WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- Following the ‘fall-out’ from the USDA report last week, markets have reacted violently this week from the geopolitics following Russia’s withdrawal from the Black Sea grain initiative (BSGI), and continued weather concerns across much of the northern hemisphere. Directly after their withdrawal, Russian missile attacks on Ukrainian Black Sea ports have caused damage to the country’s export infrastructure, meaning that grain will now have to be shipped via European routes or via the Danube River. Additionally, the hype up in military action will also cause ship owners and insurers to be less confident in sending ships into what is now a ‘war zone’ environment.
- As we have seen in the media, weather issues are foremost in many countries, with heavy rainfall seen across much of Asia and China and a north/south split in the EU, with extreme temperatures around the Mediterranean, but further north more coolish and wetter conditions. While EU wheat harvests, especially in the more southern member states, are well underway, the extreme heat is seen potentially causing damage and yield losses to spring crops, including barley and maize. Across in the US, the weather outlook is also looking less favourable, especially in the deferred forecasts, with talk of hotter, drier conditions, which again may have a major impact on final spring crop yields and production.
- The sharp rally has seen a £20 w/w rise in UK prices (Nov 23), but fundamentally not a lot has changed. The UK has still carried out a historical high level of grain, and with another large crop looming, we will need to see additional demand surface to start eating away at the potential carry-out for 2023/24. Hopefully, domestic demand will improve, but we will need to become export competitive very soon. The recent rally in sterling certainly hasn’t helped, but with talk that further rate rises may be less than anticipated, mainly due to the unexpected fall in inflation, the slight fall recently has led to the UK becoming a bit more competitive, although we still remain around £10 away from actual competitiveness, in the deferred positions.
- In summary, the market has built-in weather premiums, it has also now built-in ‘war premiums’, and we would expect this to continue to underpin values, certainly in the short term. However, the UK remains uncompetitive for export, and as mentioned in previous reports, any rally provides UK growers with another opportunity to increase their marketing activity. We may not yet have seen the top of this one, but UK fundamentals still point to the need for lower UK farm prices.
Malting Barley
- For another week, the market is quiet and all eyes are watching the weather and waiting for the quality of the all-important spring crop to become known. Whilst there are potential quality concerns appearing, malting barley premiums in excess of £70/mt are certainly worth consideration by growers as a very good level historically.
- Markets are rather illiquid as traders focus on the incoming quality, and farmers still do not have the confidence to sell. The continued wet weather is starting to cause some concern over quality.
Feed Barley
- Another stop-start week for harvest as showers continue across the UK. As a result liquidity is poor and farmers are not coming to the table.
- Export demand in the nearby positions is extremely limited, so if the weather improves and as available barley is offered, we could see further pressure in order to find export parity.
- Barley is maintaining good value later in the season, trading between £18-£20 under feed wheat in the domestic market supported by a lack of origination and a tighter S&D y/y, although demand from consumers remains limited for another week.
- Flat prices are supported by the rally in futures market following recent events in the Black Sea.
Rapeseed
- So after numerous rumours, Russia has halted the grain agreement. Missile and drone strikes on Odesa have damaged port facilities and sun-oil terminals and storage facilities. In retaliation, Ukraine forced attacked the Crimea Bridge. Russian officials also reported that any cargo ship now entering Ukraine would be classed as carrying military goods and would therefore be seen as an enemy.
- Weather in the US is supporting prices for now, whilst recent showers should ease and recently added risk premium, the amount of rain reaching those areas in need just isn’t significant enough to replenish soil moistures. Hotter weather is in the forecast next week for the Midwest with showers in the South East. US crop conditions rose to 55% good/excellent last night vs the 51% reported last week.
- In South America, Brazilian exporter Anec lowered their export expectations for July from 10.45mln t to 8.8mln t due to lower exports to China. Safras and Mercado estimate the 2023/24 Brazilian soybean crop at 163.2mln t. Meanwhile, private estimates for soybean plantings for 2023 are likely to increase 0.5% to 44.48 million hectares. NOPA crush figures reported US crush at a 9-month low due to planned maintenance and lower demand.
