WHEAT

The US market is up $2/t on the week as it continues to tread water ahead of this afternoon’s USDA data.

Support is still seen emanating from the current US/China trade talks, and the assumption that China will purchases a quantity of US agricultural products, including wheat.

However, while US winter wheat plantings are expected to be declared at their lowest level in over 100 years, the likelihood of reduced 2019 production could be more than offset by a reduction in 2018 US exports, and higher ending stocks.

European prices are down €2-3/t on the week. Russian exports are declining due to higher domestic prices, although at present the EU export programme is not reaping the benefits. Exports of soft wheat to non-EU destinations are still reported 26% down year on year.

French farm office FranceAgriMer did forecast an increase in such exports by 150,000t to 8.85mln t, but also lowered intra-EU exports by a similar quantity. However, due to a reduction in domestic feeding, end-season stocks were raised from 2.8mln t to 2.9mln t

UK values are unchanged on the week, although sterling is weaker. While Brexit rumbles on, it was the release of the Basic Payment Scheme data by Defra that caught the eye.

The data, which is subject to further investigation, showed a greater-than-normal divergence from the June survey estimate for the wheat area in England. If correct, that would dramatically tighten the dynamics of the UK’s supply and demand balance sheet.

David Sheppard, Gleadell’s managing director, said:

"Another week of ifs and buts, whens and maybes, but little overall action. USDA will provide updated information later today, with US winter wheat sowings leading the interest.

"However, the trade will also watch for adjustments to the US balance sheet, and whether USDA starts tinkering with the global export matrix, particularly for the EU and Russia, where current projection remains heavy.

"Otherwise, it remains all about US/China talks, Black Sea exports and Brexit, with BPS data throwing more uncertainty into the mix."

OSR

Despite the US and Chinese governments’ ongoing discussions about resolving their trade dispute, the market remains unimpressed.

There have been further announcements of fresh soybean sales, but the overwhelming issue is the lost business and, more fundamentally, China’s general slowdown in consumption.

This is keeping US domestic soybean prices on the back foot and CBOT futures are struggling to find any clear direction.

The ongoing concerns about the slowdown in China are also affecting the Canadian canola market, with prices in Winnipeg falling during the week.

China is a significant export outlet for Canada and, with StatsCan increasing forecast ending stocks to record levels, the market is struggling to come to terms with what is becoming a burdensome supply situation.

European rapeseed futures have drifted lower on the week following a lacklustre trade, despite the weaker euro.

With the February Matif contract now closed, and any futures-related technicalities out of the way, the market is now able to re-focus on the fundamentals.

The slowdown in the EU crush caused by low water levels in the Rhine during Q3 and 4 2018, together with the impending arrival of Australian seed, is likely to supress any significant old crop rally even if farmers continue to remain sidelined from the market.

The UK continues to be a follower and fluctuations in sterling remain the greatest influence on UK farm-gate prices in the short term.

FERTILISER

Urea

The Latin America Fertiliser Conference provided little guidance for pricing, resulting in a further week of relatively little change.

There are questions being asked around the strength of sterling as we move towards the 29^th March, as well as uncertainty in energy costs following political instability in Venezuela and the building of US/Russia tensions. Many are making the most of the circa £20/t fall from the January price.

On top of these uncertainties, the Indian tender will also influence market direction, with 315,000t still to be awarded.

Spring is approaching quickly and, with top dressings just around the corner, it is important to order now to ensure a timely delivery and to avoid delays in application.

Ammonium nitrate

The AN market is still dominated by competitively priced CF products.

New uncertainties of a No-Deal Brexit and the impact on the pound will remain a significant factor for imports. Blue Bag continues to be a steady ship in a sea of uncertainty.

CF has maintained its  February and March terms and Nitram deliveries are available throughout these months nationwide.