Market Report

8th August 2019

Wheat

US prices are marginally lower on the week – winter wheat harvest reported as being 82% complete, with the spring wheat harvest commencing, reported as 2% complete – exports, although slowing, are still running 25% ahead y/y.

US president Donald Trump vowed to protect American farmers against China by signalling to provide further aid if needed, a day after China stopped agricultural purchases from the US and threatened more tariffs on US farm products.

Paris wheat futures fell to a new 2 ½ month low as the market continues to focus on the impact of Europe’s large wheat harvest, breaking through several support levels.

Russian farmers have harvested 55.8mln t of grain from 35% of the total planted area, with an average yield of 3.43t/ha, data from the Ag Ministry showed – last year farmers had harvested 46.6mln t with an average yield of 3.48t/ha.

UkrAgroConsult have lowered their 2019 Russian wheat production estimate to 74.5-75.0mln t, from 76.7mln t previously, although they raised their forecast for the Ukraine, from 28mln t to a record 28.5mln t.

Ukrainian farmers have almost completed the 2019 wheat harvest, threshing 25.8mln t from 93% of the sown area, the Ag Ministry reported.

France’s farm ministry this week increased its estimate of the country’s 2019 soft wheat harvest to 38.2mln t, up from 37mln t projected a month earlier.

Egypt’s GASC purchased 415,000t of wheat for 5-15 September shipment, which included 240,00t of Russian, 115,000t of Ukrainian and 60,000t of Romanian – no US or French wheat was offered.

UK new crop prices have eased, down £4/t on the week following lower European prices, with some export trade being reported at the lower numbers.

In summary, markets continue to weaken as the impact of bumper harvests, and limited demand, weighs. US prices have consolidated this week ahead of the key USDA report due out next Monday.

While the report is unlikely to provide any fireworks to an apparently stagnant wheat market, it will be the corn and soya numbers that the trade will focus on and may provide some ‘spill-over’ support onto the wheat complex.

Expected cuts in corn acreage, should tighten the US balance sheet although, the stall in US/China trade talks may dampen the USDA’s export optimism for both 2018/2019 and 2019/2020, reducing the impact of the lower acreage.

It will be a report of, what numbers do the trade expect, what numbers do the USDA project, and whether the trade believes the numbers!

Malting Barley

The EU Malting barley harvest is progressing well.

France and Germany are all but finished and Scandinavia has made a good start.

The English spring harvest is going well, with excellent yields reported in all areas.

English spring barley quality is looking good so far.

The Scottish harvest should start next week weather permitting, although the bulk of the crop is not yet fit.

It looks like the EU will have a big surplus and buyers remain out of the market.

The UK market is also very quiet with buyers well covered until after the New Year.

Rapeseed

Having fallen sharply last week, US soybean prices have been treading water this week ahead of USDA report on Monday.

Traders are maintaining a bearish bias on beans ahead of the report, with US and world stocks plentiful. Average trade estimates suggest the US soybean acreage could increase by circa 1 million acres from the previous report.

Following concerns over domestic vegetable oil shortages, Chinese officials announced that soyoil, rapeoil and palm oil would not be subject to import restrictions.

The Ukrainian rapeseed harvest is now complete, with production estimates settling around 3.2mmt, still a record, but well down from earlier estimates.

Showers in Australia are keeping the canola crop ticking along, but the Australian Bureau of Meteorology suggests drier than average conditions in August-October, a situation which will need watching carefully.

European rapeseed crop estimates continue to shrink towards 17mmt increasing this season’s record import requirement.

In the UK, yields are also down on last year tightening the domestic balance sheet, but with space on farm needed to accommodate the larger wheat crop, plenty of rapeseed is coming forward.

Oats

Oat harvest in England continues apace, with the majority of winter oats being cut across the South and Eastern parts of England.

Quality and yield are very encouraging, however there is a considerable amount still to be cut and the unfavourable weather forecast could have a negative effect on the crop, especially for spring drilled oats. Reports on the standing crop however remain largely positive.

Prices for spot Milling Oats have continued to drift lower as harvest movement pressure, coupled with a potentially healthy surplus, is allowing buyers to keep a lid on values. At present August milling oats have been trading at circa £115.00 – £120.00 ex the farm.

Pulses

Early pea yields have ranged from 2.5t/ha to 5t/ha. The quality of the green pea samples seen to date remains excellent.

Early cut winter bean yields have been excellent, however the quality has been variable. We are some weeks away from getting an accurate picture of the crop.

Feed bean prices are unchanged on the week despite sterling continuing to slide against the Euro. Demand is limited to the ports as shippers look to cover short positions against existing commitments. There are currently no bids for feed beans on the export market and domestically they remain too expensive against other mid-range proteins to feature in most compound diets.

Seed

Winter barley – Yield results from 10 trials sites across the country are in from the AHDB. SY Baracooda, an exclusive hybrid to ADM, sits at the top of the list with KWS Gimlet, a new 2 row feed variety, comfortably leading the way on the 2-row varieties. Hybrid barley is starting to get well sold.

WOSR – no published yield results are available at the moment, however all varieties with TuYV resistance are performing well, showing the trait has commercial value and should be part of a risk management approach on all farms.

Processing of cereals has started with TGW’s good on winter barley. The first wheat seed crops have been cut with reports of very good yields.

Fertiliser

Urea

The global urea market is showing signs of a short-term correction with the main factor being inactivity in the market over the past 2 weeks.

Egyptian & Chinese FOB markets have both traded down by almost $20 tonne from the top and the market could now remain weak until the announcement of the next Indian tender in September.

UK prices remain the same however, as the weaker currency has evened out any market movement and this continues to increase pressure on all imported fertilisers.

Urea still represents the best value for nitrogen today at sub 60p/Kg and ADM have terms to offer for August and September deliveries.

 

AN

CF have held their UK spot and October levels for another week.

Like urea, all imports of AN have become more expensive over the last few weeks due to currency, minimising the spread between UK and imported AN.

We may see a response from the UK producer to increase levels in the coming weeks and recommend any buyers who require AN to take advantage of the October terms on offer today.

 

NPK & Fibrophos

Blenders in the UK have released new terms this week, up approximately £4/mt on NPK blends due to currency and increased Potash values.  MOP has firmed more than £10/mt as the UK becomes reliant on imports, with UK produced Potash stocks diminished. Fibrophos however, is a cost-effective way to apply PK requirements and hasn’t been affected by any currency or market increases.  Please speak to your local ADM Farm Trader for more information on how you could save on PK inputs.

£/€ £/$ €/$
1.085 1.214 1.119
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug 19 115 - 120 130 - 140 - 316 - 321
Nov 19 116- 126 136 - 144 185 - 195 326 - 331
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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