Thursday 31 October 2024

Wheat

• U.S. wheat prices have fallen by $1.93 per ton week-over-week, though they have moved slightly off weekly lows following the release of initial U.S. winter wheat crop ratings.
• Early ratings for the U.S. winter wheat crop show only 38% in good to excellent condition—significantly below expectations and well below last year’s 47% rating—reflecting poor crop establishment due to expanding drought conditions across the southern plains.
• EU markets have followed suit, declining by €4.25 per ton week-over-week. Reports indicate that Russia is offering wheat for international tenders below the $240 per ton price floor suggested by the Agriculture Ministry and exporting unions, which has intensified pressure on EU values. Russian wheat exports for October are projected to reach a record high of nearly 6 million tons. Meanwhile, Ukrainian officials report that wheat exports reached 6.1 million tons between July and September—nearly double the amount year-over-year. EU exports, however, have struggled, reaching only 7.26 million tons as of October 25th, down 33% from last year.
• UK wheat prices have dropped by £4.05 per ton in another slow trading week, though a slightly weaker pound may offer some support as the market digests the recent budget news and its implications for the agricultural sector.
• Although Russia’s export price floor is expected to rise to $245 per ton in November and $250 per ton in December, Black Sea shipments continue at a strong pace, keeping global markets supplied. This momentum may slow as prices increase, but upcoming Southern Hemisphere harvests are likely to fill the supply chain. Markets remain without a strong directional argument, but with reduced production expected in the EU, Ukraine, and Russia, and growing concerns over the U.S. winter wheat crop, the downside price risk appears limited.

Feed Barley

• Continental feed barley markets are starting to show a little more life, with MATIF coming off the highs and increasing EU competitiveness on the global stage which is encouraging buyers into the market.
• Domestic markets are quiet, and demand is sluggish for the time being. Meanwhile, farmer selling is still not coming forward, stifling the market of activity.
• Export pace continues to be slow. The UK will have to do a lot of work in the new year to clear the balance sheet of its surplus. The unknown question today is, will the UK depreciate to capture this much needed demand, or will a more supportive tone in Europe help to bring the demand to us?

Malting Barley

• Malting barley markets are lifeless for another week, and there is very little to report from either supply or demand.
• New crop markets are starting to establish which is giving a slightly more promising picture, and we have a range of contracts available at the moment. Speak to your farm trader for details.

Rapeseed

• Agricultural markets have started the week on a lower note as favourable rainfall benefited key regions in both North and South America over the weekend. In the U.S., precipitation boosted soil moisture without significantly impacting the soybean harvest, which has continued at a brisk pace. Harvest progress has reached 89% completion—7% ahead of last year and 11% ahead of the 10-year average—keeping states roughly a week ahead of schedule. In Brazil, soybean planting is advancing, with 36% completed compared to 40% at this time last year, as favorable weather accelerates the pace. Meanwhile, China and Russia are reportedly in talks to strengthen soybean trade ties, as China looks to diversify its suppliers beyond the U.S.
• Crude oil prices have dipped this week as weekend events signaled no immediate threats to global oil supply, reducing risk premiums in the market. OPEC+ plans to raise output by 180,000 barrels per day in December; however, they’ve previously delayed quota increases due to lower prices and may do so again. BP’s CEO noted that global demand growth in 2024-25 is slightly below average due to reduced consumption from China, though he expects demand to normalize with anticipated stimulus measures. Optimism around China’s economic recovery has grown following reports that they may issue over 10 trillion yuan in additional debt over the coming years.
• Canola prices remain strong, pushing crush margins to new lows, with some locations seeing margins turn negative into the new year. Current commercial stocks sit at 1.70 million metric tons, aligning with the 5-year average for October. However, both export and crush rates are maintaining a record pace.
• MATIF rapeseed has also strengthened this week, tracking canola’s rise as the EU sunflower harvest encourages some consumers to switch to rapeseed. The European Commission’s MARS report revised the EU sunflower yield down to 1.86 tons per hectare from 1.98 tons last month. Rapeseed prices hit a new contract high, though volume in this trend is beginning to show signs of weakening, with the latest upward movement falling short of the channel’s peak. While long-term momentum remains positive, caution is advised given recent volume trends.

