trading at £25-30 over the feed value. The situation in Egypt remains difficult with access to hard currency still restricting purchasing, this needs to be monitored as there is a possibility that imports could be affected for the new season
Crop development looks to be good on peas and beans, warmer weather will add to potential yield.
Seed
Spotlight on OSR Varieties for Autumn 2013
There are a number of interesting OSR varieties available for this autumn planting – and it would remain our advice for growers to use a spread of maturity dates when making varietal selections to have a spread of drilling and harvesting time.
PR46W21 remains the top yielding variety on the E&W recommended list – terms are now available for growers for autumn 2013, and this variety is most likely to be very popular once again.
Avatar – a variety which was sold last year in its candidate stages comes onto the recommended list at 104% treated gross output – the variety has stiff straw and is the earliest maturing of the new additions – giving harvest flexibility.
Slightly further down the list – a new short-height hybrid variety Troy from breeder DSV looks to be of high interest – at 102% of control – just 4% behind the market leader PR46W21 but a 9 for stem stiffness and 6 for resistant to light leaf spot – Troy with the added benefits of cost savings around harvesting and management with a plant height of 139cm vs. W21 at 163cm – Troy looks set for good demand.
Moving to the candidate lists –there are two very interesting new varieties one from RAGT called Ginfizz which looks very interesting – The variety is 6% ahead of Excalibur and 3% ahead of DK Cabernet in candidate trials and also has a 7 for Phoma/Stem canker resistance – so offers the grower a superb all round variety. Ginfizz is also extremely early to mature – at the same level as Excalibur – scoring a 7 on the candidate list, and is well suited to all regions and soil types. Another is Incentive from DSV which is the highest yielding hybrid candidate – Incentive is another early maturing variety, with a combination of high seed yield and oil content.
There are also a couple of varieties that shouldn’t be dismissed but which narrowly missed out on recommendation last year – one is from breeder Syngenta – a variety called SY Fighter – a vigorous hybrid variety with good stem canker resistance. The variety DK ExStorm is also an excellent variety for resistance towards Phoma/Stem Canker – very popular variety in France where Phoma pressure is much higher, this variety is more of a medium maturity as with SY Fighter and as such would fit well within the balanced rotation.
Fertiliser
The UK fertiliser market is now busy. Buyers are still slightly cautious but with perfect growing weather, nitrogen demand particularly is driving enquiries. Both spot and new season Granular urea tonnage is being placed as many growers see crops starting to recover. The prilled urea market however is still firm and is not following the usual trend i.e. discounted to Granular. Producers are holding tight on new season and replacement values for June/July shipments are abnormally more expensive compared to granular. The firm US $ unfortunately makes values even more expensive for imported products.
The UK ammonium nitrate market is also at the forefront of discussions and new season levels are not looking too far away. Spot demand for Imported AN is slightly weaker achieving £290-£295 delivered farm.
Gleadell Blue Bag Tracker
This week, Gleadell exclusively launched the ‘Gleadell Blue bag Tracker’. The tracker is a risk management tool to help balance the risk of buying your fertiliser in what has become a volatile market.
For the same reason that farmers use grain pools and grain trackers, this is an excellent risk management contract and will return a true market average over a period.
The fertiliser market is liable to volatility in the same way as grain markets.
ENhancePro – Enhancing grain protein to achieve milling premiums
ENhancePro is a proven foliar spray product to maximise protein levels in premium quality wheat’s. A unique foliar nitrogenous fertiliser, ENhancePro is formulated from highly bio-available sulphur and now exclusively available through Gleadell.
After a difficult start to the season and poor weather conditions, poor establishment of all crops may prove a problem for hitting the protein levels to achieve the high premiums of this year. Gleadell want to ensure that the grain you grow hits the premiums you require.
