WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- A welcome area of high pressure has brought warm windy conditions for most of the UK this week to dry out saturated winter wheat crops, with only localised showers slowing progress in some regions. Harvest has progressed at a real pace generally this week, with around 15-20% complete nationally. Early yield data is encouraging and roughly in line with the 5-year average of 8.3t/ha, with most private estimates in the 8t-8.4t/ha range. Moisture and quality are unsurprisingly variable, as standing crops have weathered the July storms with varying success. Proteins & Hagbergs remain key watchpoints for high-grade crops and have dipped slightly week on week, but with harvest in its infancy, expect more clarity on this point in the coming days and weeks.
- UK wheat prices lifted around £5/t on Monday, tracking a reactive rise in global markets to escalations in Russia over the weekend and remain rangebound around £200/t on Nov LIFFE futures. The UK feed wheat exportable surplus is likely to increase, as high grades lose quality and therefore competitiveness on exports will be key to UK price support for 2023/24 season. Despite this, the domestic crop is expensive against competing feed grains, particularly out of Poland & Germany, where a similar dynamic exists following unseasonal weather. As a result, feed wheat prices need to depreciate significantly to buy the demand into key destinations such as Spain. Technically, LIFFE is trading a narrow £196 to £203 range, and the discount to MATIF milling futures is widening, which is typical of a large EU feed-grade crop, but the market has work to do to compete with our European cousins for exports.
- Drone attacks on Russian naval & oil vessels over the weekend clearly highlighted a Ukraine offensive in the ongoing conflict. Ukrainian maritime authorities have warned that all Russian Black Sea ports, along with their approaches, will be defined as “war risk areas” as of 23rd August. This pushed global markets firmer at the start of this week. Despite the war, Russian wheat continues to be one of the cheapest origins as demonstrated in Monday’s Egypt tender, where GASC bought 230,000t of Russian wheat. It’s projected that Russia will have a 47mln t exportable surplus this year, so, it’s now just a question of who and how the world will access this wheat.
- In the US, a change from a hot and dry July weather pattern across much of the corn and soybean belts to a wetter and more normal August has definitely helped improve ratings in recent weeks, but we still see levels at a historically lower level across those key commodities. Despite this, spring wheat continues to be baked and is most likely to see less beneficial weather in the coming weeks, and with harvest progressing, benefits are limited to the following drilling campaign rather than the crop being harvested. Corn and soybean ratings are progressing slowly in the right direction, but from a low level, and we continue to see main cropping areas under long-term drought constraints with short-term beneficial weather.
- Overall, the UK is benefitting from a break in unseasonable weather and harvest is progressing well, with yields encouraging and the only flags for quality at this stage. UK feed wheat is significantly overvalued for exports and the surplus is growing, so price depreciation is inevitable relative to other origins. Globally markets continue to trade escalations in Russia and Ukraine and weather models, but fundamentally there are very few significant bullish or bearish stories to swing markets at this stage.
Malting Barley
- Malting barley is once again very quiet as demand remains sidelined amid falling beer sales.
- The market is trading only on supply issues, with yield and quality problems in Scandinavia, and a nervous trade in the UK, following recent wet weather.
- Premiums are now into the £90/mt region over feed, and so far the spring barley samples we have seen are holding up well.
- If the market deems the quality is sufficient, we could see a sharp correction in premiums with the ongoing absence of end-user demand.
Feed Barley
- Big news in the global barley market over the last week, as China has dropped their much discussed anti-dumping tariff on Australian barley. It seems that the news will take some time to filter into any significant market change, but overall, this move limits demand for French barley, a key origin for China in the last few years, which isn’t supportive of northern EU prices.
- We have seen a very unsettled week weather-wise again. Continued rains nationally have kept harvest slow and origination on the back foot. We estimate harvest is around 45% complete in the UK now and expect growers to make good progress this week now that some better weather is arriving.
- Barley is finding good demand in the domestic market going into the winter, and consumers taking cover on barley in particular which is maintaining competitive value vs wheat and corn.
- Export demand has been very minimal. We see no demand in Spain at current levels as they continue to trade cheap Black Sea origin. Meanwhile, we are uncompetitive vs domestic supply in Ireland and the Netherlands.
Rapeseed
- A sharp fall for CBOT soybeans at the start of the week with some recovery ahead of the USDA report at 5pm on Friday. Prospects of increased temperatures from the south into key growing areas in the Midwest also helped support prices in recent days. The trade now awaits Friday’s USDA stocks and acres update. It’s estimated to see increased soybean yields anywhere from 50.5 to 52 bpa. Production is expected at 4.246bn bu – being offset by lower demand. Crop ratings in the US were improved back to 54% good/excellent up 2% week on week.
- The USDA announced a total of 383,000mt US beans sold to China this week, this could bring China’s total imports up to 105mt vs. the USDA’s 99 mln t.
- In South America, Brazilian crop consultant Celeres estimated the Brazilian soybean crop at 165.9 mln t vs 157.3 mln t this year.
- We saw further attacks from Ukraine over the weekend striking two bridges surrounding Crimea and a Russian Oil tanker. China is sending delegates to Saudi Arabia to talk about the situation in Ukraine.
- Energy markets are up again this week, supported by strong crude oil import demand from India and China. Chinese imports are up 12.4% January-July. This has led crude oil to reach prices that we haven’t seen since Aug 23. EIA crude stocks rose 5.851m barrels and are now 13.612m barrels above last year. Veg oil markets have dipped this week, with palm approaching 6-week lows from expectations of rising Malaysian palm oil supply. Prices have started to take back some losses at the end of the week based on El Nino concerns. In Indonesia, domestic bio-diesel consumption fell short of trade and government expectations for the first half of this year. The government recently increased biofuel mandates from 30% to 35% but blenders struggle to meet those demands due to capacity limitations.
