- US prices are trading up about $2-3/t on the week after earlier weakness had been negated by position-taking before and after the release of the USDA monthly report.
- There were no real fireworks in that update. USDA slightly lowered US wheat stock, whilst keeping US corn stocks unchanged.
- Global wheat stocks were reduced 4mln t on the month as higher usage offset a rise in production. Corn stocks were lowered by 2.5mln t as a result of lower production and higher usage.
- Stats Canada raised its all-wheat crop estimate for 2020/21 to 35.2mln t, up from 34.1mln t previously and 32.6mln t a year ago.
- Buenos Aires Grain Exchange reported the Argentine wheat harvest as 40% complete vs 46% a year ago, with soybean and corn plantings seen at 48% and 35% complete respectively.
- China’s National Bureau of Statistics sees 2020 corn output barely changed year on year at 260.7mln t, although many question the data.
- Russian wheat exports remained strong in November, estimated at 4.2mln t, bringing the accumulative seasonal total to 21.1mln t. 15% above last season’s pace. Rumours of an export tax being imposed on Russian wheat in order to control domestic prices have been heard this week.
- Ukraine has exported 22.1mln t of grain so far this marketing season, down 13.5% year on year, mainly due to lower maize (6.03mln t) and wheat (12.02mln t) sales.
- Ukraine’s agriculture ministry reported farmers had sown 8.06mln ha of winter grain for the 2021 harvest, equating to 98% of the expected area, including 6.1mln ha of wheat.
- Official French figures estimated the country’s soft wheat area for the 2021 harvest at 4.73mln ha, up 12.4% on last season’s final area, but down 5% from the level seen in 2019.
- The forecast for French non-EU soft wheat exports during the 2020/21 season was increased to 6.95mln t, although end-season stocks were left unchanged at 2.5mln t.
- Grain trade association Coceral forecasts soft wheat production in the EU (including the UK) will rise next year to 143mln t, up from a revised figure of 127.9mln t in 2020.
- UK prices have remained steady during the past week, although sterling has weakened as the likelihood of a Brexit UK/EU trade deal seems to be receding.
- A Brexit no-trade deal means that the UK will move to WTO terms and conditions regarding trade, and the impending introduction of tariffs, on both cereal imports and exports post 1 Jan 2021.
- For UK farmers, this should continue to support farm gate prices in the current marketing year, as we need to import. The cost of importing grain into the UK, both from the EU and potentially Third countries depending on the quality of the wheat, will increase from 1 January 2021. It remains unclear whether the UK will be given its share of the EU tariff rate quota (2.4mlnt annually at €12/t) for the current season; the non-EU TRQ import tariff is set at €95/t.
- After 2020’s poor harvest, the dependency on imports for 2020/21 marketing season has dramatically increased. This means that UK prices must get to and stay at import parity to allow the necessary levels of imports to balance supply and demand, unless non-traditional grains (sorghum/tapioca etc) somehow replace the need for wheat.
- However, for 2021/22, a different scenario is looming. The expected rebound in the UK winter wheat planted area should ensure production returning to a more ‘normal’ level, weather permitting. This places the UK back into a surplus position and the need to export. As tariffs for exporting to the EU will also be adopted, UK prices will need to price these tariffs into export quotations, meaning potentially lower farm prices than we would have seen in a zero-tariff situation.
- With this unprecedented ongoing uncertainty overhanging the grain sector, placing crops into ADM Agriculture’s pool for harvest 2021 takes away the marketing uncertainty for all pool members. Our pools are open for 2021/22. Please speak to your farm trader to find out more.
Friday 11 December 2020
- EU old and new crop values slightly weaker due to the lack of demand.
- As we would normally expect to see, markets have been fairly active due to the increased demand in the run-up to Christmas.
- We expect this demand to drop after Christmas and possibly see values decline.
- The new crop market is fairly quiet, but premiums look much improved against this season.
- With the arrival of Covid19 vaccines, we hope to see demand return to normal levels next season.
- Please contact your local farm trader for contracting options for 2021.
