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Market Report

Friday 10 December 2021

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Wheat

  • US and global numbers released yesterday by USDA continue to support the current short-term bearish slant to the wheat markets, much of which is related to the spread of the Omicron virus.
  • US wheat stocks were increased due to lower exports, while global wheat stocks increased by 2.4mln t compared with last month, mainly as a result of higher production in Canada, Australia, the EU and Russia.
  • The resulting lower values may entice buyers back into the market looking to extend cover. And the long-term view is still seen as supportive, as the ongoing likelihood of reduced export availability from key producers should provide the rationale for higher prices.
  • Severe flooding across vast areas of Eastern Australia shows little signs of relenting as costs to farmers continue to mount.
  • Ukraine had exported 14.6mln t of wheat as of 6 Dec, up 21% on the year, the equivalent of about 60% of its annual export quota.
  • Russian wheat shipments continue to lag, amounting to 18.8mln t as of 2 Dec, down 18% on the year. In addition, the agriculture ministry is discussing setting its wheat export quota that runs from mid-Feb through June at 9mln t.
  • However, France has cut its outlook for exports beyond the EU, raising end-season stocks, due to increased competition from Argentina and the Ukraine.
  • Saudi Arabia has apparently purchased 689,000t of wheat in its latest international tender.
  • Turning to new crop, French farmers are seen planting 6.8mln ha of winter crops for the 2022 harvest, down 0.4% on the year.
  • UK prices have slipped marginally lower on the week, driven by weaker global markets and growing demand concerns linked to the spread of the Omicron virus.
  • However, current prices still represent historic highs and growers should not assume that values will rebound.
  • With half the season gone the UK is still showing a healthy surplus, which may increase if a continued spread of the virus forces the government to rethink travel and social restrictions, and domestic demand wanes.
  • The next four to five weeks will provide their own logistical problems, with growers shutting down early for the festive break, and lorries no easier to find.
  • Growers who can release fresh supplies and can load over the Christmas period may be able to obtain a market premium to load, or deliver, which may be more profitable than selling early in the new year.

Malting Barley

Old Crop

  • There is still a market for old crop malting barley, with active buyers but very few sellers. We expect the latter to be absent until the new year.
  • We are seeing a rise in rejection rates due to wet grain and germination problems.
  • We would advise growers to check their malting barley and to keep conditioning it over the festive period.

New Crop

  • We are seeing good tonnages being contracted for new crop.
  • We have a variety of contracts to offer growers for all risk appetites.
  • Please speak to your local farm trader for contract options.

Feed Barley

  • Barley markets have moved sideways on the week, with little to no activity to report. Most market participants are focusing on logistics in the run up to Christmas.
  • Feed barley is still tricky to buy in the UK, once again keeping prices supported, although consumer engagement is also noticeably absent at this stage.
  • Export markets are quiet. With corn prices much more attractive in most destinations, demand for feed barley is being rationed. Meanwhile freight issues still persist. Despite quoted rates falling in recent weeks, fixing vessels is still tricky due to low availability.

Rapeseed

  • Another choppy week for outside markets, which saw crude oil traded higher. More cases of the Omicron virus remain a concern.
  • US soybeans struggled to attract any decent buying interest this week. USDA reported additional sales of US soybeans to both China and unknown destinations but not enough to meet USDA estimates.
  • Dry weather is forecast in the south of Brazil, where plantings are reported to be 90% complete. In Argentina, Buenos Aires Grain Exchange lowered crop ratings last week only to increase them again to 88% good/excellent.
  • All eyes were on last night’s USDA update. As expected, the report was largely a non-event. USDA left US supply and demand unchanged, as well as South American production.
  • In China, buyers are stepping in for more US soybeans, but not in volume.
  • Malaysian palm futures rallied over 4% this week as monthly production numbers were predicted to fall below expectations. Prices soon came sharply lower following pressure from lower soy-oil prices mid-week following talks that the US Environmental Protection Agency was going to release updated biofuel mandates.
  • This sparked some uncertainty, but it looks like 2020/21 mandates will be reduced slightly and 2022 will be left unchanged.
  • Canadian canola prices traded off the highs this week down to $1000. Stats Can estimated the Canola crop at 12.6mln t compared with 19.5mln t earlier in the season, broadly in line with expectations.
  • Matif rapeseed bucked the trend and traded at record highs this week. February futures exceeded €723 at one point. Seed supply still remains tight.
  • France’s agriculture ministry increased the country’s OSR area by 12% to 1.1mln ha, but it won’t be enough cover the shortfall from Canada. New crop prices remain at a large inverse to old crop.
  • Rain spreads across France and western Germany over the weekend, which will help crops. Cold temperatures still hang over crops across the Ukraine, which will be closely watched.
  • UK prices exceeded season highs, helped by weaker sterling, which fell 1 cent to trade below 1.16500.

