Markets Quiet Ahead of This Month’s WASDE

The London LIFFE wheat future for March 2014 closed at £154.30/T on Friday afternoon (7^th February) – £5/T higher than the week previous.

Old crop trade below the benchmark £150/T lasted all of a day although the improvement in values is more likely to be attributed to a decline in the strength of the pound against the Euro rather than any physical supply/demand changes – the pound fell to 1.20 against the Euro towards the end of last week, a decline from 1.22 the previous Friday.

This month’s World Agricultural Supply and Demand Estimates (WASDE), care of the US Department of Agriculture (USDA) are due for release at 5pm today and buyer interest therefore became increasingly limited towards the end of last week. The estimates ‘should’ indicate any damage done to winter crop prospects across the Northern Hemisphere following January’s cold spell and should also include any changes to global demand due to lower new crop values. Changes to the oilseed market are also expected and due to the current level of demand, any downgrade to production could really tighten the supply and demand situation. South American production forecasts will also play a big part although the on-going reluctance to sell by the Argentinian farmer will struggle to be ignored regardless of the numbers.

Old crop feed wheat is currently valued between £152-153/T ex-farm for February/March movement – generally unchanged regardless of the £5/T price increase on the screen. Further forward, buyers for April/May are quiet and will probably remain this way until we get today’s WASDE numbers out of the way this evening.

As for feed barley, ex-farm values are again unchanged with spot collection currently trading in the early £130’s/T. Some local farm-farm movement may put £135/T ex-farm on the table for spring movement – good value for those of you who are looking for shed emptied by the end of June and still have a large heap of feed barley to sell yet.

As for new crop wheat, the London LIFFE wheat future for November 2014 is currently at £146/T in opening trade this morning, unchanged from Friday’s close. In ex-farm terms, this ‘should’ equate to October/November collection at £140/T although buyers are again limited given the release of this evening’s USDA estimates.

New crop barley is currently valued at a £15/T discount to feed wheat depending on farm location and movement requirements. Again buyers are limited. As for malting barley, spring barley contracts are filling fast and as available movement is currently in the region of £165/T ex-farm (for the right variety and the right specification – please contact the office for more information). Judging by the amount of good quality spring malting barley still available on farm and a lack of local buyer interest, it would seem that our local homes are fairly full. Therefore for those of you who are looking to have spring barley moved at harvest time, a contract should be worth some serious consideration.

Meanwhile, old crop OSR values experienced a hugely volatile five days last week with ex-farm values fluctuating anywhere between £280-297/T ex-farm – almost £20/T. Mid-week values touched £290/T and a further £7/T was added towards the end of the week meaning ex-farm values were falling just short of the benchmark £300/T ex-farm.

Currency is the main factor behind these price gains although the supply and demand fundamentals have remained in the farm-sellers favour. Chinese demand is good and whilst there are plentiful supplies to put against this, the physical logistics of the situation are not that simple.

North American supplies are in abundance but are completely un-favoured given the recent traces of GM found in several Black-Sea destined shipments, hence the added pressure on both Australian and Canadian supplies – which are struggling to keep up with the pace of demand. European supplies therefore suddenly look rather attractive, unfortunately for the UK farm-seller the relative strength of the pound against the euro is just halting ex-farm values from reaching that £300/T ex-farm position.

As for new crop values, ex-farm prices are only moderately higher considering the advance of old crop values this morning. As available collection would currently make £270/T ex-farm.