WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- Last Friday’s US planting report was deemed bearish, as corn acreage was increased by 2.1mln acres, and spring wheat by 570k acres. Although the winter wheat area was slightly trimmed, harvested acreage was increased with the likelihood that the US will raise US wheat production in next week’s report. The increased corn plantings will partially negate the expected reduction in the yield expected next week due to the current adverse weather conditions
- With the US returning from their annual Independence holiday, weather and geopolitics came back to the forth to drive the markets higher yesterday. Declining US spring wheat crop ratings, and reports of dryness in the Canadian prairies helped push the Minneapolis and Kansas markets higher, pulling Chicago along for the ride. US winter wheat harvest continues to lag, at 37% complete a/o last weekend, about 10% lower than the 5-yr average
- On the geopolitics, fears continue to circulate around the Ukrainian nuclear plant at Zaporizhzhia, with the Ukrainians accusing Russia of mining the plant. If true, any possible leakage would place a vast percentage of Ukrainian acreage, and crop production, at threat. Additionally, new wires confirming that Russia has rejected the EU’s, and UN’s compromises on the potential setting up of a bank subsidy to allow re-connection to SWIFT, endorsing the likelihood that the Black Sea Grain Initiative will not be extended.
- EU prices rose on the above news, and reports of Algeria and Tunisia being in the market was also supportive. Over the past weeks, wheat crop estimates in the main EU producers have slipped, as the hot, dry conditions have taken their toll on yield potential. However, the wheat crop is still projected to surpass last year’s outturn, and with report of Russia’s wheat also being revised higher, they should be more than enough competition as key importers look to extend their coverage.
- In the UK, despite the rise yesterday following the global trend, prices are £2 lower w/w (basis Nov23). Slow demand and the lack of export competitiveness continues to undermine the UK’s position. Aggressively priced barley, and maize imports are reducing wheat demand, not only in the UK but also into Southern European, which also reducing the opportunities for wheat exports to these destinations. Even as the UK attempts to ‘buy demand’ with the discounted harvest price, we are still some-way from becoming export competitive, and this is even more exaggerated when looking at the forward positions.
- With the current market scenario , we would still advise growers to adopt an aggressive marketing strategy, especially on any market rallies, as the UK’S need to get export competitive usually means lower farm gate prices!
Feed Barley
- Another relatively quiet week for barley markets with limited farmer selling and domestic consumers largely uninterested with harvest now imminent
- Most of the trade is focused on harvest execution for the coming weeks as the spread between Jul/Aug pushes out in anticipation of harvest pressure
- With a few combines having already been out in the field, early indications suggest average yields and potentially low bushel weights in some areas
- Export demand is still subdued as other origins in the EU, notably Bulgaria and Romania remain far cheaper than us particularly into North Spain
Rapeseed
- Lots going on in outside markets. Riots on France over the weekend cause widespread chaos. President Putin expected to visit China in the coming weeks.
- After last week’s shock USDA report which saw U.S soybean acres fall from 87.6 million acres to 83.5 million acres, this was the second biggest fall in planted area since 1990. This now leaves very little room in the balance sheet for further crop deterioration or yield losses. U.S markets were closed on Tuesday for Independence day, reopening on Wednesday. Widespread rain fell over the Midwest weekend offering some relief to struggling crops but yet again we saw crop conditions drop back 1% on Monday to 50% good/excellent. Looking ahead, forecasts in the U.S has 1-3 inches of rain spreading across the Dakota’s. Showers are maintained across the Midwest and Northern Plains.
- On the other hand Brazilian origin beans still trade at a discount to U.S supplies and Brazil are likely to remain export competitive, exports out of Brazil are expected to reach 9.4mmt this month vs. 7mmt last year. Although we saw China in the market pre-USDA report but China have drastically reduce U.S purchases recently owing to high stocks.
- Crop indications for Brazilian soybeans in 2023 are estimated to be 156mmt although CONAB have reduced their export predictions for new crop beans.
- From here, it’s all going to be about the U.S weather and if recent rains will improve crop conditions or not. The market can’t afford for any further yield loss.
- Energy markets are firmer this week. The market has put demand to one side for a moment and focused on the production cuts in Russia Saudi-Arabia. Renewable diesel and bio-diesel capacity was report unchanged from April. Veg oil prices firmed last week on the USDA report.
- Canadian markets reopened firmer on Tuesday following their public holiday on Monday. Large areas of the country missed recent rains which will be closely watched in the coming weeks. Prices struggled to sustain this week’s highs in the short-term with U.S markets looking short-term overbought.
- Matif rapeseed prices bought into the rally following Fridays report but struggled to sustain levels above €450. EU harvest has now started which adds some hedge pressure in the short-term. EU weather looks favourable for harvest to progress next week.
