Week Beginning Monday 4th March 2019

THIS MORNING’S LONDON LIFFE WHEAT FUTURES:

• MARCH 2019 – £160.45/T (£4.40/T LOWER ON THE WEEK, £9.65/T LOWER ON THE FORTNIGHT)
• MAY 2019 – £161.75T (£6.20/T LOWER ON THE WEEK, £10.05/T LOWER ON THE FORTNIGHT)
• NOVEMBER 2019 – £145.25/T (£4.75/T LOWER ON THE WEEK, £7.85/T LOWER ON THE FORTNIGHT)
• MAY 2020 – £150.80/T (£5.05/T LOWER ON THE WEEK, £7.15/T LOWER ON THE FORTNIGHT)

POUND Vs EURO – 1.1670

MONDDAY 28^TH FEB – 1.1526

MONDAY 11^TH FEB – 1.1411

MONDAY 4^TH FEB – 1.1415

MONDAY 28^TH JAN – 1.1577

Old crop feed wheat for April collection is struggling to make £165.00/T ex-farm this morning; a firmer pound and slow buyer interest have both added pressure to the market this week. Further forward, £170.00/T ex-farm has at least for now been taken off the table.

Milling premiums have slightly firmed over the past week, with full specification group 1 varieties achieving up to a £25.00/T premium over the past week. There are also some smaller opportunities for both hard and soft milling varieties – please get in touch to discuss your requirements.

Markets have reacted positively to the news that the Ensus bio-ethanol plant in Teeside is due to recommence production in March. However, the initial rise has waned over the past few days as the reality of the situation weighs on the physical market; the plant will run entirely on imported maize for the time being, which will limit the knock-on effect within the wheat market.

As for the new crop market, August/September is currently valued somewhere in the region of £140.00/T ex-farm. In truth, those looking to secure as available collection at harvest would this morning be looking at the late £130.00’s/T ex-farm. Further forward, the benchmark £150.00/T ex-farm is now struggling to maintain its position for the following summer (2020).

There is an interesting article on the AHDB website this morning regarding the current situation with the feed barley market: https://cereals.ahdb.org.uk/markets/market-news/2019/march/01/analyst-insightprospects-of-a-falling-feed-barley-market.aspx.

Throughout 2019, feed barley prices have fallen away, driven by both reduced domestic demand and other wider global factors. On average, ex-farm values have fallen over £20.00/T from the beginning of January.

Interestingly, on the 21^st November 2018, feed barley was trading at a £0.10/T discount to feed wheat. Comparatively, on the 21^st February 2019, feed barley was trading at a £24.30/T discount to feed wheat.

Furthermore, as markets currently expect a larger domestic and EU barley crop, a considerable new crop discount and harvest pressure offers little incentive to hold stocks in the next trading season. Bu have we seen the bottom of the market or are their further risks for the feed barley market?

• Remaining domestic demand is reduced due to the price attractiveness of maize corn. Total demand is down 14% from this time last year.
• Good weather outlook and smaller cattle herd numbers – spring feed demand could be lower than previous years.
• Total 2019 EU barley production is forecast to increase by 10% on account of a “rebound in yield”.
• Uncertainty of Brexit = little demand for feed barley exports. Additionally, due to currency, ex-farm prices are still too high to be competitive with other European markets.

For those of you with plenty of old crop feed barley left in the shed, I would recommend a read.

Current feed barley values are trading in the region of £145.00/T ex-farm for spring collection – please speak with the office to discuss your requirements.

FOOD FOR THOUGHT:

Indicative wheat production for major exporters next season (Source: USDA).

• Argentina – down 15.3%
  • 2019/2020 – 16 million tonnes
  • 2018/2019 – 19 million tonnes
• Australia – up 9.6%
  • 2019/2020 – 19 million tonnes
  • 2018/2019 – 17 million tonnes
• Europe – up 12.2%
  • 2019/2020 – 154 million tonnes
  • 2018/2019 – 138 million tonnes
• Russia & Ukraine – up 7%
  • 2019/2020 – 104 million tonnes
  • 2018/2019 – 97 million tonnes
• US – up 3.2%
  • 2019/2020 – 53 million tonnes
  • 2018/2019 – 51 million tonnes