Market Report

Thursday 2 July 2020

SAMPLING HARVEST 2020

We have sent a communication to all our farmer customers regarding our plans for sample testing for the forthcoming harvest. If you have not received this important information, please speak to your ADM farm trader to be fully informed and for us to be able to provide you with an efficient, smooth service in the coming weeks and months.

Wheat

  • The week has all been about Tuesday’s USDA US crop area figures. Corn (maize) was put at 92.006mln acres, compared with an average trade estimate of 95.2m acres, soybeans at 83.825mln acres (average estimate 84.72mln acres) and all wheat at 44.25mln acres (average estimate 44.72mln acres).
  • Managed money funds held a significant 277,479 contract short position on CBOT corn as of 26 June. This, combined with a figure that was 3mln acres smaller than expected, moved the main corn markets higher, which helped wheat appreciate also.
  • NASS reported US winter wheat harvest at 41% complete, up from last week’s 29%, in line with the five-year average.
  • Russia’s agriculture ministry says that the country will not replenish its stockpile of grain in the new season and domestic reports of bigger-than-expected crops is limiting chances of an export quota.
  • EU Commission cut the import duty on maize to €4.65/t from Tuesday this week, following a slight rise in global import prices.
  • As the wheat harvest in the US progresses at a normal rate and Europe just starting to get meaningfully underway, eyes continue to watch the weather before grain is secured in the barn.
  • EU Paris futures, having traded to contract lows last week, found support from the rallying US corn and wheat markets to trade €3-4/t higher than this point last week.
  • Early European yields and quality are variable, dependant on area, but owing to being early in the campaign there is much to still await before the crop is truly defined.
  • The recent cooler, damper weather pattern across the UK, following a significant hot blast last week, has calmed talk of more potential dryness induced crop losses, albeit it is late in the growth stages to see any significant benefits.

Malting Barley

  • World beer markets continue to forecast declining volumes.
  • UK pubs can re-open this weekend, but some have chosen not to.
  • The market is very quiet as there is very little harvest demand.
  • The French winter malting barley harvest is well underway with generally good quality but lower yields.
  • The UK winter malting harvest should start in the next two weeks.

Feed Barley

  • The feed barley market is still lacking much needed liquidity. Barley growers in the UK have pre-sold well and are waiting to see how the crops perform before selling further.
  • In general, buying and selling ideas are a long way apart, and we expect the market to remain stuck in this mode until the combines start to roll, over the next few weeks.
  • UK consumers are still largely absent from the market, despite barley looking cheap vs other products at circa £30 under feed wheat.
  • We are still hearing mixed harvest reports on both yield and quality from nearby north EU origins.
  • There is still some technical tightness on nearby execution in the Black Sea following adverse weather, but this is not reflected into the later positions.

Rapeseed

  • Outside markets continue to influence market direction. Even though economies are showing some slight signs of recovery, there are a number of reports showing an increase in Coronavirus cases across the southern states of the US. Worldwide cases hit 10.4mln and global deaths hit 508,000. US governors are now re-imposing lockdown restrictions in worse-hit states to try and stop new infections, which is adding pressure and caution to outside markets.
  • This month’s USDA report took a few by surprise. The market expected a 1.2mln acre increase in US soybean plantings, but the USDA only increased by 300,000 acres to 83.8mln acres. However, as of the 1 June USDA did report a further 12.1 mln acres were left unplanted.
  • USDA stocks and acreage report:
  • US quarterly stocks (1st June): Average trade estimate 1.392 bbu vs 1.386 bbu reported.
  • US soybean planting 2020: Average trade estimate 84.716 million acres vs. 83.825 million acres reported.
  • Current US soybean crop conditions are reported at 71% good/excellent vs 70% last week (54% last year). Hot and dry weather in the next 5-10-day forecast may start to deteriorate crop conditions.
  • Chinese buyers are still requesting Covid-19-free certification on all exports out of the US, which exporters are wary of doing and is something which may hinder futures sales.
  • Crude oil markets trade lower on global demand concerns. Last week WTI traded above $40 for the first time since the first Covid-19 outbreak.
  • World veg oil markets tracked outside markets lower on fears of reduced food demand should a second wave take hold.
  • Heavy rains still affect major growing areas in India and China. Some areas have seen continued rain since the start of June, causing localised flooding and crop damage, but the extent of the damage is still unknown.
  • Stats Canada increased its 2020 canola plantings estimate to 20.78mln acres from 20.62mln in May. This is less than 1% from last years planted area but short of the highs seen in 2017 and 2018.
  • Matif prices traded higher for most of the week before being pressured at yesterday’s close. Harvest has now started across Europe, with Bulgaria, Hungary and parts of southern France. Other countries are expected to start in the up and coming weeks.
  • In the EU (including the UK), Strategie Grains lowered the EU 2020 rapeseed crop to 16.54mln t vs. 16.68mln last month, the lowest crop since 2006.

Pulses

  • The area of faba beans planted in Lithuania for harvest 2020 is 58,500ha, up slightly from 56,500ha from last year (as per statistics released at the end of last week). This confirms that the area planted in the three major origins (including UK and Australia) are higher year on year.
  • Whilst UK yield is likely to be lower than 2019 as a result of the impact of the dry spring. Current forecasts suggest the Baltics should at least be unchanged and the Australian yield should eclipse last years. Therefore, total production in the three origins is likely to be higher overall, keeping a lid on UK prices of both feed and human consumption quality.
  • The vining pea harvest has commenced, and yields have been vary variable, with results ranging from a poor 0.5t/acre, all the way up to 3.5t/acre. Recent crop inspections of dried peas generally show the crop to be in good condition and well podded, as the pea crop responded to the dry spring better than most. New crop pea buybacks are available for harvest 2021. Please contact your farm trader for further information.

Seed

  • We have a great portfolio of OSR varieties to offer with a selection of different traits to suit your needs, including:
    • DK Excited with market leading traits including TuYV resistance, pod shatter resistance and excellent autumn vigour.
    • RGT Nizza CL, a high yielding Clearfield variety.
    • HOLL varieties on our buyback contracts, including V3670L, with very high gross output potential.
    • ALL of the above varieties are supported by very appealing establishment schemes. Get in touch with your farm trader for more information.
  • Winter cereal seed stocks are under increasing pressure as yield estimates continue to be brought back. Our advice to growers is to get autumn cropping plans in place and get certified seed requirements covered earlier than normal this season.

Fertiliser

  • UK AN prices are firm and holding above £200/t, with early buying easing off as efforts turn to the UK harvest. Imported products have followed suit and new levels have been established.
  • Belarusian potash producer BPC secured a supply deal with China on MOP last month. China usually imports well over 2mlnt of the product. These quantities can easily affect the supply-demand balance and offer support to prices on the global market.
  • Weakness has been seen in the phosphate and potash markets in the UK whilst demand has been relatively low. As demand increases through the next two months and news from the global market reaches regional buyers, prices could begin to firm. Alternative PK products offer comprehensive crop nutrition for requirements following a damaging season to soils with heavy rains.
  • UAN markets are firmer, with European benchmark Rouen trading €5-7/t above the previous week. UK liquid UAN prices are increasing week on week, in line with ammonium nitrate and urea movements.
£/€ £/$ €/$
1.11 1.25 1.127
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
July20 120-128 155-160 200-205 320-325
NB: Prices listed may vary depending on area.

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.

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