WHEAT

US wheat values have fallen about $4/t on the week as the market continues to trade what was deemed a negative USDA report.

Although US export forecasts were left unchanged, US stocks were increased due to a predicted fall in domestic consumption. However, it was the US winter wheat planting report, showing intended plantings less than 1% down on the year, and 1.3mln acres above trade expectations, that triggered further selling at both Kansas City and Chicago exchanges.

Concern over excess dryness in the US southern plains still exists, meaning final harvested acres will be more important than intended planted acres.

The EU Matif posted a string of consecutive yearly lows before the market bounced on Wednesday, but it is still €5/t down on the week as the euro surged to a four-year high against the US dollar.

The overall picture for the EU is unchanged, with exports still lagging lower 20% year on year, with no prospect of a dramatic increase.

Reports that over 200,000t of Argentinian wheat has been shipped or have been booked to be shipped since the turn of the year, mainly to Algeria, shows the intense pressure the EU is operating under.

In addition, there is the ongoing record export program from Russia, where favourable weather continues to allow movement and shipment of grain.

The UK market, after posting yearly lows earlier in the week, has also bounced and is currently trading unchanged on the week.

Despite a surge in sterling to its highest point against the US dollar since the Brexit vote, UK farm levels are resisting the need to move lower.

The recent release of official data shows the UK as an increasingly large net importer and, depending on future domestic requirements, the carry-out at the end of this marketing season could be in excess of 2mln tonnes.

In summary, the USDA reports were bearish, and the markets reacted accordingly, posting fresh yearly lows in most commodities except Chicago wheat.

Believing that US winter wheat planting would be considerably lower, the market had built in some premium which, after the report, left the market open to further fund selling.

Old crop fundamentals remain bearish and provide a level of protection against the likelihood of reduced new crop production. Short-term the market will go back to trading weather and its impact upon mainly South American crops.

OSR

Rapeseed prices on the Matif futures have fallen about €12/t on the week as a combination of bearish fundamentals and the firming euro/US dollar rate continues to weigh on the market.

Globally, stocks of rapeseed are up and in Europe this situation has been exacerbated by larger-than-expected production numbers, high imports from both Ukraine and Canada, and unchanged crush margins.

This bearish situation is likely to continue to keep the market on the defensive, unless there is a significant oilseeds crop problem in either the Americas or Eastern Europe.

In the UK, farm-gate prices have come down to reflect the decline in the Matif. They have also suffered from the firming pound, which has taken an additional £2-£3/t off prices.

The UK is in a similar situation to Europe regarding potential carry-out. Higher imports, slow demand and better-than-expected crops all create a pretty negative outlook.

FERTILISER

Granular urea

Producers globally are yet to see any large demand to emerge. Given the limited spot activity, producers are maintaining a firm stance with offers for February shipments.

Rumours have circulated that a new Indian tender will be announced imminently, which will boost sentiment and set market direction.

A major urea shortage in China continues to worsen and the spread between Chinese urea and other producers continues to widen.

UK urea stock levels are low, which will keep levels stable to firm as spring demand emerges.

Ammonium nitrate

AN pricing in Europe and Asia continues to edge higher.

CF continues to maintain its competitive pricing from 2^nd January in the UK. Imported AN levels are struggling to compete, forcing importers to reduce prices below replacement values to continue selling into a quiet market.

Ammonium sulphate prices remain stable.

UAN

There is minimal activity with no new traded levels of UAN in Europe. Pricing for nitrogen and nitrogen sulphur grades remain stable from Q4 of last year. In the UK, values remain very competitive compared with AN prices.

P&K

Significant demand is surfacing for spring PK/NPK and straights in the UK.

Blenders nationally are competing for tonnes, resulting in some very aggressive pricing compared to raw material cost.

January offers are attractive, to encourage an uptake in early deliveries prior to the spring rush.