Market Report

Thursday 6 August 2020

Sampling – Harvest 2020

As many of our farmer customers already know, ADM Agriculture will not be sending samplers out to farms for the forthcoming harvest. We need to be able to test the crops we buy, and it remains our intention to do this in as efficient manner as possible whilst reducing the risks associated with this service. If you have not already done so, please contact your farm trader to arrange for sample bags to be sent to you. Once you have samples ready, we will collect them and the results will be available via our online portal, ADM 365, or from your ADM farm trader.

Wheat

  • US futures prices are down $8/t on the week, pressured by favourable weather for US spring crops, declining Russian prices and concerns regarding global demand due to Covid-19.
  • US maize prices traded down to a new contract low this week, as talk of higher yield and production and reduced domestic demand could see ending stocks rise.
  • The US Attaché in Argentina reports that the country will produce less wheat and maize than previously estimated due to adverse weather conditions.
  • Russian wheat export prices continue to fall, as crop estimates rise on higher area and improving yield projections.
  • Ukraine’s Grain Traders Union (UGA) has raised its 2020 corn estimates to 38.9mln t, with exports seen at 33mln t. Its wheat estimate was left unchanged at 26.8mln t, with exports put at 18mln t.
  • Romania is expected to reap a meagre 5.5-5.6mln t of wheat this year. This marks a drop of 42% on 2019 due to extreme drought, with average yields falling sharply.
  • France’s farm ministry has cut its 2020 soft wheat estimate to 29.7mln t from 31.3mln t last month.
  • Germany’s 2020 wheat crop could fall about 12% on the year to 20.2mln t the stats office reported, in a harvest estimate based on data gathered in late June.
  • In summary, a week with prices driven lower by ongoing optimism over US spring crop production and declines in Russian export prices due to an improved crop outlook.
  • However, European wheat crop estimates continue to decline, and with growers remaining far from active sellers, cash premiums continued to be supported.
  • In the UK, harvest activity is slowly progressing northwards, eroding some of the delivery premiums seen in the recent market. With signs of harvest making progress in East Anglia, prices are allowing supplies to be transported north and west to cover shortages in these areas, although the market remains one of apparently limited demand, matched by limited selling.

Malting Barley

  • EU and UK malting markets are very quiet.
  • Maltsters and stores are full of old crop due to the reduction in beer sales.
  • The EU harvest is moving slowly northwards with mixed to average results so far.
  • Overall, there is plenty of supply.
  • After a disappointing UK winter malting barley harvest, the market is awaiting results from the spring crop.
  • The first reports from the early sown springs are mixed.
  • Yields are between 5t/ha and 8.5t/ha and nitrogen ranges from 1.5-2.0%.

Feed Barley

  • Spot barley markets are softer in the east as supply seems to be outstripping demand, whilst the lack of available barley in the North West is squeezing values higher.
  • The winter barley harvest is largely complete. In most parts of the country spring barley is up to two weeks away, as many growers focused on combining wheat. This could lead to further tightness in demand as consumers/shorts still need to secure supplies.
  • Export demand is very thin, and in many cases buying interest is at or below replacement values.
  • Last week’s Tunisia tender traded lower than expected, but for the time being the UK looks competitive, particularly after seeing a significant appreciation in GBP/USD over the last few weeks.

Rapeseed

  • Outside markets trade higher on the optimism that another Covid-19 relief package will be agreed by the end of the week to help pressured US economy.
  • Tensions between US and China are now said to be easing, following a report suggesting senior officials from both sides will meet to discuss the “phase one” trade deal on 15 August, which is progress from earlier in the week when President Trump threatened to ban Chinese app TikTok from the US.
  • CBOT soybeans traded lower and now trade between $8.50-$9.00. China returned to the US to buy 192,000mt of 20/21 soybeans after being absent from the market since the end of July. However, there are still concerns that the expected buying pace will not be met before the end of the season.
  • US weather still looks favourable with cooler temps this week but warming up next week and rain in most places in the next 6-10 days. Crop ratings for soybeans improved 1% to 73% good/excellent vs 72% last week and 54% last year. Yields are expected to improve to 49-51 bushels/acre, prompting private forecasters to increase crop estimates ahead of next week’s USDA report.
  • Soy oil outperformed soybeans and meal, and followed crude oil prices higher, with crude oil stocks estimated to be lower than expected. Veg oil prices firm in reaction to firmer palm oil prices. Palm again under the spotlight with lower than expected supply and increased demand interest from China.
  • Brazilian soybean exports for July were a record 10mln t, making the total for the season 68mln t (71% of exports were to China). Agroconsult now estimates Brazilian soybean plantings this season will be more than 1 mln ha higher than previous years at 37.9mln/ha. Production will be 132.6mln t vs 124.7mln t.
  • Lower yields for rapeseed in Ukraine mean forecasters are dialling in lower crop expectations for 20/21 production. Oil World is now estimating 2.8mln t vs 3.5mln t previously.
  • In Europe, harvest is nearly complete. Yields are slightly improved in Germany and Poland, which has led Strategie Grains to revise EU rapeseed production higher for the first time in months. Crop estimates are now 16.8mln t vs 16.5mln t in its last report.
  • Matif rapeseed fell this week after trading back near recent highs. November futures broke the recent range of €380-€385 range to close at €379.25 for the first time since early July.
  • Here in the UK, rapeseed prices have seen additional pressure from firmer sterling. The pound is edging towards to recent highs against the euro and other currencies following the Bank of England’s August policy statement, which stated interest rates and quantitative easing measures were to stay unchanged.

Matif Rapeseed November (€)

Pulses

Peas

  • Harvest is underway with some variable yield results.
  • Quality so far seems to be very good, but fewer than 2% of total contract samples have been seen to date.
  • The market is relatively quiet as consumers wait to see harvest results.

Beans

  • Yield estimates in Australia remain strong and market prices have dropped on the back of good weather forecasts.
  • Early bean yields in the UK have been poor but this is probably related to individual crops rather than the main crop of spring beans, which is still a number of weeks away.

Seed

OSR

  • We have several market-leading OSR varieties ready for immediate dispatch. Including TuYV resistant varieties Aurelia, DK Excited and Voltage. DK Excited also comes with a very appealing establishment scheme offering £100/bag rebate upon establishment failure.

Cereals

  • Winter wheat stocks are changing daily with limited availability on some key varieties. Discuss your full autumn seed requirements with your farm trader now to avoid disappointment.
  • Conventional winter barley is in a similar situation to the above.

Fertiliser

  • Urea has seen significant firmness in the last week, with sales completed at $260/t FOB Egypt. UK levels have also continued to move upwards.
  • CF has increased AN levels by £8/t from previous terms due to support from overall higher nitrogen prices globally and increasing raw material costs.
  • Phosphate prices are rising as a potential anti-dumping duty could be put on Russian products into the US. Importers in the UK see a potential lack of availability in the coming months, as significant quantities of product is shipped to the US prior to the potential anti-dumping duty date.
  • Alternative PK products are available for delivery as harvest continues and land is cleared. Currently, availability is good for the months of August and September.
  • UK markets are relatively quiet at present, although more are returning for cover as prices increase and the potential demand of large N requirements next season looks likely to underpin the market.
£/€ £/$ €/$
1.1125 1.317 1.1835
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug20 123-133 156-168 200-205 326-331
Nov20 127-136 160-170 201-206 336-341
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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