Market Report

Thursday 2 April 2020

COVID-19 – Safe transfer of grain passports and self-isolating

It is important that all farmers follow UK government advice with regard to sanitising and best practice. We strongly recommend all participants in the grain supply chain read this advice from AHDB https://ahdb.org.uk/knowledge-library/coronavirus-guidance-for-combinable-crop-deliveries-and-collections

If farmers are quarantined or self-isolated for a period of time and therefore unable to load combinable crop sales or accept deliveries of seed or fertiliser, please advise your ADM farm trader as soon as possible and we can then delay the collection/delivery until the period of self-isolation is complete.

Red Tractor have asked us to urge farmers to use the Red Tractor pdf grain passport which is being rolled out currently.

To date, the grain supply chain is working close to normality. All parts of the industry are working well together. The situation is obviously under constant review and of the utmost importance in keeping the nation supplied. ADM Agriculture would like to thank all our customers for their ongoing support.

Wheat

  • US prices are down $12/t on the week, pressured by ‘risk-off’ mood and fears of a steep drop in medium and long-term demand for commodities amid the coronavirus epidemic.
  • USDA projected US all-wheat sowing for the 2020/21 season at 44.7mln acres, the lowest figure since records began in 1919.
  • IGC sees global grain production increasing 2% y/y in 2020/21, reaching a record 2.22bln tonnes, with wheat production set to increase to 768mln tonnes.
  • Weather conditions in Brazil and Argentina remain favourable for fieldwork and crop development, although a need for greater rainfall in parts of Argentina will increase during April.
  • Russia’s agriculture ministry has proposed a quota for grain exports of 7mln tonnes during Q2 (April-June) 2020, to ‘help ensure stability in domestic food markets’, yet to be approved by President Putin.
  • Ukraine’s government is to limit wheat exports to 20.2mln t in 2020/21 to avoid a rise in domestic bread prices and maintain supplies.
  • Kazakhstan will introduce quotas on its exports of wheat and flour, but lift its current ban on flour exports introduced this month to ensure domestic supply.
  • Saudi Arabia’s strategic reserves of wheat exceed 1mln t, although the country plants to start importing at least 1.2mln t more starting this month.
  • Morocco will extend its suspension of import duties on soft wheat for a further 45 days to 15 June. A decision aimed to ensure regular supplies and price stability, amid prospects of lower domestic output.
  • European (PARIS) futures are down €4.5/t on the week, following the weaker global trend.
  • FranceAgriMer kept its estimate of this season’s soft wheat crop condition unchanged on the week at 63% good/excellent, still well below the 85% at the same time last year.
  • UK (London) futures are down over £10/t on the week, pressured by a weaker global outlook, and a firmer UK£.
  • In summary, the subject of ‘food security’ has raised its profile in recent days, as consumers load up on pasta and wheat-based products. Farm supply lines are becoming disrupted and certain countries are restricting agricultural exports to maintain domestic supply. Difficulties moving grain within countries and across borders, coupled with increased buying, could exacerbate the impact of the pandemic on the global food markets, especially with 20% of the world’s population under lockdown measures.
  • In the UK, the rise in sterling has pressured the markets lower amidst global fears of a drop in demand – for example, ethanol.

Malting Barley

  • As beer sales fall across the world, the industry is doing everything it can to keep businesses going.
  • SIBA, The Society of Independent Brewers, and Simply Hops, has set up a not-for-profit UK and EU website, trying to save the country’s smaller independent breweries and retailers https://www.beerishere.org/
  • Supported by Simpson Malt, the website uses your postcode to help you find local beers that are delivered to your home.
  • The market is very quiet as the industry tries to work out how much malting barley will be required from crop 2020.
  • Crop 2019 malting barley continues to be sold as feed by maltsters who no longer need the barley.
  • Spring planting is going well throughout the UK and the EU.
  • Rain is now needed in most areas.

