Farming News - OSR Wheat and Fertiliser - The Weekly Market Report

OSR Wheat and Fertiliser - The Weekly Market Report

WHEAT

US markets have remained in their downward spiral, as spill-over selling after the bearish USDA report continues.

Chicago corn has recently traded at contract lows, although pressure may ease as farmer selling slows with harvest nearing completion. US wheat continues to test the recently set contract low, and with only routine export trade being registered, it is likely that this next target will be breached.

Fund managers continue to extend their short position, seeming more than comfortable with current market dynamics and US crop prospects.

EU prices have eased on the week, trading down €1/t as slow exports, falling Russian export prices and a weaker US dollar continue to weigh on values. 

The main talking point this week has been the court ruling in Egypt reinstating the zero tolerance of ergot contamination in wheat imports. It will be of interest to see what the confusion over Egypt’s intake criteria actually means in US dollar terms. Offers, if there are any, will carry a level of protection against the risk of increased costs imposed on shippers.

UK futures have also eased, down £2/t on the week, although there has been little change in physical prices, especially in the nearby positions.

Reports that one of the UK’s ethanol plants has brought forward its annual maintenance shutdown – and has indicated a prolonged time period – has the trade talking of spot prices easing, due to the reduced demand this will cause.

UK wheat exports rose in September to 75,284t, down 78% year on year, and although imports for the same period were reported at 419,093t, down just 2% year on year, this still leaves the UK supply and demand forecast very much in balance.

In summary, the US markets are looking to retest market lows along with the Matif. Egypt’s unclear import policy has thrown confusion into the market, while market dynamics in the UK show little signs of easing. Funds continue to extend their short position, and current market fundamentals give little evidence why they should change their current stance, except to bank profit!

OSR

Following last week’s neutral/bearish USDA report for soybeans, fund managers have been aggressive sellers, pushing CBOT soybean down £6.50 on the week.

This negativity has been compounded by a sharp improvement in Brazil’s production prospects, with some commentators pushing estimates as high as 108mln t.

In Europe, the Matif rapeseed complex has followed the slide in CBOT, closing €8.25 down. The firming euro/US dollar rate has also contributed to the declines in the euro-denominated rapeseed futures market, but its rally against sterling has helped cushioned UK farmgate prices and values remain largely unchanged.

The market continues to be buffeted by the volatility in the foreign exchange markets. Crops around the world appear to be developing without issue.  European rapeseed plantings look well established and we really need a crop problem or some fresh bullish news to push prices higher.

FERTILISER

Granular Urea

After the latest Indian tender was scrapped, producers have been left with November stocks which will need selling.

This has caused cracks to appear in what was an inactive market, which might see some sellers accept lower offers to move stock.

India will need to tender again for circa 800,000t in December at a time when Chinese production remains low as high coal prices continue and exports are significantly lower year on year.

The US, European and Turkish markets all remain short of urea for the spring and need to buy substantial quantities come January/February.

Ammonium Nitrate

AN markets are slow in the UK after CF posted another increase to both straight nitrogen and nitrogen sulphurs last week.

Levels still represent excellent value compared with European markets, where 33.5% is offered at an equivalent to £260/t. Imported AN purchased earlier in the year is trading at a slight discount to UK material.

NPK

Phosphate markets continue to climb higher, with most recent trades up another $20 over the week.

Blenders have withdrawn NPK/PK and straight prices this week and reissued higher numbers to represent this move.

Prices for TSP and DAP were up by a further £5/t yesterday, with further increases planned for next week. Whilst demand has remained steady for PK and NPKs, spiraling raw material costs will increase the price of both blends and CF compounds.

Report courtesy of Gleadell