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Friday 1 October 2021
- Wheat markets continue to firm amid strong international trade, declining export availability and a bullish US wheat stock/production report.
- The continued tightening of global production and export supplies should keep markets underpinned as key importers step up their buying activity.
- On Thursday USDA estimated all-wheat stocks in the US at 1.78 bln bushels as of 1 September, 18% lower than a year ago and below trade expectations, mainly due to higher domestic usage and a lower crop forecast.
- A severe drought, following a season of record grain exports, is forecast to shrink Canada’s stock of principal grain to its lowest ever level of 7.8mln t at the end of 2021/22.
- Buenos Aires Grain Exchange has kept Argentina’s wheat area and production unchanged on the week amid reports that recent drier weather is starting to stress crops.
- Brazil’s government has scrapped the tax rate on corn imports until 31 December in a bid to increase levels.
- Ukraine’s farmers had sown 1.95mln ha of winter wheat as of 27 September, or 29% of the planned 6.68mln ha, according to the country’s agriculture ministry. Last autumn just 6.1 mln ha of winter wheat was sown due to drought.
- However, Russia risks a drop in winter crop sowings due to adverse weather and tax worries, with farmers reported to have sown 10.5mln ha to date, down 12% on the year.
- China is snapping up cargoes of Australian wheat, despite a bitter stand-off in other trades, as global crop downgrades leads to concerns over a shortfall in output.
- EU soft wheat exports had reached 6.95mln t as of 26 September, up 37% on the year despite a reporting delay in French exports.
- Matif futures (Dec 21) posted fresh contract highs on Tuesday to Thursday and were trading up again today (Friday) at €264 in late morning trade.
- France’s port line-up is adding in more vessels destined for China following that country’s decision to reduce import specification for French wheat from 77kg/hl to 75kg/hl.
- Continued demand from key importers like North Africa, Iraq, Iran and Turkey looks set to keep EU values supported.
- UK markets remain competitive for export and recent trades have been concluded, helped by a weaker pound. ICE Nov 21 futures topped £200/t yesterday and have traded up a further £2 today.
- World malting barley prices have risen again this week.
- Prices are now as high as most people can remember.
- EU supply and demand could well be in a deficit given the third country demand.
- The UK still has a big exportable surplus.
- More UK spring barley has been sold for export over the last few days.
- The feed barley market found strong support again this week, as sellers retreated further, cautious of firming futures and the ongoing lack of origination.
- The firmer Matif is supporting destination markets in northern Europe, although the UK is still not finding much demand here. We are also expecting further support in northern EU markets from delays to the Black Sea corn harvest following wet weather and strong gas prices prohibiting artificial drying. This may push further demand into feed barley.
- The UK still remains the cheapest northern EU origin on paper into third country markets.
- Tunisia is tendering today for 100,000t (4 x 25,000t) 15 Oct-20 Dec shipment, which is expected to trade ex Black Sea.
- US weather is now showing some rain heading south, whilst the northern plains are looking dry with temperatures around normal.
- US harvest is estimated at 16% complete compared with 6% last week, and 18% last year. Yields are said to be improving.
- USDA’s report published yesterday showed higher-than-expected stocks of old-crop soybeans for the US as of 1 September. Its figure of 256 mln bushels compared with a trade estimate of 174 mln bushels. Soybean crop output for 2020 was increased to 4,216 mln bushels compared with 4,136 mln bushels in the last report.
- In South American, planting continues in Brazil with beneficial rain in the forecast for this week into next, with normal temperatures and scattered showers. In Argentina, the government renewed exports of beef into China after the 50% restriction.
- In China, Golden Week holidays start next week. The only US soybean exports announced ahead of this were 330,000t earlier in the week. US exports remain 36% below last year. There are still rumours that some crushers may stop production due to higher energy costs.
- Crude oil prices remain firm. EU energy prices continue to rise with natural gas prices leading the charge. Veg oils have in turn rallied, with palm reaching a record high in yesterday’s session, trading 2.5% up on the back of tight veg oil supplies and increased demand. Soy-oil rallied on increased demand for 2022.
- Canadian rapeseed prices seem to be stuck in a trading range of $850-$900/t. Harvest continued over the weekend, which brought with it some farmer selling on Monday, but should be complete next week.
- Matif rapeseed traded at contract highs again this week. Whilst prices are now looking overbought, the November futures have rallied €63 in just over 2 weeks.
- Sterling fell sharply in yesterday’s session due to major concerns among investors over the UK economy as we head into winter, sparked by the recent lack of fuel supply. However, fuel supplies now appear to be recovering.
- Since the last report, London wheat futures prices have rallied by £10/t. This, combined with the lack in farmer selling, has led UK oat prices to appreciate in line with other markets. Subject to location and movement period, milling oats are now worth £160-£170/t ex farm with feed oats around a £20 discount.
- Demand for both feed and milling grade remains high into Western Europe and we would expect more cargoes to trade in the coming weeks. However, logistics will be the key determining factor.
- Quality remains variable with many samples in the 45-48kg/hl bracket and millers are using these tonnages on fallbacks to limit the amount being downgraded to feed.
- Our winter oat sampling averages remain around 50kg/hl with springs at 48kg/hl.
- Export buyers into Europe remain keen for 45kg feed oats with prices calculating around £150-155DD Oct’21 to UK ports. Milling oat values are still difficult to put a value on due to a lack of bid/offers, but reports are for values higher than those being paid domestically.
- Bottom line, oat market continues to be supported by the wider grains market and the tightness seen in the milling balance sheet.
- Winter Wheat: Availability is now tight across most key varieties. With the haulage issues delaying deliveries on to farm, along with many key varieties now being sold out, we urge you to place any outstanding seed orders in good time to avoid disappointment.
- Winter Barley: We are beginning our final run of production of winter barleys. Conventional stock is very limited, but we still have good availability of consistently high yielding hybrids SY Kingsbarn and SY Baracooda.
- Don’t forget that ADM Agriculture can cover all of your grass seed, stewardship and cover crop needs. Please see page 25 on our 2021/22 seed varieties guide for more information.
- CF Fertiliser terms remain withdrawn from the market. With Billingham now operational, they continue to execute outstanding Nitram orders from this site, whilst delivering both SingleTop and NPK from stocks held at Ince.
- The UK market continues to be active, although is plagued with limited stocks of AN & ANS, as all producers across western Europe are suffering from the same issues.
- Yara, Borealis, Fertiberia and Achema are all reducing production in Europe, causing continued strain on supply to European AN markets. Here in the UK, the weaker £/€ exchange rate is also helping to push import prices even higher.
- Granular urea activity in the UK has been high again this week, as farms look to secure product. Internationally, trades of $640/t FOB Egypt are being reported and the UK urea market continues to chase these replacement values upwards.
- Additional costs continue to rise in the fertiliser supply chain, with the road haulage crisis in the UK being affected by fuel problems, the high number of driver vacancies and road transport delays.
|Feed Barley £||Wheat £||Beans £||Oilseed Rape £|
NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.
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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.