- Liquidity in the barley market is falling as buyers dry up completely, with still no clarity on post-transition period trade arrangements with the EU.
- Prices should theoretically remain supported as barley is still good value, but there is just too much uncertainty for the market to move forward.
- New crop barley is still trading around £15 under wheat nationally.
- CBOT soybeans have been in liquidation mode for most of this week, which saw prices touching three-week lows.
- China remains out of the market for US soybeans, and it looks like Chinese demand is running out of steam for now. Crush margins have dropped back from highs. Meal stocks are decent, but meat demand is dropping back from its recent highs. Although it is rumoured that China was in the market to buy Brazilian soybeans for March-April.
- South American weather is starting to look dry as we head into the weekend, with some light showers forecast next week. Argentina remains dry, with the La Nina still forecast well into January.
- Plantings in Brazil are 90% complete, slightly behind the 93% this last year. Some of that area will need redrilling. Farmer selling is non-existent.
- Informa updated its crop estimates last week, estimating world soybean output at 362mln t vs 337mln t last year (Brazil 132mln t vs 128mln t last year, Argentina 51.5mln t vs 49.7mln t).
- Managed funds were net sellers of soybean contracts this week, until late in Wednesday’s session. The estimated long position is down for its highs, but remains around 203,000 contracts.
- Veg oils weakened across the board. It was mentioned that China are washing out some palm oil contracts this week, with rumours of soy oil sales from their reserves.
- In Australia rapeseed harvest is nearing completion. There is some rain in the forecast, which may cause a few delays, but nothing to be concerned about. Crop estimates are being increased closer to 4mln t.
- Matif rapeseed closed lower on the back of weaker US and veg oil markets. February futures currently trading within a €10 range.
- Sterling remains volatile as trade deal discussions continue. It’s a crucial time for these negotiations, with the Prime Ministers trip to Brussels not making a needed breakthrough. That said, it is still uncertain whether or not the UK will have a free trade deal post January 1 2021.
- The AHDB Early Bird Survey detailed an estimated oat area increase of 3.6% (219,000ha total). If this comes to fruition, it will result in a very heavy balance sheet. However, circa 50% of the hectarage could be made up of spring oats, and so we are a way off understanding whether we may actually see a crop of this size or not.
- The old crop market has drifted slightly lower. Domestic millers feel comfy with their cover for the season, and we still don’t know whether we can export tariff free into the EU after December.
- Old crop feed bean prices remain stable on the week.
- Those who were short for the ports for December are now covered, and the focus remains on nearby logistics with domestic haulage and freight for December very tight. Fresh export interest beyond the new year is currently limited, as EU buyers remain hesitant to bid for UK beans until there is clarity on a deal/no deal and the import tariffs that may be applicable.
- Australian bean prices continue to fall in the wake of ever-increasing crop production estimates. As a result, there remains no demand for UK beans for human consumption and no premium available. Whilst there remains limited demand for UK bagged beans to Sudan, a continued lack of container freight availability continues to restrict trade.
- New crop pea and bean contracts are available. Please contact your farm trader for further information.
- Pea seed is in high demand and selling quickly. Availability is currently ok, but our advice to growers is to book soon to avoid disappointment. ADM Agriculture has market-leading buybacks available on large blues and marrowfat peas.
- We have spring barley processed on the floor ready to go. Don’t forget the added bonus of using Tiros seed treatment with an estimated 0.7t/ha yield increase, giving an 8:1 return on investment.
- Spring bean processing is due to begin next week. Get in touch with your farm trader if you require early delivery.
- Granular urea has stabilised around $280/t FOB Egypt, the equivalent of £270-275/t on farm in the UK for January.
- Urea in the UK is limited and values on farm continue to move up as we approach the Christmas holidays.
- The firm urea market is supporting AN values, allowing room for a £10/t increase irrespective of any tariffs in the event of a no-deal Brexit.
- UAN levels are stable following increases last week, although any further firming on AN and urea markets will help firm liquid grades also.
- In the event of a no-deal Brexit announcement we expect all terms to be withdrawn immediately on all products.
|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.
“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.
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.