- Energy markets are up this week. Russia cut oil production for Q3. Chinas imports for crude oil in June were reported to be 4.6% vs May at 12.72 million barrels. Veg oil prices followed owing an increase in interior demand for soy-oil in the US. Malaysia kept its crude oil export tax at 8% for August. India continue to purchase Malaysian palm for the second week running.
- Meanwhile in Canada, whilst rain fell this across the course of the week, the major canola growing areas missed out, Saskatchewan in particular. Crop conditions will be released today, but are likely to be reduced and therefore crop estimates revised.
- MATIF rapeseed prices trade sharply higher on the week following the escalation of fighting between Russia and Ukraine. November futures trading back to levels we haven’t seen since March 2023.
- UK rapeseed prices also saw added benefit from the weaker sterling/euro following inflation figures earlier in the week.
Oats
- European oat markets continue to be supported by the lack of harvest sellers with the key Scandinavian countries still some weeks away from harvest.
- Spain remains the main buyer supporting oat prices with feed oat values still a huge premium over feed barley.
- Demand into the EU millers remains quiet and this is evident given the lack of bids into western EU mills.
- Here in the UK, some winter oats have been harvested, however, it is too early to draw any conclusions in regard to yield or quality.
- Feed demand into the UK compound sector remains well below export parity and explains the lack of demand.
- Bottom line, markets still await harvest results in order to see some strong trade participation.
Pulses
- Old crop is complete on human consumption and feed peas. Consumers covered until 2023 crop is harvested.
- New crop peas are in strong demand across Europe. The recent closure of the grain corridor out of Ukraine will likely have an impact on the need for more UK origin good quality peas.
- Crops in the ground are still looking well despite the heavy rain across the UK. Marrowfat and large blue peas have podded well. We hope there will be much less rain between now and harvest to avoid moisture issues amongst other quality impacts.
- 2024 marrowfat and large blue pea buyback terms have been released. With new exciting varieties available, it is a great time to get into peas, particularly with our new marrowfat variety which is a major step forward in marrowfat plant breeding. Please get in touch with your farm trader for more information.
Seed
- We have a great portfolio of oilseed rape varieties with various offerings across our key varieties of delayed payment, establishment schemes and sale or return. We also have limited stocks of overyeared seed available for fast delivery. Speak to your farm trader for more information.
- Companion cropping is a great option to help aid establishment of the oilseed rape. Our mixes include buckwheat, berseem clover and fenugreek to help improve the soil health and deter flea beetle.
- Winter wheat KWS Dawsum is proving to be a popular choice, with huge yields and quality with a specific weight of 80kg/hl and yields 104% of control.
- Check out our 2023- 2024 Seed Catalogue for information on our autumn and spring varieties here.
- 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. For more information on catch/cover cropping within an arable rotation, take a look at our YouTube video here.
Fertiliser
- UK AN manufacturer CF have withdrawn terms this week, previously offering a flat price for spot and 2024 delivery.
- Urea prices in the UK have moved higher throughout the week as supply tightness has developed in the near term with a summer rally ensuing.
- Availability of ammonia, Egyptian urea and ammonium nitrate in Europe has decreased in the last month given the reimposition of the ammonia and urea tariffs in the EU, higher Natural Gas costs further forward and production capacity limitations through the summer. Reportedly the Egyptian government has requested manufacturers to reduce production capacity to reduce gas demand in the country also.
- UAN prices on the continent have also increased, with growing expectations that UAN terms in the UK will be higher also, following other nitrogen product price increases.
- Potash and phosphate prices have decreased this week, but with new strikes in Vancouver ports and reportedly reduced production from Nutrien, global potash prices could see some support.
- DAP has corrected with sub £500/t on farm price potentially becoming possible in the coming weeks. Whether this materialises or not is still yet to be seen given nitrogen price increases.
- ADM have Alternative PK products available for harvest delivery. Watch the latest ADM YouTube video here for more information.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1505 | 1.2865 | 1.1180 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| July 2023 | 155-165 as available | 185-200 | 265-270 | 405-415 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.
