Thursday 14 November 2024

Wheat

• This week, U.S. wheat markets faced sustained downward pressure, reaching 10-week lows on a strengthening dollar and favourable weather conditions across key growing regions. On reaching 2024 highs, the dollar index has made dollar-denominated commodities, like wheat, less appealing to global buyers, adding to bearish sentiment. The market was further pressured by improving U.S. wheat crop conditions. Recent rainfall across the Midwest and Southern Plains helped ease drought in winter wheat areas, boosting prospects for a healthy crop. With winter wheat now 91% planted and good-to-excellent ratings up to 44%, the supply outlook is optimistic, and no immediate weather disruptions are expected, as a cold blast looks set to move into the northernmost States by month-end.
• Global wheat markets mirrored the weakness in U.S. markets, as favourable harvest outlooks extended beyond North America. Australia and Argentina have begun wheat harvesting, with initial yields surpassing expectations and adding to global supply. Australian wheat, at 11.5% protein, remains the lowest-cost origin on the market, providing stiff competition in export markets closer to home – namely the EU. Meanwhile, uncertainty in U.S./China relations, under the new Trump administration, is adding to demand concerns, with potential trade policy shifts influencing future wheat trade flows. The U.S. dollar’s upward momentum, fuelled by market reactions to Trump’s re-election and anticipated inflationary pressures, further eroded the competitiveness of U.S. wheat, as importers turn to cheaper suppliers.
• In Europe, the EU wheat markets continued their slide, with MATIF wheat breaking below key support levels and trading €3 lower on the week at the time of writing. FranceAgrimer reduced its soft wheat export forecast by 62% YoY following one of the country’s poorest harvests in 40 years, estimating non-EU exports at just 3.9 million tons. European exporters are grappling with intense price competition from Russia and Ukraine, who are successfully capturing traditional EU markets into North Africa and the Middle East with lower export prices. As a result, EU wheat prices face continued pressure, and market sentiment remains weak.
• In the Black Sea region, there is mounting concern that Russian wheat planting could fall to 15.4 million hectares for the 2025/26 season, which would be the lowest since 2018/19. Should Russian production fall below 80 million tons next season, it could bring down projected current season export volumes, in an attempt to protect 24/25 ending stocks, which are currently estimated at 48 million tons. Weekly Russian wheat exports remain high at around 1 million tons, but long-term supply could face constraints if acreage reductions materialise.
• Technical analysis further underscores the bearish sentiment in wheat markets. In MATIF, the March 2025 contract confirmed a downward trend, breaking below key support at €224 and nearing the September low of €219.50. CBOT wheat also broke out of its previous sideways channel with little support, signalling more downside potential.
• With the combination of a strong dollar, favourable weather for major exporters, and fierce competition from low-priced Black Sea wheat, the outlook for wheat prices remains more bearish than bullish. Barring unexpected winter weather events or fresh demand, notably from North Africa or Middle Eastern tenders, further downside is likely in the near term. Markets remain focused on any signals of a shift in demand to counter the continued pressure on prices.

Feed Barley

• Feed barley continues to price well into domestic barley rations which is supporting inclusion rates, however, we still see a rather relaxed attitude from consumers, particularly as futures markets continue to slide.
• Export business is starting to trickle through, with Ireland being the only demand for UK barley today. The quantity of demand in the market however is limited, and we will need to see much more activity in order to balance this season’s heavy S&D.

Malting Barley

• Malting barley markets continue to stagnate, and both supply and demand remain poor. The UK is getting into export season now and some shipments are starting to leave the country, however, fresh demand is limited, and we see no real support from the export market for now.
• Attitudes from brewers and maltsters is downbeat, and we continue to hear nothing but tales of slow malt offtakes amid the tricky demand environment.
• Improving weather conditions over the last few weeks has allowed growers to proceed with the winter planting campaign, with a surge in wheat plantings likely to impact the spring barley balance sheet heading into the 25/26 season.

Rapeseed

• Ag markets have been mostly lower this week, with US markets being pressured by the surge in the US dollar, rallying to the highest we have seen in over a year. Last week’s USDA report did bring some positivity to the soy complex, with reductions in yield, down to 51.7 bushels/acre in the US vs. 53.1 previously, though following recent drought, this was not a huge surprise. We saw the USDA lower crush figures with no change to soy oil usage despite seasonally large export commitments. World ending stocks were also dropped to 131.7mln t vs. expectations for 134.06mln t.
• In Brazil, the USDA left soybean production estimates unchanged, despite expectations for a 4 million ton reduction, as it is still very early to make such adjustments. Mato Grosso is now ahead of its five-year average planting pace. AgRural reported that plantings in Brazil have accelerated beyond last year’s pace following an initially slow, dry start.
• Energy markets have been lower this week, as investors are disappointed that China’s stimulus plans did not offer the aggressive measures for which they were hoping. Chinese CPI and PPI data released over the weekend was also disappointing. Reuters have reported that Saudi Arabia’s crude oil supply to China is set to fall 1 million barrels in December from this month. OPEC has now cut its forecast for global oil demand growth in 2024 to 1.82 million barrels per day, down from the previous 1.93. They also cut 2025 growth by 100,000 barrels per day. China’s overall crude imports fell 9% in October.
• Canola is lower so far on a short week after being shut for Remembrance Day. This week we have seen funds increasing their short exposure, despite reducing this over the past six weeks. Commercial buyers have been making the most of weakness leaking through from the veg oil complex.
• MATIF rapeseed prices have been very choppy this week in the wake of sharp moves in the EUR/USD. We are yet to see the turnaround in prices that we would expect this time of year, as tight global veg oils, alongside news out of the US, has kept prices supported.

