WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- The US market has traded down about $3/tonne week on week, as sluggish demand weighs on prices. However, there are multiple flags around the globe, with dryness in Australia impacting both production and exports, lower acreage and production estimates in Argentina, and dry weather that may dispute new crop corn plantings in Brazil, and further impact upon US production spring crop production. Russia’s crop estimate was trimmed to 91.6mlnt by SovEcon, but this is still some way above the USDA’s number of 85mln t, while Ukraine’s production and exports were raised to 21.5mln t and 12.5mln t respectively, compared with the USDA numbers of 22.5mln t and 11mln t.
- EU prices are also marginally weaker on the week, although yesterday Egyptian tender showed EU prices below those from Russia, with 2 cheap Romanian cargoes purchased. The imposed ‘export floor price’ of $270/t fob may see Russia miss out on some business, although this will remain the current ceiling basis for international demand on day-to-day trades. We have already seen that if a private, or government-to-government trade surfaces, Russia seem happy to work on levels below their ‘floor.’
- Algeria also (reportedly) purchased 600kmt of wheat, likely to be of EU (French) origin which allowed the MATIF to trade in positive numbers yesterday.
- UK prices are virtually unchanged, as some underlying support came in from the financial side. Due to lower-than-expected inflation figures, the BoE has today kept interest rates unchanged for the first since December 2021, and this has caused immediate negative pressure on the UK£, providing a small scale of support for ex-farm grain prices. However, this will not overshadow the current UK market fundamentals, as producer selling remains slow as does consumption demand. Details from the EU Commission showed that UK wheat exports into the EU were reported as only being 91kmt a/o September 17, 10 weeks into the marketing season, and will need to substantially increase to impact upon the UK’s excessive stock inventories.
Feed Barley
- Another slow news week for barley with the farmer seller still not focused on grain marketing and merchant trade also quiet.
- For this reason, barley continues to hold its value relative to feed wheat despite consumer demand remaining limited.
- Exports are similarly non-existent with bids and offers too far apart and other EU origins remaining cheaper than the UK.
- With October now only 10 days away, the market looks to the Oct/Dec window for increased domestic supplies and a return to export competitiveness.
Rapeseed
- The ongoing conflict in Ukraine continues to impact price direction. Yesterday news wires reported an explosion on a cargo ship travelling to Ukraine through the humanitarian corridor, thought to be a sea mine. This is the first disturbance to the recently established humanitarian corridor, which had seen 7 vessels pass through uninterrupted.
- This week we saw weakness in the soybean complex as US harvest progresses faster than expected. Crop ratings are unchanged at 52% good excellent – the lowest we have seen for a decade. Brazil’s oilseed processing capacity is expected to grow by 9% in 2024 after the sector announced $1.24 billion in investments in the area on Tuesday. Brazil is the world’s largest soybean producer and exporter.
- At the start of the week, we saw soybean harvest in the western portion of the corn belt progressing faster than the east, but since have seen a good amount of rainfall which is expected to last until early next week in the west. This looks to slow harvest there, while the east remains dry and continues at a good rate. The 6-10 day forecast shows hot dry weather over the whole of the Midwest.
- The USDA has announced multiple sales of beans this week, 123,000t to China and 120,000t to unknown.
- Energy markets are lower this week with crude reaching resistance similar to that of June last year at $91. The rise in US crude prices we have seen over the past few weeks, driven by OPEC+ supply cuts led by Saudi Arabia has shut routes for US crude to Europe and Asia and is preventing oil from the Atlantic Basin from heading east. We did see Chinese economic data stating a record refinery in August and an increase in Chinese traffic congestion which would suggest that Chinese demand is set to improve. We also saw Saudi oil exports in July fall to their lowest level in 2 years which would ordinarily signal slack world demand. EIA crude stocks fell 2.136 million barrels and are now 12.318 million barrels below this time last year. Crude stocks are 12.649 million barrels below the 5-year average. US Crude oil imports are 6.517 million barrels per day, down over 1 million barrels from last week. Veg oils are also lower this week following soybeans and energies. Indonesia’s August palm oil exports increased to 2.78mmt vs. 2.75mmt in July. Jan-Aug now sits at 17.42mmt against 13.94mmt last year.
- Winnipeg canola is down again this week as harvest has surpassed the 50% complete mark, well ahead of the 5-year average, with favourable weather set to continue.
- MATIF rapeseed is close to unchanged on the week, narrowing the canola/Matif spread over $20. After the negativity we saw last week, we have found support at the €430 level and resistance at €447, trading sideways throughout the week.
- Sterling trades at 1.15500, supporting UK prices.
Oats
- EU oat prices have started to rally this week following fresh buying interest coming into the market from the milling sector.
