David Sheppard, Gleadell’s managing director, comments on the wheat market:

Weather, politics, trade barriers, Brexit, currency movements and crop conditions are all up front and centre stage at the moment.

The latest USDA report initially sparked a wheat rally as Russian crop estimates were slashed to below 70mln t, but 24 hours is a long time in markets.

The following day, all the gains were eroded as talk of Trump activating tariffs vs China, and the consequential expected Chinese retaliatory action, spooked the market again.

The big global issues are the size of the Russian wheat crop (the cheapest wheat in the world) and crop conditions in South America and Australia.

US wheat is expensive vs all other origins, but if Russia has a much-reduced crop other exporters such as the EU and the US will have to fill the gap.

Closer to home, it looks as if Denmark, which this year was a significant source of feed wheat for the Scottish, Northern Irish and North of England wheat markets, will have a much-reduced or zero export availability, due to lower plantings and drought-affected crop conditions.

Meanwhile, the French are worried with regard to the detrimental effects of heavy rainfall and stormy weather on their wheat quality.

In the UK, the old crop market is now all about July, when we shall find out the real state of our supply and demand situation, and the need to import more or less should become clearer.

New crop prices remain attractive for farmers. Crops, whilst not likely to break any yield records, look generally satisfactory with some potential.

Consumers are understandably reluctant to take positions at very close to the season’s highs, but we have all seen an Eastern European/Russian June or July heatwave kickstart major price rallies, and there is still a risk, albeit a diminishing one as the year rolls on, this may happen again.

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

Tuesday’s USDA report was largely neutral with an increase in Brazilian production offsetting further declines in Argentina.

The market quickly digested the report and re-focused on the weather and its potential impact on the crop in the US.

The US crop is moving into a critical development window but, with forecasts of wet and warm weather, the market is taking a positive view on the crop’s potential and soybean futures have broken sharply lower as a result.

European rapeseed futures have followed the declines in the soy complex, despite the declining crop conditions of the European and Australian crops.

Hot dry weather in North and Western Europe will cut production, and overall crop estimates suggest a 1mln t decline in production. In Australia crops are also struggling and will need timely rain.

Even if we park the macro-economic and political influences and focus purely on the market fundamental, the oilseeds sector remains extremely complex. It is entering a critical time for price development with the next six weeks being key. If yields in Europe turn out to better than expected and the soy crop does deliver the required bumper yields, todays rapeseed prices might not look so bad.

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

CF released its new-season ammonium nitrate terms on Thursday 7 June.

Although higher than some had anticipated, prices were well received, and the allocated tonnage for June and July movement was soon sold out.

The higher prices, compared with last year, reflects a firming urea market, higher energy prices and the stronger calcium ammonium nitrate and ammonium nitrate (AN) prices seen in Europe.

Values have moved up and offers here are now for August movement only, as the UK market continues to track European values higher.

33.5% AN for August in Europe is now offered at €248/t delivered farm in bulk, which equates to blue-bag Nitram at £232/t on farm in the UK.

A late spring in Northern Europe, UK included, means manufacturers’ stocks ahead of the new season remained tight and, with planned maintenance shutdowns in a number of AN plants across Europe, this will remain the case.

In the UK, imports remain limited. However, where product is available, imported AN can be picked up at a small discount to UK product.

Activity has slowed in the urea market this week but, despite this, prices firmed, with latest sales taking place at $255/t FOB Egypt, up another $3/t on previous sales.

Globally, stocks remain tight for June shipment, and this will continue to support prices, especially if India decides to enter the market before the end of the month. However, producers’ July stocks remain largely unallocated and this may lead to the recent rally running out of steam if demand slows.

With the International Fertiliser Conference taking place early next week, many traders will look to this for an insight into the next direction of the market.