Week Beginning Monday 5th November 2018

Trade for spot collection feed wheat appears to be non-existent this morning as the UK trade continues to digest the “bio-ethanol back log” created by the closure of both Ensus and Vivergo over the past couple of months.

£170.00/T ex-farm is currently offered for February/March collection – growers who require movement in the short term will need to take a significant discount to negotiate this.

Regardless, cereal demand for use within animal feed is good due to the reduced forage availability this year.

The latest trade figures for September are in and as confirmed by the AHDB, wheat usage in GB animal feed production reached the highest level on record for the month of September. Also, maize usage within animal feed during September was recorded at 39,400 tonnes – a 24% increase from September 2017.

Conversely, barley usage has been falling. With domestic barley prices being supported, its discount to wheat in the UK has been minimal, hence the additional usage of alternative cereals such as oats and maize.

According to the latest figures from the USDA, the US is reportedly set for a bumper US Hard Red Spring Wheat (HRSW) crop in excess of 16 million tonnes due to both “an increase of area and record yields”. This is a 53% increase on last year’s “drought affected crop” and the second largest since the 1992 record.

Furthermore, the USDA have added that as well as being a large crop, this year’s quality is also expected to be strong. “Overall, proteins are slightly down on last year (due to the low yield seen last year) but remain firmly above the five year average. The baking performance and gluten quality is also strong”.

AHDB have added that alongside domestic wheat, the UK milling industry is dependent on imports of high protein wheat, such as the US HRSW, which we are unable to produce in the UK.

Typically, this high protein wheat is sources primarily from the US, Canada and Germany.

• The drought has significantly impacted German crop production this season and it has also placed question marks around this year’s autumn drilling campaign. Crop quality from harvest 2018 is said to be good, but the ability of the country to export the volumes they historically would do normally, is limited.
• As for Canada, the recent unfavourable weather has raised significant concerns regarding crop quality.
  • Harvest progress is slow – several ley producing regions were hit by snow and unusually cold and wet weather.
  • Looking ahead, above average rainfall is forecast for the later harvested crops which is expected to affect the Hagberg Falling Number.

Here in the UK, milling premiums have fallen under pressure over the past couple of weeks – full specification group 1 wheats are struggling to make a £12.00/T premium over feed wheat. As for soft wheat, a £3.00/T – £5.00/T premium currently looks like a realistic offer – the premiums seem to become larger further forward, presumably due to the level of demand being better.

Planting of soybean crops for the current 2018/2019 trading season is now underway in Brazil and the early indications are that the area “could expand again from the previous season’s record”.

Both maize and soybeans are planted at the same time in Brazil, so both crops are in constant competition with each other for area. Over the past ten years, the higher the export prices for soybeans were compared to those for maize, the greater the expansion in the soybean area.

Currently, Brazil soybean export prices are around 2.5 times those of maize – hence why the trade are convinced that we could be looking at a large soybean crop this season.

Brazil is the worlds top exporter of soybeans and is currently forecast to account for almost half (an estimated 48%) of global shipments in 2018/2019, hence the pressure on prices.

Valued upwards of £310.00/T ex-farm for August collection next year attracted a fair bit of interest last week from the seller’s – it’s a much more positive starting point than the £280.00/T ex-farm that was offered last year.