Week Beginning Monday 16th April 2018

• The London LIFFE wheat future for May 2018 is higher this morning from Friday’s position at £146.50/T. This is £1.45/T higher than the opening trade a week previous.
• The London LIFFE wheat future for November 2018 is higher from Friday’s position at £146.45/T. This is £0.35/T higher than last week’s opening trade.
• The London LIFFE wheat future for November 2019 is also higher this morning at £147.40/T. This is £1.00/T higher than the week previous.

Old crop feed wheat has traded the same this morning at £152.00/T ex-farm. For those of you with any old crop feed barley left in the shed, values appear to have plateaued at £150.00/T ex-farm.

Markets have remained driven by weather and the continued uncertainty of spring planting. The World Agricultural Supply and Demand Estimates (WASDE) report was out on the 10^th of April and again, has done very little to encourage the market. The weather over in the US has seen all types conditions last week; heavy snow in the north, cold with excessive moisture in the Midwest and Delta and droughts in the Southern plains. Current weather in the UK has delayed spring drilling and application of treatments (to winter crops), if this continues and then we see temperatures turn excessively warm, winter crops with shallow roots could be affected from stress – lowering potential yield.

Some interesting points worth noting from this month’s WASDE are given below.

WHEAT

• Global wheat production is forecast slightly higher this month at 759.75 million tonnes (up from 758.79 million tonnes last month).
• Global trade is virtually unchanged overall as increased wheat exports from Russia and Argentina offset lower exporters from the European Union. Wheat exports from the European Union are now forecast at 24 million tonnes (down from 25 million tonnes last month).
• Russia’s wheat exports are raised by 1 million tonnes to 38.5 million tonnes which surpasses last year’s record exports by more than 10 million tonnes. Russia continues to displace the European Union and other exporters in several markets.
• Projected world consumption is higher. However, the increase in global supplies still exceeds this additional consumption. Global ending stocks are now forecast at 271.2 million tonnes, a new record.

MAIZE CORN

• • Global maize corn production is forecast slightly lower this month at 1,036.07 million tonnes.
  • Argentina corn production is down based on reductions to both harvested area and yield. Yield results have been below expectations, while dry conditions are expected to increase the amount of corn harvested for forage or grazed. Argentina’s corn production is now forecast at 33.00 million tonnes (down from 36.00 million tonnes last month).
  • Brazil corn production is reduced reflecting expectations of lower second-crop corn area. Brazil’s corn production is now forecast at 92.00 million tonnes (down from 94.00 million tonnes last month).
  •  If the above is realised, the combined corn production of Argentina and Brazil for 2017/18 would be 14.5 million tonnes below the record reached in 2016/17.
  • Looking ahead, with reduced export competition from Argentina and Brazil, we could see an impact on the first half of the 2018/19 marketing year in the US.

OILSEEDS

• Global oilseed production is lowered 5.7 million tonnes this month to 558.8 million tonnes.
• Soybean production for Brazil is forecast at a record 115.0 million tonnes, up 2 million tonnes on last month due to beneficial rainfall during the growing season.
• For Argentina, production is lowered 7.0 million tonnes to 40.0 million tonnes on reduced harvested area and yield, reflecting dry conditions during January through March.
• Global soybean ending stocks are lowered 3.6 million tonnes to 90.8 million tonnes with reductions mainly for Argentina, Brazil and the EU.

 Meanwhile, the weather in the US is going to have a further impact on farmer’s future sowing decisions, favouring a move to maize corn rather than soybeans. However, US farmers still need to understand what the 25% export tariff on US soybeans into China means for domestic US price development. The US soybean market could potentially see a significant upside if global production is affected by the US weather events.

On the other hand, the old crop rapeseed market does not have the same potential outlook as the soybean market. Reports have suggested European processing plants are switching from rapeseed to soybeans; this has affected the French rapeseed futures, along with the fall in demand from the biodiesel sector as Argentinian imports continue to flood the European Market. 

According to Agrimoney “The outlook for new crop rapeseed will be influenced by the fluctuations in the soy market but, given the burdensome carryout stocks that are expected at the end of this season, it would need a weather or production event in the US to support global oilseed prices in the medium term.”

Last week, UK ex-farm values drifted and are struggling to hold on to £290.00/T ex-farm. This morning, spot collection is valued in the region of £285.00/T ex-farm as sellers continue to hold off.

Vivergo have officially announced that the plant has re-opened following a four month shut down period following unfavourable trading conditions; “in part driven by Government inaction on the future of renewable fuels”.

They added that over the coming months, “it is hoped that market conditions will improve as a result of the RTFO being passed through parliament in March. This will come into effect later this month, increasing the use of renewable fuels in transport from 4.75% to a target of 9.75% by 2020”.

Following this, the bioethanol industry is now calling for the Government to introduce E10 fuel by the end of the year. “E10 is a more environmentally friendly blend of 10% renewable bioethanol with petrol which can lower emissions from vehicles”. It is commonly used across North America, Europe and Australasia and introducing it in the UK would be the carbon emissions savings equivalent to taking 700,000 cars off the road.

The current intake capacity of the plant is unknown within the trade but judging by current intake levels, they look set to be fully online within the coming few weeks.