Friday, 17 November 2017

Want to be part of the ‘Pool’ party?

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With changing times looming, getting your marketing strategy right is going to become more and more difficult.  GrainCo can take this pressure away from you as our experienced trading team consistently make the right decisions at the right times.

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Call GrainCo on 0191 4287700
Email info@grainco.co.uk

Monday, 13 November 2017

Market Review 13th Nov 2017

Wheat markets trade sideways this week, as US corn makes new contract lows post USDA data, released late on Thursday.












  • USDA raise US corn yield estimates to a record 175.4b/a (174.6b/a last year). US carryover also raised 3.7mmt to 63.2mmt.
  • US corn demand remains strong for ethanol/feed/exports, though farmer selling is believed to be considerably behind normal.
  • Coceral place UK wheat crop at 14.79mmt, whilst Strategie Grain suggest 14.52mmt, significantly below DEFRA’s first estimate of 15.16mmt.
  • US funds estimated net short 129k wheat, 244k corn (near record).
  • EU Commission report wheat exports just over 7mmt to 7th November, 25% down on 2016. USDA estimate EU all-wheat exports at 28.5mmt for the season - appears too high on the current pace.
  • Sovecon increase Russian wheat crop estimate by 1mmt to 83.9mmt.
  • India increase wheat import tax from 10 to 20%. This is expected to largely impact Ukrainian exports intended for India – could consequently pressure international export markets lower as this wheat seeks an alternative home.
 
WEATHER/CROP DEVELOPMENT
US corn harvest progress expected around 85% complete (70% last week). 7-10 day forecasts indicate largely unthreatening conditions for much of the Corn Belt.
Brazilian corn planting 49% complete (42% last week), whilst Argentine corn planting 65% complete (61% last week).
Argentine forecast look mild for this coming week, with scattered showers expected for Southern Brazilian growing regions.
Russian Ag Ministry report the grain harvest at 95% complete, whilst Ukrainian winter sowings are believed to be 95% complete and largely in good condition.
France AgriMer place winter wheat plantings at 90% (largely in line with the 5 year average).
  
BOTTOM LINE:
Little bullish outlined by USDA in their latest update, with abundant supplies of corn/wheat evident Globally.
Northern hemisphere weather appears largely unthreatening for winter plantings, whilst SA harvest/plantings continue without major incident.
US fund shorts in corn/wheat are significant, though given the current bearish sentiment, it is difficult at present to identify the catalyst that would trigger major fund short covering.
On balance, failing a significant weather/currency event, markets may continue to feel pressure to erode, albeit gradually, over the coming weeks and months into the New Year.
  
Contact: GrainCo Ltd 0191 4287700

Wednesday, 8 November 2017

Market Review 3rd Nov 2017

US wheat reaches new contract lows before consolidating somewhat, whilst UK/EU markets continue to be currency led.
 
  • Private Analysts FcStone and Informa release new US corn crop estimates, suggesting 173.7b/a and 173.4b/a respectively. This is relative to USDA’s October estimate of 171.8b/a.
  •  Iraq buys 450k US HRW late last week, (now 600k in sales to date from the US).
  • Russian Ag Ministry report their wheat harvest at 87.9mmt, versus 75.8mmt in 2016 (up 16%). Wheat exports of 12.3mmt by the end of October up 21% on the pace of the previous year.
  • Russian Ministry also announces plans to wave rail charges for 3.2mmt of grain from certain areas in November, to help support exports from these more remote regions.
  • Interest rate announcement by BOE midweek pressures Sterling 2% lower, firming London wheat somewhat.
  • Weaker Euro and firming Russian prices recently have helped support Matif to an extent – though EU wheat exports continue to be down circa 23% y/oy.
  • US funds estimates net short -227.5k corn, -124k wheat. 



Wednesday, 25 October 2017

October 2017 Update by Mike Temple


With the exception of a few fields of beans, October has largely seen the end of the 2017 harvest. A settled period during the first half of the month has also allowed growers to continue drilling much later than had been expected a month ago with some farmers now even claiming that it is ‘too dry’!

