WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- The political issues surrounding the Black Sea Grain Initiative (BSGI) continues to drive the markets. Reports of further military attacks on Black Sea port facilities, and on the grain infrastructure on the Danube River, have helped underpin global markets, although the Chicago price is slightly weaker w/w. With Russian officials declaring any vessel heading towards Ukraine as ‘potentially military’, ship owners, and insurance, will evaluate the high risks of sending vessels into the area. It is envisaged that the closure of the BSGI will not only reduce Black Sea exports, but also force Ukraine to increase its shipping routes through the Danube, and neighbouring EU states, of which many are asking the EU to extend the export ban of grain through their country.
- Weather continues to make the front pages, all for the wrong reasons! The continuation of severe heat in Southern Europe provides risks for spring crops, while heavy rain continues to batter the North, which could undermine final yields and quality on harvested winter crops. US weather remains changeable, although recent crop ratings for both US corn and soybean have improved in the recent weeks, while spring wheat rating have declined.
- EU harvests continues to advance, albeit weather is seen reducing yields and production, with the EU’s crop monitoring unit now placing the average EU soft wheat yield at 5.8t/ha, in line with the 5-yr average, but 2% lower m/m. Russian wheat harvest has been slowed by rain, although the Russian Grain Union has stated that the country could export 60mln t of grain this season, citing record stock levels and a weaker Ruble as supporting export potential UK market has traded down £4/t w/w, with sterling holding steady after the surprising better-than-forecast economic data released last week. While the UK has become a bit more competitive, we are still as much as double digit £’s away, especially in the deferred position, from actually ‘kicking into’ some export business. The recent rally has allowed growers to increase their market activity, and given the current UK market fundamentals, we would advise continuation of this strategy
Malting Barley
- The challenging weather conditions are starting to cause concern for malting markets. With plenty of the winter barley crop still in the field, prolonged wet weather will be doing harm although we are yet to see actual sample result
- Early spring cuts are coming in in good condition with a generally bold, low nitrogen sample.
- Markets are incredibly illiquid, as all selling ideas have disappeared as all eyes nervously watch the state of the UK crop.
Feed Barley
- For yet another week we have seen a very stop-start harvest pace as prolonged rains continue to cause headaches. We estimate that nationally only 40% of the winter crop is in the barn, which equates to only 17% of the UK total area. A large proportion of the barley being combined is outside of the 15% moisture specification, which is causing some logistical headaches.
- The slow pace of harvest has caused some issues with spot supply, however a significant harvest discount still remains owing to the general lack of fresh export demand, a situation which is not improving.
- Domestic prices remain competitive in feed rations going into the winter, which is limiting our export competitiveness in the deferred positions. The question will be, how much does the UK need to export given the lower barley acreage the UK planted this year.
Rapeseed
- Conflict between Russia and Ukraine continued to escalate over the weekend with Russia launching drone strikes on Reni situated on the Danube River and Ukraine retaliating by attacking fuel depot in Crimea. The UN is still trying to renew the Black Sea grain corridor, something which Russia will only agree to if their conditions are met. Russia’s Ag Ministry proposed extending its ban on rapeseed exports past the current deadline of 31 August through 29 February.
- Weather in the US has been largely hot and dry this week, however, rain and storms are appearing in the 6-14 day forecast bringing with it cooler temperatures.
- On Monday we saw U.S Soybean ratings fall 1% to 54% good/excellent, giving a current yield estimate of 51.3 bpa. The USDA has announced sales further sales of U.S soybeans for 2023/24 totalling 622,000mt all to an unknown. Whilst it’s not confirmed, these are likely to be to China to build state reserves. Brazilian soybean exports are expected to reach 9,1mmt in July vs. estimates at 8.8mmt.
- Energy markets trade higher on the week. News that China would introduce measures to help support their automotive and property sectors gave the market some hope of firmer demand. Oil markets also saw support on news that Russian and Saudi Arabian production is declining, however, most of that was offset by lower-than-expected Indian oil imports which were at a seven-month low and the continued discussions on the reduction of fossil fuel
- Canola futures are higher again this week. Rain over the weekend in Canada seemed to be limited to central and northern parts of Alberta. South Alberta and Saskatchewan lacked rain with above-average temperatures. However, it now looks like temperatures are cooling with showers in the forecast this coming weekend.