Rapeseed

  • The macroeconomy continues to dominate the veg oil complex as the world continues to battle coronavirus.
  • This week USDA released its Prospective Plantings Report for this year, pegging the soybean area at 83.5m acres (33.8mha). That is below the average trade estimates of 85mln t but above last year’s area of 76.1m acres, reduced by flooding.
  • These figures were largely ignored by the trade as growers are now likely to move from corn to soybeans due to the collapse in ethanol demand in the past month.
  • The Brazilian harvest is now 76% complete, up from 66% last week, falling back in line with previous seasons. In Argentina reports have emerged that logistical restrictions are now easing, putting further pressure on the US soy complex.
  • In Asia, veg oil has endured a turbulent week as lockdown and travel restrictions across many countries reduced demand for veg oils.
  • In Europe, MATIF has enjoyed its most stable week since the pandemic began, with May futures rising €6 since last Wednesday. There are still a number of factors that affect price direction. If one ignores currency fluctuation, old crop prices are still weighed upon by the ongoing effects of COVID-19.
  • Whilst some nearby food demand remains, there is significantly less demand from fast-food outlets and the biofuel industry. However, rumours of renewed Chinese buying interest did give the market some support earlier in the week.
  • Looking ahead to new crop, Strategie Grains has revised its European rapeseed production estimate down 260,000t to 17.59mln t. Although larger than last year’s harvest, this does still point towards a large net import requirement from the likes of Ukraine and Australia.
  • In addition, recent cold weather in central and eastern Europe has raised concern that crop production could be lower than anticipated. Plants are now out of winter dormancy with daytime temperatures increasing. However, there is no snow cover to protect the crop from recent overnight freezing temperatures, which might be a potential threat.
  • That said, as long as the economic impact of coronavirus remains unknown, gains to new crop MATIF will remain capped.
  • In the UK, sterling has firmed against the euro this week as investors gain confidence to reinvest int UK markets. Until it is known how coronavirus will change lives, economies and demand, there will continue to be large amount of volatility across commodity prices and currency exchanges.

Oats

  • The domestic oat market continues to be bolstered by spot demand, with values for milling oats rising +£15 on the week in some areas, however fresh procurement (in any volume) remains lacklustre.
  • Following good drilling conditions, albeit later than ideal, the UK spring oat planting has got off to a good start. Rain is now needed in places to maintain growth as seedbeds needed to be cultivated ahead of drills and lost moisture.

Pulses

  • Old crop bean prices have remained stable on the week despite currency firming, as shippers are still short against existing commitments. New enquiries for export remain few and far between.
  • New crop bean prices have drifted lower, as London wheat prices fall and sterling firms. We have started to see greater farmer selling of new crop beans this week, as spring planting progresses. The dry weather forecast needs to be watched closely. This could add support to prices if it continues.
  • ADM Agriculture has a range of new crop marketing options available, including the marketing pool and buyback contracts for peas and beans. Please contact your farm trader for further information.

Seed

Spring Barley

  • Stocks of popular varieties are available however demand is currently very high, so please call to discuss with your farm trader current lead times on delivery. LG Diablo and Laureate are widely available, with RGT Planet becoming harder to turn around now under short notice.

Winter OSR

  • ADM has market leading closed-loop buybacks available for HOLL OSR. A very limited amount of new variety V367OL is available, offering increased gross output and establishment vigour over current market leader V316OL.

Winter Wheat

  • With a lot of the spring cropping area now in at last, thoughts are turning to autumn cropping plans and what options there are. For wheat following fallow, we would recommend KWS Parkin as an excellent early drilled variety. Short, stiff straw, and very early maturity, make KWS Parkin an excellent option and a good entry into OSR for the 2021 planting season.

Fertiliser

  • Over the past six months political circumstances, weather and coronavirus have created a ‘perfect storm’ for the UK fertiliser industry this spring with demand soaring for spot delivery.
  • Imported fertiliser in the UK firmed due to domestic market demand and challenges. Execution and raw material stock levels were the biggest driver of firmer prices last week.
  • Current circumstances present daily challenges for some suppliers in order administration, bagging and delivery of fertiliser, as haulier availability can be sporadic. Orders are encouraged to be placed as early as possible to allow for potential delays, even for those currently unaffected.
  • CF is now offering April and May terms to ensure continual smooth planning and execution.
£/€ £/$ €/$
1.1395 1.2455 1.0935
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May20 130-140 152-162 240-245 305-310
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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