- Here in the UK Sterling firmed to close near 1.17000 which added additional pressure to UK prices.
Oats
- Oat markets here in the EU continue to be challenging with milling oat sellers offering at high numbers due to production and quality concerns following the late drilling date and dry conditions experienced to date.
- Spain continues to be the main buyer of feed oats with Sept’23 trading at approximately €30 premium to feed barley.
- Sellers of feed are more readily available than milling grades, however in general there are currently more buyers than sellers, but this could change once the combines start cutting.
- Here in the UK widespread showers have helped to bring further relief to developing crops. Winters are generally looking well with spring crops seeing a much wider variability.
- Buyers of milling oats are eagerly awaiting the quality result of harvest with sellers expected to be more ready sellers once they know what they have got.
- Feed demand domestically is low, but with the strong demand for feed into Spain we could see our surplus be exported as feed rather than milling in 2023/24.
- Final export figures (Jul’22 to Jun’23) to the EU saw just over 168kmt shipped from the UK and this has tightened the UK balance sheet and illustrates the acceptance of UK oats to the EU market.
- Bottom line, the milling and feed market are currently supported by the risk premium built into prices following the adverse growing season experienced so far, however soon the combines will start cutting and this will determine the direction for the season.
Pulses
Peas:
Old crop now finished, anything left over is designated for feed and we do not see farmers looking to carry over any stock. Consumers are well covered until harvest gets under way, feed peas in particular will be in strong demand for Q3 & Q4.
New crop wise, with harvest fast approaching and rain still showering many parts of the country it indicates we could see a rise in yield due to the favourable growing conditions at this stage.
Pea crops were in the midst of a drought during May and the first half of June, but the rain we have seen over the past 3 weeks has accelerated the growth process helping the stems of the crop push away from the ground, crops look well podded and flowered.
2024 contracts for Large Blue & Marrowfat peas are expected to be released next week, please keep an eye out and expect a call from your farm trader to discuss.
Old crop completed on beans, farmer selling non existent if there are any beans around.
Egyptian bean stocks very low compared to their 5 year average which should bring demand into the market for new crop; however they are still struggling to gain access to funds to purchase any volume, which has been an ongoing story all year – with the population rising over there each year, they need to access the USD$ to provide supply.
New crop beans in the ground are very varied across the country, spring beans in isolation don’t look fantastic – the rains over the past couple of weeks will have helped them however, the winter crop looks impressive as we approach harvest – recent indications were that the total yield for the country & crop would be down.
Seed
- Rapeseed is now beginning to make its way on to farm ahead of the drilling campaign. We have a selection of floor stocks available for early delivery with some varieties supported by establishment schemes and/or sale or return offers, giving the flexibility to return up to 75% of your seed if there isn’t the opportunity to drill. Within our portfolio we have some of the most vigorous varieties available in the market place, including LG Aviron which is fully loaded with all the usual traits we have come to expect from the Limagrain stable.
- We have seen an increase in cereal seed enquiries over the past couple of weeks. Champion and Dawsum are both under demand and look to be firm favourites on farm for this autumn.
- ADM has a huge range of small seeds available including countryside stewardship mixes, cover crops, grass seed and companion crops to drill alongside oilseed rape.
- Our countryside stewardship mixes range from AB1 to AB16, they help to keep things simple whilst abiding by the schemes requirements and benefitting the land and wildlife.
- Cover cropping has never been easier than with our ready made mixes that are also available as straights plus the added option to make mixes bespoke.
- We have grass mixes including agricultural, paddock and lawn, all varying in lengths of time and uses.
- Aiding establishment of oilseed rape, our companion crops are packed full of beneficial components including fenugreek, buckwheat and berseem clover.
- For more information on small seeds, speak to your farm trader.
Fertiliser
- Granular urea prices have held firm this week with more spot demand FOB Egypt.
- Brazilian urea prices are reportedly also rising in the country, whilst they have booked 75kmt of AN for July shipment.
- Urea Sulphur prices are rising in the UK as urea prices edge higher which could support ANS prices also.
- Piamon 33N 30SO3 compound is available through ADM alongside ANS compound products.
- UK AN manufacturer CF have withdrawn and reissued terms this week seeing an increase for the later delivery window as well as spot availability.
- As we approach harvest PK requirements will come to the forefront, TSP, MOP and DAP prices have all dropped circa £150/t in the last 3-4 months.
- Alternative PK products that contain secondary and trace elements, reduce UK farmers fertiliser carbon footprint and strains on labour at harvest remain available and at a competitive price to traditional bagged product.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1790 | 1.2770 | 1.0885 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| July 2023 | 140-150 As available | 170-180 | 255-260 | 355-365 As available |
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.