- Canola values are down again this week, despite dryness continuing across Saskatchewan leading to a large proportion of canola growing regions facing drought. On the other hand, Canada is said to be expecting the largest rain event since mid-June, and is also still expecting a large exportable surplus due to crop size.
- In Europe, we have seen another good week for harvest progress, with some EU countries looking complete, with parts of Germany and Poland still struggling to breach the halfway mark and seeing a fast decline in quality. In the UK, we are looking around 80% done, but with the warm weather we are facing now, it is looking likely that we will see a finish within the week.
- Sterling trades at 1.5700 vs the euro.
Oats
- European oat markets remain supported after further heavy rain in parts of Scandinavia and the Baltic states over the last week and this is leading to quality concerns for millers.
- Demand into Spain for feed oats remains, with buyers still looking for Aug-Sept positions, but given the Baltics are still a few weeks off harvest, we may see minimal trade until the combines start rolling and the quality is known.
- Demand from milling oat customers in the EU remains largely quiet, however, this will rise once their retail customers enter into the market, but given the uncertain quality, we could see milling oat prices maintain a premium over wheat until more is known about the quality.
- Adverse weather in north America is also adding support to international oat markets, with enquiries into the US now starting to be brought to Scandinavian suppliers.
- Here in the UK, better weather this week has allowed for further harvest progress and could be the saviour for a number of oat crops, which are ready for harvest.
- Quality so far has been okay, with specific weights holding at levels around 50kg/hl on average. However, it must be noted that there is already a large amount of variability, and we are still yet to see crops that were late planted in the spring.
- Demand for feed oats into the UK is poor at present. We would expect to see a big devaluation in feed oat prices in order to take demand away from feed barley, which is already exceptionally cheap, but a strong demand into Spain may eliminate this problem.
- Bottom line, we still await further harvest progress in the key producing areas of Europe before we can determine the price direction for oats here in the UK.
Pulses
Peas
- New crop peas are beginning to be cut. Early indications on quality look good, with bleaching lower than initially expected. This is only from a handful of samples that have been tested. We do expect bleaching to increase given the weather over the last month.
- Long Sutton is currently on planned maintenance. We will bring marrowfats into the plant w/c 21st of August.
- We are keen buyers of any new crop parcels across any of the three main pea types. Prices are seasonally high, so it is a good time to get them sold – we expect prices for marrowfats to drop on farm over the next few months should the quality of the crop hold up.
- The main bulk of the pea crop is likely to begin cutting next week. Please ensure you request samples from your farm trader to be delivered directly to Long Sutton, with a lead time of three working days from arrival to receive your results.
Beans
- Old crop appears to be completed. We are buyers of any straggling parcels at a premium to new crop. Please get in touch with your farm trader if you have any beans to offer.
- Farmer selling has been very slow on the new crop beans. With wheat dropping and growers busy on combines, this is to be expected.
- National average for beans as a whole we pin at around 3.1t/ha. Winter beans look strong around the country – rough estimate of 3.9t/ha on yields. Spring beans do not look as well due to the growing conditions we have seen in the UK over the past few months, but we have heard some positive news on some early cut beans.
Seed
- The rapeseed drilling campaign is underway. We have a great portfolio of varieties fully loaded with traits that are available for urgent delivery. We also have select varieties available on sale and return offers and establishment schemes, allowing you to share the risk of ordering and establishing OSR seed.
- Our seed processing lines are now busy processing cereal seed and our first winter barley deliveries already making their way on to farm. Availability is still good across most key varieties, but we would expect demand for Champion, Crusoe, and Caravelle will be greater than the seed available in the marketplace.
- Cover cropping is a great way of improving soil health by increasing organic matter, reducing compaction and preventing soil erosion. Our overwinter cover crop mixtures include a range of species that will provide benefits to the land ahead of the spring and are a great fit for the new SFI scheme. We can also offer bespoke mixtures upon request and cover crop straights.
- As well as cover cropping, herbal leys are a big topic of conversation at the moment. Our herbal ley contains a range of grasses, herbs and legumes to help maintain the soil structure and improve water infiltration.
- ADM Agriculture has a vast portfolio of grass mixes available, including agricultural, lawn, and paddock leys. Check out our Grass Mixes YouTube video for more information – https://www.youtube.com/watch?v=9IWrpnHUZVQ
Fertiliser
- Urea prices are expected to remain firm despite many global buyers having now covered any shorts in the Aug/Sept positions.
- India tender announcements will also help to support urea levels. The risks also still remain high, with gas market vulnerability entering Q4 and uncertain Chinese export policies.
- ADM has granular urea and inhibited urea options available for Q4 and Q1 2024 delivery. Pricing still reflects a good discount on a price per Kg/N compared with ammonium nitrate.
- Whilst the UK AN offer stays static this week, we have seen a sizable move in AN Sulphur products.
- Sulphur prices have increased by 30% with some suppliers over the last two weeks, thought to be powered by demand in China.
- Liquid prices are also firming in Europe. Achema is back online producing Ammonia for UAN, which has a firm outlook with possible further supply outages reported.
- ADM has liquid terms available for both autumn tank fill and spring delivery. We are expecting the current offer to be withdrawn in the near future.
- Market activity for DAP has moved prices to as high as $540/t CFR. Prices could see steep increases this week amid reports of limited availability from China under their Q3 export quotas and tight supply from some other producers.
- TSP appears to be stable at present, whilst MOP continues to show firmness.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1575 | 1.2765 | 1.1025 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Aug 2023 | 155-165 | 179-189 as available | 240-260 | 360-370 |
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.