Oats

• European oat markets are currently unchanged week on week, with a lack of fresh farmer selling weighing on the market.
• Bids into the EU for milling oats for Nov/Dec’24 are generally few and far between, however interest remains for the new year. 
• Feed and milling cargoes have been trading into Spain over the last few weeks as buyers look to take advantage of cheap supplies and favourable freight rates.
• Here in the UK, trade continues to flow, however, it has slowed down in recent weeks with farmers focussing on autumn drilling rather than selling.
• Demand for feed oats is very poor, but given the exceptional quality of this year’s crop, this is currently not an issue.
• Winter plantings are progressing in some areas, however, parts of the south and midlands are behind where they would like to be.
• Strong Sustainable Farming Incentives (SFI’s) and better gross margins in wheat are expecting to have a negative impact on oat plantings for harvest 2025, but if the rain persists, some land could be switched into spring oats again.
• Bottom line, oat prices remain balanced, however large supplies in Europe could start to weigh if demand is not maintained and farmers come to the market to sell.

Pulses

• Combines keep rolling as the bean harvest rapidly wraps up. As in previous weeks, moisture levels remain a concern in freshly cut beans, with many still coming off above 25% moisture. For those without drying capabilities, please contact your farm trading representative, as we have drying options available. Quality remains relatively good in the north, though the dampness will likely impact it once the beans are dried. Imported feedstuff prices continue at comparatively low levels, resulting in limited interest in feed beans for rations at this time. The Australian new crop is also approaching, with the first cargos expected to arrive in Egypt by late December. This arrival is anticipated to effectively close the season’s window for UK and Baltic imports, contingent upon the quality of the incoming beans.
• Looking ahead, the UK is forecasted to see a mostly dry week, with temperatures 2-3°C above the seasonal average, aiding the winter drilling campaign to maintain a good pace. This trend extends across most of Europe, though additional rain is expected in Iberia.
• Moisture levels could jeopardize the northern bean crop if growers cannot dry beans promptly. Damp beans stain more easily, making them less suitable for human consumption and generally unsuitable for long-term feed storage. Premiums are still available for high-quality beans, but buyers are diminishing, so it’s essential to stay in touch with your farm trader and submit promising samples. If quality specifications are met, the beans may be eligible for an additional premium—while this option remains.
• Current feed market pricing indicates that feed beans need to decrease by approximately £15-20 per metric ton relative to other commodities to stimulate renewed demand. As noted in previous reports, pressure on feed prices is likely to continue, pushing values lower in the near term.
• Yesterday’s autumn budget announcement by the new Labour Government allocated £400 million to support agriculture, mainly to address farmers’ challenges with cost inflation and sustainability goals. Meanwhile, GBP/USD saw mixed movements, with traders closely watching fiscal impacts on the economy and the Bank of England’s rate path. The pound faced slight downward pressure following the budget’s limited stimulus for economic growth, though most of the budget had already been factored into the market. Looking ahead, the US Presidential Election next week could be a significant mover for currency markets—stay tuned!
• The winter drilling season is progressing across the UK, with growers maximizing the improved weather outlook to “make hay while the sun shines.” Dampness is causing some slug issues for certain earlier sown crops, with reports from Home Farm at Ambridge struggling with winter cropping. If you find yourself in a similar situation or have had to spray off damaged OSR with Kerb, beans are a great option for re-drilling. Your farm trading representative is ready to advise on available contracts. With robust marketing options, various seed stocks on hand, and a portfolio of cost-effective inputs—including Polysulphates, P’s + K’s, P-Grow, and FibroPhos to enhance yield potential—they are prepared to support you. We purchase from a broad range of regions nationally and offer competitive origination markets, with the added opportunity to upgrade any crops meeting specifications for human consumption pulses for processing at one of the UK and Europe’s most advanced pulse processing plants, earning an additional premium for your crops.
• Finally, a reminder for those eligible for PGRO membership. If you’re not already on the PGRO mailing list, sign up here, where levy payers can access a wealth of free advice and support, drawing from PGRO’s extensive knowledge on pulses.

