The last eight weeks has seen a great deal of change on all fronts; crops have progressed rapidly through the growth stages and harvest is starting to feel just around the corner. Likewise prices have also moved significantly since the end of April, providing some comfort to those whose crops have suffered from the recent dry weather.
Old crop wheat prices have plateaued recently around £165/t for July, however with few farm stocks available and new crop wheat still weeks away, you would certainly not rule out any shorts within the market having to pay up substantially for any sizeable tonnages of wheat. As is always the case at this stage of the season, most growers may only be left with a couple of loads at the back of the shed and it’s more dependent on whether they want their sheds emptied before harvest or whether they’re happy to over-year any remaining balance.
New crop wheat prices have slipped a little from the contract highs reached in early June, with November wheat currently £160-162/t depending on location and As Available £5/t less. Following one of the most bullish USDA reports for years in mid-June, the bonkers-nature of grain markets were acutely highlighted as global grain markets dropped over 4%, despite the USDA predicting one of the smallest Russian wheat harvests in years. The report highlighted what had been known for a while; initially a smaller acreage of winter and spring wheat had been sown and following an incredibly dry May it was only logical that forecasts for Russian wheat production would reduce. The market has already priced in an element of this risk so now it’s a waiting game to see just how much lower the harvest will be. To give some context, anything below 70 million tonnes would probably be seen as bullish to the market.
Old crop feed barley has almost dried up, especially as new crop seems only a couple of weeks away. New crop values still look attractive with as available trading at £137-£135/t depending on location and November £5/t more. At this point it would probably be prudent to concentrate on harvest movement as this is always the point at which markets come under most pressure – booking a bit of tonnage now to ease cash-flow and storage at harvest is never the worst idea.
Oilseed Rape (OSR) remains fairly flat following a brief skirmish for old crop up to £300/t spot. New crop is trading around £285-£287/t at harvest and £295-£297/t for November, depending upon location. These values seem fairly par for the course at the moment and given the volatility in OSR yields, few growers ever sell forward.
New season fertiliser prices were finally released, with the initial allocation of June nitrogen selling out within a day. Current terms ‘blue bag’ terms are around in the high £230s for October delivery – there is better value UK and imported product still available for August delivery at a little over £230/t. New season prices have been much higher than most expected as a consequence of higher general commodity prices coupled to little competition from urea. Whether these levels can be sustained will depend largely on whether grain and oil prices stay buoyant!