- Matif Rapeseed is down week-on-week. The open interest on the August matif fell sharply again as we get closer to expiry. News of the Russian attacks on Reni last weekend were quickly dismissed given that Ukrainian products can flow via other outlets which pressured prices.
- Sterling took back last week’s losses now trading at 1.1650.
Oats
- European oat markets continue to feel the effects of the adverse growing conditions experienced across large areas of key growing areas and high demand locations.
- Prospects in some parts of Scandinavia have improved and this has lead to further sales of milling oats, however some areas remain reluctant sellers sighting quality uncertainty as a result of late drilled and drought affected crops.
- Demand into Spain for feed grade oats remains the key supporting market currently in play and with a relatively inelastic demand we could see imports rise significantly in 2023/24 in order to accommodate the lack of domestic supply.
- Lower plantings in North America combined with hot dry conditions are expected to result in a significant drop in production with some estimates forecasting ending stocks below the five-year average.
- Here in in the UK, wet weather continues to delay harvest and with many OSR and barley crops still unharvested we should expect a multitude of crops all needing to be harvested at once which could result in poorer oat quality.
- Early quality results from winter crops that have been harvested have been varied, but in general the quality has been good, but below the highs of last year.
- Spring oats remain ~four weeks away from maturity which should help spread the harvest workload, but with further wet weather forecast, one cannot help but feel quality could be more variable this year.
- Bottom line, oat prices feel supported, but if the wet weather continues we could see milling premiums rise and feed oat prices fall in order to capture demand.
Pulses
- Old crop completed on both human consumption and feed peas; our Long Sutton pulse production lines are now on planned maintenance ahead of the new season starting.
- Crops in the ground remain to look well despite the heavy rains, we would like some consistent spells of warm dry weather over the next week as crops near the point they are able to be harvested. Marrowfats in particular have podded well, we expect yields to be around the same level as last season, those who planted early we expect samples over next two weeks.
- New crop price direction remains firm, with marrowfat prices for open market still high year on year; large blues are in strong demand and there appears to be many parcels available on the open market. Yellow peas are also in consistent demand by vegan/vegetarian markets. Feed pea consumers also are looking for cover ahead of the new season and a recent drop in the prices of feed for export has encouraged consumers to enter the market for offers despite no peas being available just yet.
Seed
- The first AHDB trials results for winter barley have now been published. The hybrids are having a very good year in trials, and will no doubt be a consideration on most farms this autumn for their added benefits with grass weed suppression. SY Kingsbarn is currently leading the pack and seems to be the go to variety for consistency and strong all agronomic profile. Conventional LG Caravelle and candidate variety LG Capitol are also off to a strong start, unfortunately, the demand for these varieties will be greater than the seed supply for this autumn.
- The rapeseed drilling campaign is now 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.
- Have you seen our most recent small seeds YouTube video? Take a look and find out about some of our different grass mixes and their components.
- Watch here – YouTube
- Cover cropping is a great option for improving soil health by preventing soil erosion and helping to suppress pests. Lots of our cover crop straights and ready–made mixes are currently available for fast delivery.
Fertiliser
- Granular urea continues to trade higher FOB Egypt with most recent trades concluded at $450/t.
- A combination of factors have tightened the UK market, with prices rising £80-100/t from the lows of the UK season already.
- Curtailed production in Egypt has reduced production capacity by circa 30%, following requests from the Egyptian government to reduce gas demand.
- Ammonia prices globally have also risen, specifically in US. India has come to tender for an unspecified tonnage of urea, shipment by 26 September.
- UK AN prices have seen around a 5% price increase since previous terms with spot and forward offers available.
- Imported AN, CAN and ANS products have also risen.
- Phosphate prices continue to fall despite anticipated demand in the UK, with opportunities arising in the DAP and TSP markets.
- MOP trades higher than TSP at present which historically was not the norm emphasising the continued issues with supply in the global market.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1640 | 1.2960 | 1.1135 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| August 2023 | 160-170 | 185-195 as available | 265-270 as available | 370-380 |
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.