- Sellers of milling oats remain hesitant with many exporting countries seeing significantly lower supplies year on year. Furthermore, the quality in Sweden is a concern and will likely see a smaller proportion of milling oats compared to normal.
- Feed oat demand into Spain has eased with a number of cargoes in the line-up for Sept/Oct arrival, this has made buyers more relaxed and could see them turn to a hand-to-mouth buying strategy which could ease prices in the short term.
- Here in the UK, millers continue to seek supplies to cover nearby positions, however, a lack of farmer selling is lending to prices moving higher as traders and buyers look to cover positions.
- The quality of samples processed through our TASCC assured lab illustrates the poor-quality nature of the late-planted and later harvested crops, with averages of 50.28kg/hl and 47.67kg/hl for winter and springs, respectively. Of the spring samples tested in the last 10 days, the average specific weight is only 46.9kg/hl, with many samples testing between 35-40kg/hl.
- The UK is going to need to find a home for some of its poor-quality oats, but this may take time.
- Bottom line, milling oats are currently in high demand, however, feed oats seem to be more readily available, and this could see milling premiums widen vs feed in the coming weeks.
Pulses
Peas
- We continue to receive more samples from the open market & later harvested growers, with overall quality still looking strong despite poor yields on marrowfats and large blues. Strong reduction in insect damage year on year (0.9% average), an average bleach level of 7% on marrowfats and just under 9% on large blues means many growers have benefitted from our bonus offered on sub 10% bleached peas on marrowfats and meeting packing grade spec for large blues. Given the challenging weather conditions the U.K saw this harvest, we are incredibly pleased with our growers and how they have adapted to the variable weather they have faced.
- Demand for high quality, low-bleached large blue peas has led to seasonally firm prices due to a shortage across Europe and Asia – we are keen buyers of any open market large blue peas, please contact your farm trader for a competitive bid.
Beans
- Farmer selling has improved again week on week, bringing us back within the average level of selling we see at harvest, which is now fully complete. We are working on a National average yield of 2.75t per hectare and a crop size at 600,000mt.
- Overall crop quality still looks pretty poor with insect damage levels high again for the season. Despite having an exportable surplus of around 200,000 tonnes we remain uncompetitive on the feed front vs. the Baltic origins which are about 5 euro per tonne cheaper. We still expect the Baltics’ exportable surplus to have been used by early January which will leave the UK as a competitive origin for Q1 in 2024 onwards.
- Human consumption beans in the Baltics are approaching completion following their harvest with yields much like the UK – fairly average. Insect damage has also had a significant impact on overall quality, which has contributed to very few offers coming out of the Baltics currently.
- Globally we are not short of beans, simply tight on quality for the Sept-Dec position which will likely raise premiums and the flat price for the low insect damaged, nice coloured beans. January onwards when the Australian beans come to the market, we expect the premiums to drop due to the flood of quantity.
Seed
- As the autumn drilling campaign is now well under way, we are beginning to see pressure on availability across the board.
- Winter barley seed is now extremely limited across the trade. However, we do still have availability of LG Caravelle, the highest yielding 2 row feed barley on the AHDB RL.
- As to be expected on the winter wheat, KWS Dawsum, Champion and KWS Extase (among others) are all proving to be extremely popular this year.
- The AHDB harvest results are showing great promise for Group 3 soft wheat Bamford and Group 4 feed wheat LG Beowulf, both of which will have seed commercially available for drilling autumn 2024.
Fertiliser
- Granular Urea has remained relatively flat over the last week as traders digest the global supply and demand dynamics.
- India continues to tender for urea. The uncertainty over future export certificates for Chinese urea has created a slightly more bullish stance and adds pressure on the supply and demand dynamics globally.
- European energy markets continue to be volatile with knee-jerk reactions to gas flows at the beginning of the week. Increased raw material costs such as Nat Gas and ammonia are lifting price floors in the region whilst crop output prices currently limit any triple digit fertiliser price increases that had been seen in the previous 2 years.
- A quiet market is limiting any significant gains to both urea and AN, but small increases continue to be seen in the UK market as storage costs and availability of certain products alter.
- ADM can offer spot and forward nitrogen prices for AN and Urea, Piamon 33N 30SO3 compound also remains available.
- PK prices are also trickling up as anticipation for demand builds. Replacement costs into the UK are reportedly higher than current stock costs. ADM continue to offer alternative PK products for Autumn applications.
- Sterling is negatively impacting freshly imported UK fertilisers prices with the £/$ rate dropping from highs of 1.254 last week to lows of 1.229 this week.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1525 | 1.2250 | 1.0630 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Oct 2023 | 160-170 | 182-192 | 220-230 | 355-360 |
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.