Old crop values have traded horizontally for the last month. Wheat is valued at £143-£145/t for November (depending on location) and given the scale of world wheat and corn stocks, unless there is a significant devaluation in the pound or a weather event, it seems unlikely that these values will move too far. Feed barley has firmed a little more, now valued at £126-£128 for November; this seems in-part due to compounders replacing more wheat with barley because of the price differential. Having already shortened from roughly £25/t difference to now close to £15/t difference, barley would soon lose its price advantage if it were to become any more expensive. Similarly with currency remaining static and imports taking the heat out of buying-demand, OSR has remained flat with values still around £312 for November.

Given the lack of movement in old crop values and the progress of autumn drilling, more attention is now being paid to next year’s harvest and prices. At the time of writing, November’18 feed wheat is worth £147/t, with harvest and September valued at £142 and £144 respectively. Given the size of world wheat and corn stocks, these values would be much lower if it were not for the weakness of the pound, but this doesn’t seem to be encouraging many growers to sell forward as these values have now become ‘the norm’.

Over the next 18 months the only thing in which you can be certain, is in uncertainty itself. Britain will continue to negotiate exiting the EU and within 18 months will have either left or be in a transition deal, the consequences of which are yet unknown, not to mention uncertainty in the rest of the EU and USA. As a result, predicting grain prices going forward becomes increasingly difficult. Growers at this point should start to look at ways to minimise their risk for next harvest. The most straightforward way of doing this is to use grain pools to market a percentage of your grain. GrainCo pools remove the ‘emotion’ in trading to ensure you receive a good-average value for your grain whilst also easing cash-flow requirements through flexible interim payments and harvest-advances.

Forward values over the next couple of years could easily vary by £20-30/t: if fixing a price for a proportion of next year’s harvest does not look appealing then achieving a good average through a pool is the most prudent course of action at the moment.

UK and imported AN both continue to trade at similar values between £230-235. It is difficult to see imported product gaining business back in the short term unless the currency strengthens. Urea is thought to be at the top-end of the market for now, with prices expected to drop back in the new year.

GrainCo Ltd – 0191 428 7700

Thursday, 5 October 2017

September 2017 Update


As we reach the end of September, the 2017 harvest is still very much alive. Having boldly claimed at the end of August that ‘September will be the month’, I can probably count on one hand the number of actual combining days there has been. At the time of writing there is still both spring and winter wheat, spring barley and winter and spring beans left to cut. Any hope of malting or milling premiums for these crops has long since disappeared and it is ever increasingly becoming a salvage operation.

The difficult weather is also starting to have a potential knock-on effect for next year’s harvest; Oilseed rape (OSR) drilling has been abandoned and land ploughed for winter cereals will need an extended period of dry weather if it is to be drilled as intended.

Wheat markets have firmed a little over the latter half of September; the fundamental demand from both Ensus and Vivergo mean that feed wheat is always in demand. Depending on locality to either plant, values for November range from £144 to £142 per tonne. It is hard to see this demand waning a great deal and with plenty of consumer-buying still to take place, the downside looks relatively limited. The greatest threat to domestic wheat prices comes from overseas, with the pound strengthening against both the euro and dollar Russian wheat is only £4/t above UK values.

Barley has also firmed a little, supported by increased consumer buying and a slightly smaller feed barley crop. Depending on locality, November feed barley is worth between £125-127/t ex farm. Again, the upside will be limited, especially if wheat values remain relatively static. It’s worth noting that in July, as wheat peaked at £153/t for November, feed barley was worth £30/t less. Now, the differential is as little as £15/t (depending on location). With this in mind, it could be argued that barley is a better sell in the short-term over wheat, having closed the gap to wheat so significantly.

Oilseed rape (OSR) has suffered somewhat over the last month with November values falling to £314/t at the time of writing; a drop off of over £10/t. This can largely be attributed to imports of foreign OSR depressing the UK market, but with few farmer sellers, it is difficult to see these values being eroded too much more.

Due to the inclement weather, the spring and winter bean harvest has been a little stilted. Human consumption beans will be worth around £180/t with feed beans at a £25-30/t deduction. It remains to be seen what effect the weather will have had on the quality of the spring bean crop and subsequent premiums for human consumption quality.

