WHEAT

 The US market continued its fund-driven consolidation, moving up a further $10/t before it ran into selling pressure.

Continued dryness in the US plains and declining state crop ratings spurred funds to continue their short covering. However, the move on Wednesday may reflect profit-taking on a market that had risen $15/t in just over two weeks.

The EU market, after a week of consecutive daily lows, took solace from the firmer US market, edging up €5/t, before again trading lower.

Although Russian export prices firmed on the back of the stronger rouble (triggerd by an oil rally), they are still cheap in the international market, with a comparable spec almost $20/t below French wheat.

Argentine wheat is also priced at a similar discount to French supplies and it remains unclear how the recent Algerian trade will be split between the various origins.

The UK market bounced and then eased back after setting a contract low last Friday, as the pound/US dollar moved lower, then higher, as concern rose over the Prime Minister’s future and Donald Trump’s vision of a strong US currency.

However, despite the fluctuations, physical prices have hardly moved with good spot demand, mainly from merchant shorts, and limited farmer selling, which is seen as keeping farm prices underpinned.

Long-term UK fundamentals still look negative, with an easing in the forward carries a possibility, leaving near-by prices still looking attractive for growers.

In summary, the funds have had ‘a bit of fun’, but yesterday’s price action may suggest they have finished for the time being. It is likely they still hold a sizeable short, and with no signs of the US weather issues abating, the market remains open for additional bouts of short-covering.

However, EU and other origins are working off a different agenda. With export opportunities dwindling, it remains unlikely, given the current price-spreads, that the EU can substantially increase its export outlook.

This leaves the likelihood of higher stocks, an outcome which could be repeated here in the UK.

OSR

 Another week dominated by weather and currency.

The shorts in the CBOT soybean market have reduced their positions, as on-going speculation remains about damaging weather in Argentina.

Seasonal rainfall is well behind the norm, and whilst there has been some beneficial precipitation in the last week, the forecast is for a return to hot and potentially damaging weather into the next month.

However, global oilseeds stocks are very comfortable and the world is going to need a crop problem if a sustained rally can happen.

The rapeseed market in Europe continues to suffer under the weight of global supplies, as imports continue and the euro remains firm.

The Matif rapeseed futures contract has ticked up marginally this week, but buyers have failed to reflect this in the physical market.

UK farmgate prices continue to be buffeted by the swings in sterling, as economic data and Brexit speculation pushes values around within the recent 1.13 -1.15 trading range, adding additional complexity to an already challenging market.

The longer-term outlook for the pound/euro that is being discussed within the UK suggests a break above 1.15, and this will not help our rapeseed prices in the medium-term, unless a crop disaster somewhere in the world changes the neutral to bearish outlook.

FERTILISER

Granular Urea

High volumes of buying continue to firm global prices.

Chinese shortages continue to cause concern among many traders as exports from the country will be negligible in the first quarter of 2018.

Stocks of urea in the UK are dwindling, with a number of importers now selling out of product.

The likelihood of new vessels arriving is low, as global prices firm and we move ever closer to the start of applications.

Gleadell has discharged a vessel of Egyptian urea and have product available for February/March movement.

Ammonium Nitrate

CF released new terms for February and March delivery earlier this week.

The previous January offer for Nitram has been rolled into February, keeping prices unchanged. This reflects European markets, which are yet to see a pick up in seasonal demand.

This keeps pressure on importers, some of whom have expensive product in stock and are being forced to sell at lower prices to compete with CF.

Nitrogen/sulphur grades from CF are only available from March and this perhaps explains the increased interest in imported grades that remain available for February delivery.

PK

CF’s new terms for compound NPK’s have remained mostly unchanged for February. A few of the grades are already sold out and there is a warning that there are low stocks of several others.

March terms are now available for all grades indicating a small rise to prices.

With availability already tight, our advice would be to secure requirements now, rather than delay purchasing and run the risk of missing early delivery slots.