Wheat market

Talk of rain entering the US plains switched the global wheat markets into negative mode prior to last weekend. They fell further on Monday as a major rain event swept through the US Midwest and into the plains over the weekend.

Although decent rains fell in most areas, the western parts of the region (Kansas, Oklahoma and Texas) saw limited precipitation. This was deemed of little significance to the market, which shed 40c/bushel ($11/t) over three trading sessions.

Weather premiums, which have been built up due to ongoing drought concerns over the past weeks, have now been eroded. This is despite state crop ratings released by the US Government still showing the US winter wheat crop in a perilous condition, with ratings at a historical low level, and considerably lower than a year ago.

EU MATIF prices, down €2/t on the week, followed the declines in the US, although not one-for-one. Falls were limited by ongoing rises in Russian export prices, due to seasonal logistics and continued strong demand from shippers.

Despite Russian wheat exports being forecast at a record high level, stocks are projected to rise to over 20mln t. In the EU, it is the slow pace of EU soft wheat exports (down 22% year on year) that will cause stocks to increase sharply.

UK futures prices are also lower, down £2.50/t on the week, although actual physical prices remain little changed, as consumption and market-short buying continues to underpin the market.

Sterling has firmed over the past week as news surfaced that the UK and EU had agreed terms over the UK’s Brexit transition period, which will now end on 31 December 2019.

During this period, the UK will be able to negotiate, sign and ratify its own trade deals, while still being party to existing EU trade deals with other countries. This means the UK will be likely to need new rules for import/export of arable crops from 1 January 2020.

The market rose on US drought, and now has fallen back as rain arrives, but one rain event doesn’t eliminate four months of drought. In some areas dry conditions persist and, while rains may stabilise the crop, major improvements are not expected.

Elsewhere in the northern hemisphere, crops look in good condition, appearing virtually unscathed from the vast variations in temperature witnessed recently. However, it is now melting snow and excessive moisture that may cause concern, disrupting spring sowings in the EU, and potentially those soon to start in the US.

OSR market

Argentine soybean production is being closely followed as the region has still received no rain and it is now really too late for any moisture to be beneficial.

The last USDA report forecast production to be circa 47mln t, but many are putting the figure below 45mln t and some as low as 40mln t.

The availability of soybean meal is an issue and is supporting global prices and, whilst Brazilian production has the potential to increase, there are concerns that the region’s logistics will not be able to cope, leaving many anticipating further demand being switched to the US.

European rapeseed futures are up marginally on the week, as a weaker euro added some support. However, the underlying market sentiment is still one of burdensome stocks and declining demand.

Returns for rapeseed processors continue to be poor, and we hear reports of crushers switching into soybeans to take advantage of better margins, leaving old crop rapeseed looking for a home.

In the UK we have seen sterling rally, following the outlined transition agreement announced on Monday. This undermined farmgate prices by circa £3/t, as the pound rallied back to the top of its recent range against the euro.

Old crop rapeseed has probably run its course and, given the burdensome supply situation, farmers left holding stocks should probably look to trade any remaining balances.

New crop remains less clear as there is a lot of weather to get through in both the US and the UK, so still all to play for.

Fertiliser market

Nitrogen markets have remained flat over the past week as weather conditions remained unfavourable for spreading.

However, after significant delays, some growers have finally been able to get on the land this week to start spreading first applications of nitrogen.

This has come as a welcome relief to many as winter cereals and OSR are looking hungry. As conditions continue to improve, both spring seed drilling and fertiliser applications will increase.

After a period of dormancy in the fertiliser market, buyers have started to return looking for various top-ups and spring NPK grades. National statistics point towards a large volume of business still to be covered.

This period of low demand has meant the market is now running significantly behind previous years, and while there are no issues with deliveries or availability at present, with such large volumes still to cover, this could change quickly.

With Easter weekend not far away, this will only add pressure to haulage and deliveries as we have two short weeks. It is therefore crucial to consider any requirements early, as those looking for immediate delivery may find themselves disappointed.