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Monthly eNewsletter
1st February 2023

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Cefetra Market Report

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After more than a year of the grains and oilseeds markets trading almost exclusively on the external influences of Black Sea politics, energy, and macroeconomics such as foreign exchange rates, interest and inflation, the focus has now swung firmly back to the commodities’ own Supply & Demand.

The main reason for this is the success of the “humanitarian corridor” for safe transit of Ukrainian and Russian goods out of the war zone to reach free access to international markets.  At the start of hostilities, it was reasonable to assume that millions of tonnes of food and feed commodities would be stuck at its origin, and hence the rush to buy at eye-wateringly high prices to secure critical supply.  In fact, due to a concerted effort by all sides, grain movements have more than kept up with this year’s production.  Russia’s exportable surplus is believed to be a massive 40Mmt, but vessels are moving 4Mmt monthly on average, so no problem there, and EU efforts to facilitate rail freight to the interior have also been surprisingly successful.

So, despite the dreadful situation on the ground in Ukraine, and markets finding some logistics issues and extra costs, the desire to keep trade intact has meant much less disruption after all.  The risk premium in wheat prices has therefore been steadily eroded to the point where it no longer attracts much attention.  Have we normalised the war?

What is in the minds of traders is the large crops harvested around the world.  Not only did Russia and the rest of Europe produce high yields in nearly all areas, North America had no issues, and we are now discovering that Australia has harvested it’s second biggest wheat crop ever, despite earlier worries about flood damage.

 

If Supply is strong, what of demand?  Globally the economic slowdown driven by high energy costs and more expensive money has undermined all consumption, but in local markets there have been particular damaging issues.  For instance, China’s lifting of Covid lockdowns has taken far longer than we would have hoped, and closer to home Avian flu has slashed the national poultry flock at the same time as the pig herd has been hit hard.  Feed compounders supplying the monogastric market have effectively become overbought of wheat, pulses, rape and soyameal with existing purchases, and so are rolling contracts forward, and the prospect of rebuilding the sales book this season is slim.

The UK bio-ethanol producers are also on slowdown at the moment, after a long period when corn has been comfortably cheaper than wheat.  In recent seasons this demand (up to a million tonnes of grain annually) has been crucial as the “balancing item” when we have had large crops that were not export-competitive.  For this ‘22/’23 campaign, most analysts agree we have a 2Mmt exportable surplus, so without Ensus and Vivergo running at a decent pace we really do need to work hard to avoid taking on a heavy carry-out stock.

 

You can see why the clear bullish - then bearish - trends have developed, and hopefully you have traded your own position accordingly, but what does the future hold?  It seems that with the market coping with the Russia/Ukraine conflict, softer macroeconomics, and no shortages in the commodity S&D’s, prices probably have further to fall.  However, there are signs that cheap UK wheat is bringing international buyers to our door.  We have got cheap enough to compete with other origins now, and also with other substitutable crops such as maize.  It may be that we can dispose of the surplus, but it is almost certainly going to be from the dockside – not into friendly local homes.  The merchant that has wide connections and capabilities will be able to work with you to best meet your needs here.

We can also look toward another “weather market” developing in the coming months, with an extending “La Nina” pattern.  Most of the world’s growing crops look at least fair, but Argentina, for instance, is already showing signs of stress after a long dry spell that has got analysts scratching away at the likely production for next time.  Weather is the greatest unknown, but so obviously fickle that it is unsuitable for inclusion in your medium and long-term business planning. 

 

The other positive right now is the fall in natural gas prices, and that means cheaper fertiliser and to some extent other chemical inputs.   As ever it is crucial that you keep close to the bottom line of your gross margin calculations, and not get hung up on the prices of the individual elements.  We have seen several opportunities in recent weeks where fertiliser has fallen faster than grain and therefore good margins can still be had.

 

As ever, we encourage you to maintain a dialogue with your merchant, share information and work together for everyone’s best outcome. 

