ADM Agriculture Market Report 17th August 2023

Malting Barley

• Malting barley is once again very quiet as industry demand remains side-lined amid high barley and malt stocks, and falling beer sales.
• The malting barley market remains extremely strong in terms of price though, trading only on supply issues and the lack of farmer selling resulting from yield and quality problems in Scandinavia, and concerns about recent wet weather in the UK leading to quality issues here too.
• Despite a worried tone in the market, on the whole quality data returning from labs across the country is holding up, although it is still early days and plenty of spring barley remains in the field.
• One thing is for certain. today’s quality premiums in excess of £90/mt over feed look like a very attractive level historically. If the market deems the crop quality is sufficient then we could see a sharp correction in premiums, particularly with the ongoing absence of end-user demand, not helped by the EU malting industry starting to buy French Winter barley to plug any gaps forming in the spring barley S&D.

Rapeseed

• It has been a mixed week for Ag markets following last Friday’s USDA report where we saw a drop in both production and yield for Beans – Yield’s now at 50.9 bpa down from 52.0 last month vs an expected 51.3, and production is down to 4.205 billion bushels vs a trade expectation of 4.246. US ending stocks are at 245 million bushels versus 263 million expected – this is the lowest ending stocks figure we have seen since 2015/16. We did see this drop in production being offset by a 25 million bushel export reduction to slightly help the balance sheet. As much as this month’s report did show a decline in yields, it is not unknown that this has time to change as the recent weather we have seen has been beneficial. Positive weather patterns have led to US crop ratings to be increased by 5% this week to 59% Gd/Exc – the same level as this time last year.
• CBOT soybeans have had a very up and down week, settling close to unchanged, following USDA and weather stories. Soyoil on the other hand is three points up supported by veg oil rallies.
• US weather has been very favourable recently as we have continued to see good rains across the Midwest. However the 6-10 day forecast shows very high temperatures in key Soybean regions, though this is not expected to last more than a week.
• We have heard from the ongoing Russia-Ukraine conflict this week with news of airstrikes landing very close to NATO member Romania, which led to a rally across the board.
• In Australia, the Australian oilseed federations estimated the 2023 canola crop at 5.59 mmt which is a 30% fall from this year’s 7.9 mmt. We saw a total of 416,000t of soybean sales announced by the USDA this week all to unknown destinations in addition.
• Energy markets are down this week with Crude oil taking back the $5 rally we saw last week to now look short-term oversold. This is on the back of Chinese economic data suggesting slower demand. US oil output is set to extend fall in September to the lowest levels since May. Crude oil stocks this week are 6.842 million barrels below the 5-year average and imports are up nearly 500,000 barrels vs last week. Saudi Arabian exports have fallen now to the lowest level since September 2021. Veg oils are up this week. We saw news over the weekend from the USDA that the two major world veg oil importers will decrease their import needs by 1.40 mmt or 5%.
• Canadian Canola is up this week as Saskatchewan is still struggling to see any decent rains, also seeing temperatures upwards of 30°C. Crop conditions fell to 39%, a 10% fall on the week. Canada have also sold a 21k Canola vessel which supported prices.
• Matif Rapeseed has taken back all losses seen after the USDA report following veg oils as we come out of harvest.
• Sterling trades at 1.1700 vs Euro, pressuring UK prices.

Pulses

• PEAS
• New crop is in full swing, Peas are beginning to be cut across the country, and between the 3 main pea types, 10% is currently harvested and in the sheds.
• Quality from the small amount of samples we have seen thus far is variable, bleaching appears low and moistures are average – peas are not brittle which is to be expected given the wet weather, meaning CSCs are also quite low and below average YoY. Insect damage up until now is also reduced from last year, please check out PGRO’s video on the management of pea moth to aid with reducing that figure further in the future!
• Prices for open market peas appear to be on the rise, for green peas in particular the market price is historically large – please get in touch with your farm trader with any open market peas and we will provide a competitive bid.
• BEANS
• New crop bean prices have fell week on week, following the wheat market down trend which has left farmers unwilling to sell much further forward.
• As wheat has taken focus from growers it has meant lots of beans are still in the fields not yet cut, early yield reports and on the small amount cut indicate decent yields YoY for the winter beans but relatively poor yields on the springs.
• Export demand has been limited in the nearby as there is little interest that the UK can engage with, Egypt still struggles to gather access to the US dollar which has meant bids are few and far between. HC interest from Sudan has picked up in recent weeks, however. Domestic feed interest remains strong into the new season with beans pricing competitively in the mid-protein market.

Fertiliser

• The Indian tender has reportedly seen 1.774 mln t accepted, with a significant quantity possibly being sourced from China (over 1.1mln t).
• The scale of acceptances is likely to leave India out of the market for a period of time. This could weigh on prices short term but more demand is set to surface as we enter Q4.
• Brazilian AN and urea markets remain unchanged and arguably will be the next focal point for price direction on the global market.
• UK AN and urea markets are flat with harvest taking the main focus at present.
• UK urea imports Jan-May are down ~20% from the previous period and with limited AN availability prices for nitrogen in the UK could hold at current levels despite recent grain market movements.
• UK phosphate and potash markets have seen some small rises week on week with demand for DAP for spot delivery driving a lot of the price appreciation.
• Alternative PK products remain available for spot delivery, with alternative grades that are excellent for maintaining PK indices.

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

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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.