Early-buyers of fertiliser have certainly benefitted this year with UK AN likely to be around £230/t onto farm when new terms are released. Urea is a similar story with values up to around £260/t as buyers chase to cover their sales – values are expected to drop back a little though once trade has settled down.  In May, I mentioned that given the historically low price-ratio between November’17 wheat and Autumn UK AN (1.27t of wheat to buy 1t of UK AN) it was a good time to buy fertiliser and sell wheat against it. Looking at that ratio now, with a £50/t increase in the price of UK AN and little change in the value of November’17 wheat, it would require 1.60t of wheat to buy 1t of UK AN.

The inclement weather is certainly starting to make growers rethink additional seed requirements for autumn-drilling. It is more likely now that growers will shift to varieties with a more ‘flexible’ drilling window such as Siskin or J B Diego which can easily be drilled throughout autumn and into winter.
Tel: 0191 4287700
 
 

Wednesday, 30 August 2017

August 2017 Update

The wet and stormy weather that dominated the last week of July has continued unabated into August. At the time of writing, most growers have only just managed two consecutive harvesting days! The relatively comfortable start to harvest in mid-july was quickly replaced with anxiety as heavy rain and wind in early-August battered very ripe Winter Barley and Oilseed Rape crops. Many growers by-passed winter barley in favour of OSR (being far more susceptible to storm damage) which unfortunately led to a loss of quality and yield in the winter barley crop.
Towards the middle of August most growers had made a start into spring barleys and wheats. Spring barleys once again have produced very respectable samples; if growers could consistently yield 3t/acre or higher with spring barley, it makes you question the merits of persisting with winter barley. Spring malting varieties all seem to be producing good quality and retention but with nitrogens marginally higher than has been seen in recent years.
Winter wheats so far have been fairly average; most first-wheats have been good but as yet nothing startling. Second-wheats however seem to have been much more mixed; it would seem that later drilled second-wheats that have hung on longer through summer have produced far better yields and quality than those drilled earlier. The greatest concern to have arisen through harvest is surrounding milling wheat quality; the persistent wet weather has led to a much greater variability in hagberg meaning there could be useful premiums over the coming year for any samples that do meet full-milling spec.
Grain markets have been a tale of two halves with OSR and feed barley remaining relatively unchanged for the last 4 weeks. Barley continues to trade at £118-120/t spot with no carry further forward; OSR is around £314 August and £325 for November, having seemingly never come under a great deal of harvest pressure, telling you everything you need to know about domestic stocks and farmer-sentiment.
Wheat markets have not been quite so mundane; having reached a high of £153/t for November in July, (at the time of writing) wheat has fallen to £138.50 for November. This is down to a couple of factors; firstly, it being harvest, markets (around the world) are always put under pressure. More importantly, a record-Russian wheat crop has been estimated at over 77 million tonnes, and coupled to improving US crop hopes the market has come under renewed pressure.  Domestically, it is difficult to the see the market sustaining these levels once we reach autumn. By this point most growers have moved everything they need to for storage and cash-flow purposes and are content to watch the market for a little while. With the incredibly strong demand for feed wheat in the North of England, the sellers are in a much stronger position.
The GrainCo seed-plant has now moved onto wheat processing and already a few varieties are becoming scarce; Barrel, Skyfall, Relay and Gator have all sold out, however there are good alternatives to be found in Siskin, Lili, Dickens and the old stalwart, J B Diego. As predicted Cassia feed barley has proved very popular again with only Tower and Glacier still available.
There is very little to report on in the fertiliser market at present with all attention on harvest and the up-coming drilling campaign. UK AN is around £200-205/t for Autumn delivery, imported AN continues to struggle and the incredibly poor exchange rate of the pound to the euro is not helping this situation. As expected, Urea has lifted to £225-230/t for autumn delivery and compounds remain fairly flat. There are decent offers for DAP at £330/t, which should be of interest to anyone looking to apply DAP when establishing OSR.
Call 0191 4287700 for all Grain Marketing, Seed and Fertiliser enquires.

Wednesday, 26 July 2017


New season KWS Cassia Winter Barley Seed arriving at the Piercebridge Seed Plant.

Call 01914287700 to order quality seed.