Oats

  • The fall in wheat market values has not been felt in the UK oat market, which continues to benefit from the lack of oat supply seen in North America, and the demand for both feed and milling oats into Western Europe.
  • Latest data from the USDA, Stats Canada and Abares (Australia), have all given the market a fresh update on the global supply and demand. The key facts are that Canadian oat supplies are down about 45% on last year, with exports of raw oats estimated to fall 28% year on year to 1.456mln t.
  • This reduction will in part be covered by increased exports out of Australia, where it is estimated to see total 2021/22 exports reach 600,000t (up about 200,000t on last year), making it the second-largest global exporter behind Canada. The balance will be made up from a rationing of demand, but also supplies from the EU (estimated 200,000t exports).
  • On paper the UK balance sheet is well supplied with DEFRA estimating the 2021/22 surplus to be 339,000t, with 55,000t of exports seeing a closing stock of 284,000t. This figure feels too high, with animal feed usage and exports expected to be higher than currently being reported.
  • The UK is well placed to capitalise on the strong demand into Europe, with buyers into the near continent for both feed and milling oats. Logistics will be the limiting factor, but on paper the oats are there. The spread between milling oats and feed wheat has narrowed by about £10/t this week and, if London wheat futures continues to fall, we could see this gap narrow further.
  • UK millers continue to be reluctant to follow the export prices higher, but if the demand into Western Europe continues our surplus could soon diminish, which would support prices in the months.

Pulses

  • The Australian harvest has been delayed due to wet weather and is around 15% complete.
  • The market in Australia has rallied sharply on the week as shippers that have sold beans for December 21 shipment scramble to cover their nearby requirements.
  • The recent wet weather in Australia has not affected the quality of the crop and production prospects look good. Issues regarding export capacity remain, with elevation slots for bulk vessels booked up and container availability from Australia still difficult.
  • There remain no offers of Baltic origin beans, so the UK largely has the European feed market to itself.
  • Old crop bean prices in the UK both feed and human consumption continue to creep higher week on week.
  • New crop pea buybacks remain available. Please contact your farm trader for further information.

Seed

Peas

  • ADM have Kabuki pea seed available on our market leading marrowfat buybacks. If you would like more information on the benefits of growing peas in your rotation, watch our YouTube video here or contact your FT for more information.

Spring Barley

Spring barley availability is good. We have agronomically strong RGT Planet – the most widely grown cereal variety in the world, as well as dual purpose variety Laureate to offer.

Fertiliser

  • Granular urea continues to edge higher in the UK as stocks remain limited and haulage rates continue to increase, firming farm gate prices.
  • CF, the UKs’ only AN manufacturer, left terms unchanged on the week. There is potential to move higher as product in Europe remains at a premium.
  • 5% granular AN remains very limited in supply and this is reflected in the price premium over a 34.5% prilled product.
  • High nitrogen sulphur grades are limited in supply, both as solid and liquid fertilisers. We have Piamon 33N + 30SO3, a perfect N/S compound for spring application onto all crops.
  • Given the ongoing export restrictions in multiple key manufacturing countries, the pricing on all nitrogen products look well supported into spring 2022.
  • Shipping rates are high and availability of vessels is relatively scarce, further adding to farm gate costs.
£/€ £/$ €/$
1.1715 1.321 1.1275
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Dec21 205-215 220-230 260-265 600-605
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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