Oats

• European oat markets continue to see a lack of trade activity with minimal bid and offers coming into the market.
• Milling oats out of Scandinavia are indicated at levels €10-20 higher than previous trades, with sellers reporting a lack of farmer selling and therefore a need for higher prices in order to tempt a trade.
• Feed oat demand is also hard to find, however, Spain and Holland have seen odd bids over the last two weeks.
• With the wider grain markets coming lower it will be interesting to see if oat prices follow suit.
• Here in the UK, demand for Q4 is all covered and milling oat buyers are focusing on Q1’25 onwards.
• Domestic milling oat prices remain competitive vs other EU nations and this should encourage demand for UK oats in both exports of raw and processed oats.
• Feed oat demand is hard to find, but fortunately, few oats have failed the milling grade, therefore the market is very limited with little trading. However, given the low prices of oats, farmers could end up feeding more rather than buying more expensive barley or wheat.
• New crop prospects are being shaped by the good planting window farmers are currently seeing with wheat dominating as the commodity of choice, consequentially the UK oat area is going to be down year on year. 
• Bottom line, market activity is generally slow, and prices are getting minimal direction as a result. 

Pulses

• A quiet week for pulses overall, with minimal reported trade in either direction. Moisture continues to be a hot topic, especially in northern beans, where the harvest was wrapped up in the rain. For those still with wet beans out there, please contact your farm trading representative, as we have drying options available. There is still some limited demand out there for human consumption beans, and with quality through the lab still showing some promising signs, it is well worth getting your beans sampled. However, as we said last week, with drying likely to take the quality edge off on some of the beans, it is likely the feed heap will get bigger. Imported feedstuffs continue to be more competitive than beans into domestic feed rations, and so it is likely we will continue to see the domestic prices remain under pressure.
• Looking ahead, the weather across the UK is forecast to finally turn, with relatively heavy rainfall forecast across most of the UK, and temperatures at or below the seasonal norm. With the recent run of good weather, strong progress should have been made across the drilling campaign, as the next week will certainly start to see it slow down.
• Feed beans have remained relatively unchanged week-on-week and continue to be uncompetitive compared to imported feedstuffs. Currently, they need to offer approximately £20-25/mt less than other commodities to generate interest within compound rations. The supply and demand situation remains heavy for CY24, and so only further supports feed values needing to turn lower to start buying some additional demand, as unless they do, we will be looking at a large carry out at the end of the year.
• We are actively purchasing across the UK and can 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. Please speak to your farm trading representative about what marketing options we have available for you, as well as the potential upgrade options.
• 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.

Fertiliser

• Market Overview: Fertiliser markets presented mixed conditions last week, influenced by currency fluctuations, and improved outlook for domestic seasonal demand. The British pound’s decline against the U.S. dollar, now down 2.8% and breaking support levels at 1.27, will support the price of imported the urea for the UK market, alongside returned liquidity with India now securing in excess of 1mT for pre-Christmas delivery. Recent improvements in UK drilling conditions have led to stronger winter crop planting forecasts, setting the stage for a notable demand resurgence in the new year.
• Natural Gas: European natural gas futures traded above €45 per megawatt-hour, closing at their highest levels since November 2023. Colder temperatures and weak wind power output have driven up gas demand for electricity. Temperature forecasts indicate continued low single digits into late December, maintaining support for gas demand. European storage withdrawals began on November 3^rd, with reserves at 93.04% capacity, providing a winter buffer.
• Urea: India’s IPL has continued its October 3^rd tender process, securing just over 1 million tonnes of urea at time of writing. Speculation persists that IPL may accept up to 1.7 million tonnes if necessary. In the U.S., limited urea trading saw barge prices initially at $308/st FOB, with recent sales moving slightly higher to $315/st FOB, reflecting modest market improvement.
• In the UK, the British pound (GBP/USD) has declined by 2.8% since Trump’s election, breaking below 1.27, increasing import costs for UK urea buyers. This adds further price pressure domestically as the market evaluates buying options for the anticipated demand increase in the new year. Looking ahead, India is expected to tender again in mid-to-late December, with shipments scheduled for Q1 2025 to support Rabi season restocking. This tender activity is anticipated to bolster prices through Q4 and into early 2025.
• Ammonia: European ammonia buyers remain hesitant at current price levels. The limited recent sales reflect high costs that are unattractive to most buyers due to poor downstream margins and rising input costs in Europe. In the UK, a shipment of 15,000 tonnes of Turkish spot ammonia arrived in Teesside on November 7^th.
• In Western Europe, AN coverage reports vary; France is approximately 60-70% covered for the 2024/25 crop year, leading to a reduction in recent buying interest. In contrast, the UK market is projected to be significantly behind France, with industry forecasts indicating at least 45% of UK demand remains unfilled. Improved drilling conditions in recent weeks have lifted winter crop planting forecasts, supporting additional AN demand in late Q4 and into Q1 2025.
• Potash: Global MOP spot prices are forecast to remain stable through 2024, with an uptick anticipated in Q1 2025 due to seasonal demand and favourable affordability. This week, prices held steady outside China, despite Belarusian President Lukashenko’s proposal for a 10-11% production cut in coordination with Russia, which fuelled market speculation. Many market participants are sceptical of the proposal’s implementation and await further details. Canada’s west coast port strikes, which began on November 4^th, are being closely monitored but have so far raised limited concerns over potash supply.
• Phosphate: DAP spot prices remained mostly steady, with downward pressure from limited demand and affordability concerns counterbalanced by tight availability. Recent price declines over the past three weeks broke a five-month upward trend, which had seen prices increase by 26% from May to early October. In the UK, domestic demand for phosphate remains muted, reflecting subdued buying across the wider fertiliser market.

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.