To find out more, please contact the team at Cefetra Grain:

Members Section

Vale Training Courses - forthcoming courses

February 
7th February to 11th February – CS38 Climbing Aerial Rescue
8th February – Basic Tree Inspection
13th February – Telehandler Experienced Operator 1 day
14th February- Manual Handling
16th February – Sit -Astride ATV
20th February – Safe Use and Handling of Chemicals (PA1)
20th & 21st February – NPORS OVER 9m Telehandler
20th , 21st, 22nd February – CS39 Chainsaw From A Rope &  Harness
22nd February- Spraying PA6 Hand Held Application
24th February – Spraying PA2 Mounted Hydraulic Nozzle
27th February – Spraying PA6 Hand Held Application
27th & 28th February – Chainsaw Maintenance & Cross Cutting


March
6th, 7th, 8th March – Tractor Driving
8th & 9th March - Chainsaw Maintenance & Cross Cutting
15th & 16th March – 2 day Mental Health First aid
17th March – Rodent Management – Rats & Mice
20th March – Working at Heights
21st & 22nd March – Chainsaw CS30 & Felling (CS31) Refresher


Other Dates For Your Diary
Starts 29th March 2023 - Agricultural Facts

For more information, contact Kate Mason, Vale Training Services Ltd on 01296 612201, or visit the website at www.valetraining.co.uk

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Feed & Livestock Section

Lead times for mineral deliveries

Lead times for the delivery of minerals has slowly been creeping up over the past few months and is now currently about 10 working days from placing the order. Please bear this in mind when re-ordering your requirements.

Game feed tender

An invitation to tender for this season’s Group game feed has been sent to all the relevant suppliers and a decision as to which supplier will be awarded the tender will be made in early March. If you order your game feed directly with your preferred supplier rather than through the office, please bear in mind that GLW no longer manufacture or supply game feed.

Caustic soda prills

This product has been almost prohibitively expensive for quite some time now, significantly in excess of £2,000/T, but as of this month one supplier can offer it under £1,500/T, so if it’s a product you’ve held off purchasing due to the price, perhaps you might now re-consider and take advantage of the price reduction.

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Sodium bicarbonate alternative

For those members who use sodium bicarbonate, one of the Group’s suppliers can now offer an alternative, Calci-buph. The inclusion rate is half that of sodium bicarbonate and it lasts longer in the rumen as it corrects the ph. The real ‘no brainer’ is that it’s nearly £200/T cheaper than sodium bicarbonate.

And Finally...

Totally irrelevant but quite interesting festive facts of the month…If your metabolism was as fast as a hummingbird’s, you’d need to drink a can of Coke a minute just to stay alive and Norway’s deepest fjord is 100 metres deeper than the combined height of the Empire State Building in the US and the Burj Khalifa in Dubai.

For more details on any matter raised in the Feed & Livestock section, please contact Joe in the office:

Joe Cobb, Feed & Livestock Manager,  01865 393 139

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Chemicals Section

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We are currently meeting with all Distributors in preparation for this Springs season.  Messages relayed are very much the same; expect some prices increases (chlormequat brands in particular), plus plan ahead and order in plenty of time for delivery onto farm for usage.

Corteva

Corteva have requested that growers, before purchasing or using products containing Inatreq™ active, note their application advice based on best practice and user experience available at www.corteva.co.uk/inatreqadvice.

Corteva want to show their support to growers by offering a goodwill gesture of £200 towards the cost of sprayer parts purchased in conjunction with the purchase of products containing Inatreq™ fungicide. To qualify for the offer, growers will need to be able to show recent proof of purchase of 20 litres (minumum) of Inatreq™ active fungicide (e.g. Univoq) and purchases of sprayer parts limited to nozzle anti-drip diaphragms or pistons, pump diaphragms or Ramsay box seals in preparation for the 2023 season.  Growers are encouraged to hold onto receipts for sprayer parts purchased. 

A link will be made available where growers can register their interest to receive updates and next steps for submitting receipts.  By registering interest there is no obligation to buy Inatreq.

For eligibility, Inatreq™ fungicide and sprayer parts must be based on purchases made between 1st November 2022 and 30th May 2023. This offer is valid only until the 31st August 2023.  

Ferrex Slug Pellets

A discounted one-off out of season rate is being offered on full pallets (54 x 18kg) of Ferrex slug pellets, delivery February.  Deferred payment terms can be arranged.

For more details on any matter raised in the Chemicals section, please contact Shelley in the office:

Shelley Dancy, Chemical Coordinator,  01865 393 135

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Invoice checking at your fingertips with Orion App Accounts

Want to be able to check your invoices via Orion at any time, anywhere? You can now do so with the Accounts feature on the Orion App, with best in class security for Members. Call the Orion office for more information.

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For more information:

www.ofg.org.uk

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