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Friday 11 June 2021
- The forecast for hotter, warmer weather across much of the western corn belt and northern plains has provided fresh bullish impetus into US grains markets.
- Yesterday’s USDA reports caused little excitement as US corn and wheat numbers were much as expected. On the global front, ending stocks for 2021/22 came in ahead of trade expectation.
- However, the reports did confirm that future market direction will continue to be driven by the corn market. With the potential for further Brazilian crop downgrades and less-than-ideal summer weather forecast for the western corn belt, the market will need to buy additional US acreage and maintain its above-trend yield aspiration.
- Although US and Canadian spring wheat production remains at threat as heat and dryness concerns intensify, US winter harvest has commenced and improving conditions in the EU/Black Sea could further enhance production numbers.
- The National Agricultural Statistics Service (NASS) lifted the good/excellent rating the for the US winter wheat crop by 2 percentage points, while lowering the spring wheat crop rating by 4 points to just 38%, as drought conditions intensify in the northern plains.
- Southern hemisphere wheat crops are being sown into favourable conditions, supporting current production levels and confirming the abundance of global wheat supplies, which may well be needed over the 2021/22 season.
- In more detail, the USDA monthly update reduced US corn closing stocks as ethanol usage and exports were raised, with the lower stocks carrying through into the 2021/22 balance sheet.
- Not to be outdone by the USDA, which lowered the Brazilian corn crop 3.5mln t to 98.5mln t, CONAB, Brazil’s agricultural statistics agency, reduced its total crop production by almost 10mln t on the month, to 96.4mln t.
- USDA also raised US 2021 wheat production and lifted global production by 5.5mln t, with bigger crops seen for the EU, Russia and the Ukraine. This was partially offset by a higher feeding figure, resulting in a net 2mln t gain in 2021/22 stocks.
- The Australian Bureau of Agricultural and Resource Economics and Sciences(ABARES) now puts the country’s 2021/22 wheat crop at 27.8mln t.
- Market researcher IKAR estimates Russia’s crop at 80mln t, as crop conditions improve in southern and central regions following recent rains, while UkrAgroConsult forecasts Ukrainian output at 28.8mln t, up 1.2mln t from the previous estimate, with yields expected to match the record levels from the 2016-17 season.
- Strategie Grains reports that larger wheat crops are expected in Europe, lifting its EU-27 projection 1.5mln t on the month m to 131.1mln t. It did add that cooler conditions might lead to a late-than-usual harvest.
- UK crops continue to improve due to the recent more-favourable weather conditions, with estimates of this year’s wheat harvest now exceeding 15mln t.
- EU and UK malting barley prices have fallen this week in line with the feed markets.
- Beer sales are not as good as hoped which is keeping brewers out of the market.
- Crop conditions are also reported as good to very good, putting further pressure on the market.
- Malting barley premiums on average are over £20/t.
- The barley market is all about harvest at the moment, and after a week of firmer prices, values started to slip this week as recent shorts are covered and the next export demand is below current replacement levels. As a result we expect to see some harvest pressure as a larger winter area should see more barley coming onto the market at harvest than last year.
- Recent weather has been beneficial for crops, and there is increasing optimism about yield prospects. We have increased our production forecast in recent weeks by around 0.25mln t to approximately 7.2mln t. As a result, UK consumers are happy to sit on their hands for the moment, encouraged by falling futures markets.
- Despite increasing yield forecasts, farmer selling is still very low, which is keeping liquidity in the market suppressed. Any significant influx of supply or demand could cause a knee-jerk move as a result.
- A choppy week for CBOT soybeans, which traded sharply higher on Monday before closing lower. The US balance sheet remained tight and the change to hot and dry weather across some of the growing regions is causing concern over crop conditions. All eyes will be on weather developments.
- US soybean plantings were reported to be 90% complete compared with 84% last week. Crop conditions were 67% good/excellent, below trade expectations.
- Last night’s USDA report last night gave little fresh news. Ending stocks finished at 155 mln bushels against the average estimate of 143 mln, and there were no changes to supply or demand for new crop.
- Informa estimates the US soybean crop closer to 122mln t than the 112mln t last year. It puts Brazilian production for 2021 at 139mln t, 11 mln t up on last year, and 140 mln t for 2022. Argentinian production is put at 44mln, 5 mln t down on last year, with 2022 at 54 mln t.
- China remains quiet though there was a rumour yesterday that they came back into the market to buy some Argentinian soybeans.
- Malaysian palm dropped sharply again yesterday on the back of increased stocks and a 14% fall in exports the first 10 days of June. Asian markets traded lower as did soy-oil after last night’s USDA report, which lowered US production but also reduced domestic and export use.
- In Canada some rain is making its way across Alberta, taking some weather premium out of prices for the time being. However, the long-range forecast is for drier weather again, which will be closely watched.
- Conditions in Western Australia look good with ample rain and more to come, helping recently planted canola. Crops elsewhere still look well. ABARES raised its crop production estimates to 4.2mln t from 3.5mln t earlier in the year.
- Matif saw some support earlier in the week before losing those gains in the last few sessions. Crop prospects look better than they did a few months again but harvest is delayed by a week or so. Expect for prices to track US markets until the combines start to roll.
- The old crop market is largely done and dusted with the focus now on execution. Buyers now more focused on covering their August book.
- New crop now is all about the weather. Demand onto the near Continent is not an attractive price vs domestic feed levels, however traded volume is light. The next few weeks will be key in determining yield and quality.
- The old crop bean market continues to firm, with prices up another £3-£5 on the week as merchants look to cover shorts against existing sales. With the large inverse to new crop, growers are encouraged to market any remaining old crop supplies before new crop beans are available.
- Markets for old crop peas are few and far between, with the human consumption and micronizing consumers now well covered until new crop. Any remaining parcels of green peas left on farm will therefore likely have to be marketed as feed or carried over to new crop.
- Confidence in the production prospects of new crop pulses is growing, with many bean and pea crops looking excellent on recent crop inspections.
- New crop bean prices continue to track wheat futures on a one-to-one basis. The new crop market remains very quiet with farmer selling very limited and many sitting out of the market.
- Marrowfat pea buyback contracts are available for harvest 2022. Please contact your farm trader for further information.
- Winter crops on the whole are looking very good with commercial crops revived after some rain and heat.
- Remain vigilant for OWBM in non-resistant varieties of wheat – we’re into the window where this pest may need controlling.
- Yellow rust has now developed in untreated plots since the rains a few weeks ago. It hasn’t been observed by us in any varieties we wouldn’t expect it in at this stage.
- Pea crops look fantastic this season. Please speak to your farm trader about contracting opportunities for next season.
- Granular urea continues to trade higher, with a further $20-30/t rise week on week, as spot demand in some destinations continues to drive the market. ADM Agriculture have urea available for spot and forward movement.
- New urea vessels into the UK currently put granular urea replacement values at circa £390/t on farm, providing room for AN to move higher still.
- UK ammonium nitrate manufacturer CF has withdrawn terms, with significant increases expected on new prices. Current equivalent values for European markets remain around £20-25/t higher.
- Liquid UAN levels have been released, and as expected, followed AN and urea markets. Availability remains limited.
- Potash has seen price increases as we approach the harvest period, while phosphate levels remain supported at 10-year highs. Alternative renewable PK fertilisers are available from ADM Agriculture.
- The return of industrial demand for raw materials, which was significantly reduced this time last year, have supported current higher pricing.
|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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