WHEAT MARKET

This week’s continued sell-off by fund shorts in the US pushed wheat markets to fresh contract lows.

US wheat exports remain routine at best, trailing last year’s pace by 5%.

Initial US winter wheat crop ratings placed 52% of the crop in either good or excellent condition.

Winter wheat sowings are 84% complete, matching last season’s and just slightly behind the five-year average. Analysts still talk that some states may lose acres to other crops, with the trade already projecting another year of lower overall winter wheat sowings.

EU prices have reacted to the fall in the US markets, moving down on the week. Nothing fresh to report, with exports now running 23% lower year on year.

Some support has surfaced from a weaker euro and rising Russian prices, resulting from continued export demand and a firmer rouble. However, to date this has not resulted in higher demand for EU supplies.

The UK market is choppy on thin trading volumes, as sterling climbed on predictions of a potential rise in interest rates, and then fell on the reality of a 0.25% hike.

Market dynamics still are mostly about the spot position, although signs of increased sellers of cash grain may ease delivery premiums.

No general weather issues are seen affecting Northern Hemisphere winter sowings, leaving the market looking for inspiration ahead of next week’s USDA report, deemed again to reflect negative numbers for wheat and corn, but maybe supportive numbers for soybeans.

Traders are also aware of the size of the fund short, leaving the market potentially open to bouts of short-covering.

OSR MARKET

The rapeseed market remains very quiet, with UK farm gates prices stuck in a range for the past three weeks.

Farm selling remains limited and as a result the crush continues to use imports. To date, the UK has imported in the region of 70,000t of European material this season.

Given the size of domestic production this year, that will result in a significant jump in end-of-season stocks if the UK doesn’t find a way to return to export competitiveness.

FERTILISER MARKET

Granular Urea

Shortly after the close of the previous tender, India announced a further one and is forecast to be looking to buy an estimated 1mln t before the end of the year.

Spot demand into Turkey and buying from traders has continued to support prices out of Egypt and, as producers have strong forward books, many are under little pressure to sell.

UK prices have continued to firm over the past week and talk of any weakness in the market has disappeared.

The question remains, if there is to be an easing in global markets, will this come in time, or be significant enough, to have an effect to prices in the UK?

Ammonium Nitrate

CF is yet to re-enter the market with new December/January terms, but with European markets continuing to firm, prices are expected to rise.

This is making it difficult to import AN at competitive levels, so availability remains low. Where long-holders of stock exist, product may be able to be picked up at competitive levels.

PK

A number of blenders have pulled prices, awaiting new nitrogen values and to re-evaluate phosphate and potash prices after both markets firmed further over the past week.