David Sheppard, Gleadell’s managing director, comments on the Wheat Market:

US traders returning from yesterday’s national holiday will be hesitant ahead of tomorrow’s US tariff announcement deadline on a range of imported Chinese goods.

The announcement will have an impact on the soybean market and its consequences may filter across to the corn and wheat pits, although market dynamics in these markets are different to soy.

US spring crops are still reported in good condition, although fears of warmer weather in the Midwest and rains in the East and Delta regions could trim ratings in next week’s report.

The US winter wheat harvest was reported as 51% complete, in line with last year and the five-year average.

European prices have surged €10/t on the week as a hefty cut in the French wheat crop estimate last Friday was followed by a report that German farmers expect a poor harvest amid drought and record heat.

The head of Germany’s farmers’ association said that the country’s grain harvest is expected to fall to 41mln t this year, down almost 20% compared with 2017. He cited extreme conditions, particularly in the country’s north-eastern breadbasket state of Brandenburg.

Russia’s agriculture ministry reported that 5% of the total area had been harvested, with early yields almost 15% down year on year at 3.82t/ha. If continued that would project a wheat crop of about 70-73mln t, the top end of current trade estimates.

UK new crop prices have also surged higher, up over £10/t on the week, despite a firmer pound/dollar exchange rate.

European market strength and increasing concerns over the yield potential of the UK crop due to the current heatwave are supporting UK prices.

A circa 14mln t UK wheat crop would, for the third consecutive season, place the country as a net importer of wheat, unless we witness a dramatic downward adjustment in domestic usage.

Gleadell comment

The potential of Northern Hemisphere harvests holds sizeable question marks. The scale of the perceived declines and final production within Russia and the EU will be influential, as the global export matrix for 2018-19 could need a major realignment depending on exporters’ total availabilities.

This in turn may provide some dynamic regional pricing over the coming weeks, until better harvest data and market assessments can be obtained.

Jonathan Lane, Gleadell’s trading director, comments on the OSR market:

Harvest is well underway in the Ukraine and yield reports are at best average.

In France there has been a general air of disappointment about the crops that have been cut to-date. First cuts in Germany and Poland have been poor.

Harvest in the UK is upon us, and we’ll have much better idea of the likely market direction in two weeks. To date, farmer selling on rapeseed has been light and well behind normal. 

However, given the generally supportive underlying tone of the market and the significant market carry, growers may find it more attractive to store rapeseed this season and chase the carry into the new year.

Calum Findlay, Gleadell’s fertiliser manager, comments on the markets:

Nitrogen markets have continued to firm over the past week due to tight supplies of ammonium nitrate and urea.

Russian AN has increased by more than $35/t over the past fortnight and, with the domestic market likely to start taking deliveries of AN in August, Russian export levels will only decrease.

The supply of ammonium nitrate remains tight across Europe, as a number of plants shut down for annual maintenance.

In France, 33.5% AN is trading at €263/t bulk delivered for October, equivalent to UK 34.5% at £247/t on farm.

CF has responded to the firm market by pulling terms yesterday. New terms are likely to follow the trend seen across Europe.

Granular urea markets have seen a significant rise, with prices climbing by more than $60/t since late May.

The continued absence of Chinese exports has kept global supplies tight and producers have been able to sell at higher levels into markets which require spot shipment.

Buyers will defer purchases where possible, but India and Brazil cannot afford to do so, and will keep demand high, even as prices continue to escalate.

Offers by UK importers have tracked replacement and farm buying has remained steady, with some growers covering a small proportion of their requirement in order to spread the risk of buying.

UAN terms have followed other nitrogen markets with rises of their own.