Market Report

Friday 12 July 2019

Wheat

  • US prices are up $2/t on the week as USDA raised US production but lowered carry-out stocks. Also seen supporting the US market was the 10mln t reduction in production for other key competing exporters (Australia, Canada, Russia, the EU and the Ukraine). USDA also raised its outlook for US wheat exports.
  • US wheat harvest continues to progress under more favourable weather, with almost half of the crop in the barn. Continued reports of good yields encouraged USDA to raise its yield estimate to 50bpa.
  • Russian wheat production estimates continue to tumble, as the adverse weather experienced during June seems to have affected yield potential. Local analysts are now pegging the crop in the upper 70 mln t region rather than the low 80s.
  • In its latest tender Egypt purchased Romanian and Black Sea wheat, although again, no Russian wheat, as farmers continue to wait for better prices based on the higher quality of the harvested crop. French wheat wasn’t even offered due to being uncompetitive.
  • Strategie Grains lowered its crop estimate for EU-28 soft wheat production by 2.2mln t to 140.6mln t. Projecting a tighter 2019/20 balance sheet, but also indicated that projected French wheat stocks would remain high.
  • UK new crop prices are trading £3/t lower on the week, although recovering from their earlier lows, as global markets firmed following the release by the USDA. However, old crop prices have fallen, as remaining stocks on farm try to find limited domestic, or merchant-short demand.
  • In summary, the USDA report came as a bit of a shock to the market, as it was envisaged few global changes would be adopted. However, the drop in production was deemed by the market as supportive for the US, prompting strong buying after the release. Now the market will go back to monitoring weather conditions, as US spring crops develop and northern hemisphere harvests progress. Although it appears that the global ‘high’ in wheat production for the season may have already been and gone!

Malting Barley

  • The French winter malting barley harvest is well underway with good yields and quality.
  • The first French springs to be harvested are also reported as being good.
  • The weather has turned dry in Scandinavia but no concerns so far.
  • In the UK, the first winter malting barley crops have been harvested with good results so far for the main variety Craft.
  • Overall UK crops look to be in good to excellent condition.

Rapeseed

  • Today’s USDA report cut US 2019/20 soybean production and ending stocks in line with expectations, at 5 bushels per acre (vs. 49.5 in June) and 795 mln bu vs 1.045 in June respectively.
  • US weather remains warm and dry across the western corn belt and plains with some showers. The trade will keep a watchful eye on tropical storm Barry as it develops over the next week or so. This could affect the amount of rainfall across the corn belt.
  • Still no sign of China in the US market, with meetings set to continue via conference call. Face-to-face meetings still TBC.
  • UK new crop rapeseed prices made fresh highs this week following stronger European prices and weaker sterling.
  • Whilst funds were net sellers of Matif rapeseed last week, the trend reversed this week pre-USDA report, pushing the Matif to recent highs.
  • The French Farm Ministry estimated this season’s crop at 3.6mln t, down 27% on last year. This will be the smallest rapeseed crop in France since 2003.
  • The general feeling across the EU countries that have started harvest, is mixed yields and lower oil contents. This could leave the EU searching for more imports this season.

Oats

  • The AHDB planting survey results released last Friday showed that the oat area across England and Scotland has increased 8% vs 2018. When we incorporate the Wales and Northern Ireland acreage, using an average yield of 2.5mt/acre, we are potentially looking at production figure of 1.15mmt in the UK, up circa 35% vs 2018.
  • Coupled with reports of a decent quality crop in the ground, we have seen domestic values come back a further £10-15 on the week for harvest movement. Yield and quality at harvest will of course have a big impact on price direction for the year, but looking at the current scenario, downward pressure remains on domestic values.

Seed

  • Want to sow OSR but not pay for the seed until your grain moves? Call your farm trader for more information.
  • We have a small balance of Theodore winter wheat available with outstanding Septoria resistance. Theodore has been the standout variety in trials during 2019 for disease resistance.
  • Autumn seed market is now moving fast, with stocks changing daily. Discuss your full autumn seed requirements with your farm trader now.
  • There has been a lot of interest in cover crops for establishing after harvest. Please call the seed team for bespoke advice on your situation to find a mix that will be suitable.

Fertiliser

  • Following the Indian tender, traders have realised that there is not as much volume for export in China as originally thought. Traders are reaching out to other supply origins in the market to cover their now short position.
  • Traders are bidding up prices to cover their short position, reportedly at loss making levels. With volumes not readily available globally, and bids too low for some manufacturers, current levels look like they could be well supported until the August 16 shipment deadline for the Indian tender.
  • A downward correction would have to be over $30/t on the global market before levels could be seen to change in the UK, due to weak sterling and urea currently being traded below replacement values.
  • Ammonium nitrate markets remain relatively unchanged, with little liquidity in the UK market. Many have already bought tonnage to mitigate risks of an uncertain market beyond October 31.
  • UAN is potentially subject to a 6.5% tariff, early tank fill terms are still available and recommended for those with capacity to do so.
£/€ £/$ €/$
1.114 1.2535 1.125
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jul19 118-123 134-146 315-320
Nov19 122-132 139-149 203-213 326-331
NB: Prices listed may vary depending on area.

NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.

“Although ADM Agriculture take steps to ensure the validity of all information contained within the ADM Agriculture Market Report, it makes no warranty as to the accuracy or completeness of such information. ADM Agriculture will have no liability or responsibility for the information or any action or failure to act based upon such information.”

ADM Agriculture cannot accept liability arising from errors or omissions in this publication.

ADM Agriculture trade under AIC contracts which incorporate the arbitration clause.

Terms and Conditions of Purchase.

On every occasion, without exception, grain and pulses will be bought by incorporating by reference the terms & conditions of the AIC No.1 Grain and Peas or Beans contract applicable on the date of the transaction. Also, we will always, and without exception, buy oilseed rape and linseed by incorporating by reference the terms & conditions of the respective terms of the FOSFA 26A and the FOSFA 9A contracts applicable on the date of the transaction. It is a condition of all such transactions that the seller is deemed to know, accept and understand the terms and conditions of each of the above contracts.

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