Seed

• The ongoing dry spell across most of the UK is allowing root and vegetable crop growers to proceed with lifting and move directly into drilling winter wheat. We’re pleased to offer urgent delivery options for milling and feed wheat varieties, including Champion, KWS Dawsum, LG Beowulf, KWS Palladium, and KWS Ultimatum. Additionally, small stocks of Craft and Buccaneer winter barley are available for those still planting.
• Looking ahead to spring, we’re already receiving inquiries about spring beans due to limited supplies of winter beans and spring wheat. At present, we have limited tonnages of KWS Ladum and KWS Alicium spring wheat and Lynx spring beans. We’re also stocking Laureate, Planet, CB Score, SY Tennyson, and RGT Asteroid.
• If you have specific seed requirements, please reach out to your local ADM farm trader for details. Don’t forget about our buyback contracts available for the 2025 harvest. We also offer a range of small seeds, from grass seeds to options for SFI and cover crops, so contact us to learn more about our offerings.

Fertiliser

• Market Overview: Global import demand remains sluggish, with UK importers exercising caution amid sustained market illiquidity. The market witnessed a decline in CIF values as geopolitical risk premiums eased and demand softened, particularly following significant rainfall across Europe and Brazil, which reduced immediate import needs.
• India’s re-entry into the physical urea market on Tuesday, tendering 1 million tonnes for December West Coast delivery, signals a potential shift away from recent paper-driven trades, injecting physical demand into what has been two weeks of predominantly speculative activity. With improving weather conditions, any continued concerns regarding India’s domestic urea production could further constrain supply, potentially tightening the market in the near term especially if Western European growers achieve higher cropping levels than forecast, buoyed by a more optimistic planting outlook.
• Natural Gas: European natural gas futures retreated below the €43/MWh mark after briefly rallying to a 10-month peak, as geopolitical risk premiums softened. The market repriced amid waning supply concerns following Middle Eastern escalations, where Israeli strikes in Iran notably spared critical oil and nuclear assets, diminishing immediate supply threats. Parallel declines in crude prices echoed a recalibration of risk, as traders digested a less disruptive-than-anticipated impact on the global energy complex.
• Despite European storage levels near peak capacity at 95%, the market’s bullish sentiment remains tempered by recent supply-side hiccups in Norway and the U.S. Furthermore, unseasonably mild forecasts in northwest Europe over the next fortnight exerted additional bearish pressure on gas futures, signalling an anticipated contraction in demand fundamentals, particularly in the heating sector.
• Urea: The primary market driver this week has been India’s major urea tender, placed by RCF on Tuesday, for December 25th delivery. This tender comes as India’s domestic urea production faces a 7% year-on-year decline, creating increased demand for imports. If domestic production fails to meet demand, the open market may see additional pressure to cover the shortfall. Meanwhile, China’s export restrictions remain in effect, leading to rising inventories (1.25Mt. 30^th October) and delaying their return to the export market which is forecast late Q2.
• Into the UK, offers for granular urea are reported at $425-430 per ton CIF bulk, with traders quoting on the lower end. Importers, however, remain cautious following a two weeks of poor weather during key planting windows and its resultant impact on domestic demand. Growers are still focused on finishing drilling after a rainy September and are not yet actively re-entering the market; this could shift after drilling completion, likely sparking notable renewed demand.
• Ammonia: Assuming prices have not yet peaked, the market may soon reach an upper limit, particularly in Western regions, where tightening margins are expected to deter additional high-priced transactions. The supply outlook appears more favourable moving into November, contingent on the timely resolution of recent production turnarounds and output constraints as scheduled.
• It is important to note that current ammonia levels, and consequently AN import price levels, reflect replacement values above present domestic values, which could pose challenges. This is especially relevant as a forecast demand spike is rearing its head, driven by improved planting conditions in the UK and Western Europe.
• Potash: European potash prices remain steadfast, with market players broadly expecting these levels to hold until 2025. Firm deals are limited, as most buyers are understood to be purchasing on a piecemeal basis. European potash demand has yet to see a meaningful uptick since prices surged to historical highs in 2022. Many market participants now look ahead to the spring season, anticipating a potential boost in demand as application season approaches.
• Phosphate: India’s RCF has been active in the market beyond urea this week, seeking 35,000 tons of phosphate rock, signalling India’s intent to ramp up Q4 imports from Morocco and Russia. This comes as India’s DAP imports reflected a 48% year-on-year drop from January to September.
• In Europe, buying activity remains subdued, with prices holding mostly flat for the seventh consecutive week. A firm exchange rate has pushed up dollar-denominated prices, leaving sellers relatively content within the current price range.

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

Although ADM Agriculture takes 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.