Market Report

Friday 12 June 2020

COVID-19 – Safe transfer of grain passports and self-isolating

It is important that all farmers follow UK government advice with regard to sanitising and best practice. We strongly recommend all participants in the grain supply chain read this advice from AHDB https://ahdb.org.uk/knowledge-library/coronavirus-guidance-for-combinable-crop-deliveries-and-collections

If farmers are quarantined or self-isolated for a period of time and therefore unable to load combinable crop sales or accept deliveries of seed or fertiliser, please advise your ADM farm trader as soon as possible and we can then delay the collection/delivery until the period of self-isolation is complete.

To date, the grain supply chain is working close to normality. All parts of the industry are working well together, and the situation is obviously under constant review and of the utmost importance in keeping the nation supplied. ADM Agriculture would like to thank all our customers for their ongoing support.

Wheat

  • US wheat prices are down $4/t on the week as a bearish WASDE report and favourable US weather forecasts weigh on prices.
  • WASDE slightly raised US wheat production and stocks, with global inventories seen up 6mln t month on month, although most of the increase is seen within China and India.
  • ABARES raised its 2020/21 Australian wheat crop estimate to 26.7mln t, up from 21.3mln t in March, as recent heavy rains broke a three-year drought that has affected production.
  • Drought-like conditions in Argentina’s central region threaten to derail expectations that farmers will plant a record 7mln ha of wheat.
  • Ukrainian farmers have almost completed spring sowings, seeding 15.3mln ha or 98% of the intended 15.5mln ha.
  • Ukrainian grain exports have reached a record 54.8mln t so far this season, up 7.6mln t on the year, including 20.2mln t of wheat, 29.0mln t of corn and 49mln t of barley.
  • Russian grain exports had reached 38.8mln t to the end of May, down 7% year on year. Exports include 31.6mln t of wheat, 3.4mln t of corn and 3.6mln t of barley.
  • SovEcon raised its forecast for Russia’s 2020 wheat crop to 82.7mln t, up from 81.2mln t, while raising its forecast for the total grain harvest to 128.6mln t.
  • Egypt’s state buyer GASC purchased 120,000t of Russian wheat for July 11-22 shipment, as the country looks to boost its strategic stocks of wheat during its domestic harvest.
  • EU (Paris) new crop futures are down €2.50/t on the week as a fall in global prices, a firmer euro, and talk of improved Russian harvest prospects ease prices lower.
  • Strategie Grains reduced its forecast for this year’s EU soft wheat harvest to 130.9mln t (147.1mln last year), saying it expected a hot, dry spring, to have hurt crops before rains returned in June.
  • UK (London) new crop futures are down £1.50/t on the week as a slightly weaker currency, due to bearish economic data, provided some resistance against further losses.
  • While weather forecasts continue to support favourable prospects for US spring crops, timely rains in Russia seems to have enhanced that country’s outlook, although crop estimates remain varied. EU weather has turned much cooler and wetter, and although this is seen at best, stablishing wheat crops, substantial year on year declines for are expected, although barley and maize outputs are seen higher year on year.
  • In the UK, recent rains over the past few days continue to bring relief to both winter and spring crops. The softer’ trend on global prices has exerted some pressure on markets, although the dip in sterling £ has cushioned the impact. Reports of the continuation of levy-free maize trading into the UK for the new year at levels that undercut domestic wheat values will continue to reduce the domestic demand for home-grown wheat.
  • The global balance sheets keep confirming the world is not short of wheat, and definitely not short of coarse grains. While prospects in the UK remain far from ideal, UK growers must remember that cereal prices will be driven by global supply, and demand, and not by what is happening in their own fields now that we are trading at levels that attract imports.

Malting Barley

  • World brewers are more optimistic this week as countries around the world start to lift restrictions.
  • Maltsters are starting to discuss purchases for Jan/June 2021 and buyback contracts for crop 2021.
  • The market believes that the recent rains have improved the chances of a big EU spring barley crop.
  • Prices have fallen back close to the lows seen a month ago.
  • Malting premiums are currently very small, but there is still a long way to go before the EU crop is safely in the barn.

Rapeseed

  • USDA released its monthly WASDE on Thursday. The key figure is ending stocks for 2020/21 that came in below expectations, and well below the 24.74mln t ending stocks two years ago.
  • Prior to the report, soybeans had been largely unchanged through the week, and despite the bullish tone, closed trading only with a modest gain at 866c per bushel for July futures, up 1.25c since Monday.
  • Crude oil continued to firm in the first half of this week, to provide a floor for the veg oil complex, as WTI and Brent Crude futures both traded above $40/barrel to hit the highest values since April. In the last two days however, values have slipped around $5/barrel following a reported rise in US crude oil inventories of 5.7 million barrels for the week to 5th
  • Malaysian palm oil futures fell in reaction to the MPOB stock reports. May production came in 3% lower than expected and May stocks were 10% below market expectations, which on the face of it should have been bullish. However, palm’s recent rally meant it was likely to have been factored into prices already. Palm oil yields have been improving. Since January, producers have seen a 37% increase vs a loss of 7% last year.
  • In Canada, the canola plantings are estimated to be 95% complete across Saskatchewan and Alberta, with Manitoba slightly behind. Weather remains favourable for the next week or so, with 10-40mm or rain expected and temperatures remaining warm.
  • In Australia ABARES released their 20-21 crop estimate report yesterday, pegging the canola area at 2.378mln ha with a crop estimate for this coming season of 3.248mln t. Some sharp frosts may affect crops if they persist, but it’s a little early to tell.
  • Matif rapeseed tracked crude oil, as August futures traded as high as €379.25 on Tuesday before coming back towards the €375 level later in the week.
  • In the UK, sterling has remained range-bound which has meant prices have followed Matif. Rains this week have come too late to help new crop, with the picture remaining tight for the season and a large import programme required.

Oats

  • USDA increased world oat production for 2020/21 by circa 2% from the previous projection, showing a global increase of 11% year on year. The key move in the latest report was Australia’s oat production figure which was increased by 39%.
  • Western Europe oat production does remain a concern as unfavourable weather conditions may hamper yields. However, upside price potential in western Europe may be tempered by increased production and export projections from other key global producers i.e. Australia, Russia and Canada.

Pulses

  • The old crop bean price has fallen sharply in recent weeks in the face of no demand. The lower levels have prompted some interest this week on the export market which has stabilised the market at a £10 premium to new crop.
  • ABARES released its Australian production forecasts this week for the 2020/21 season. They estimated the faba bean planted area at 235,000ha, up from 196,000ha last year, and production at 402,000t, up from 327,000t last year.
  • The forecast increase in production is being reflected in aggressive pricing from Australia. This is keeping a lid on UK values and the human consumption premium which is currently £20 over feed.

Seed

  • Winter barley and winter oats seed crops have been severely set back by the wet autumn, therefore our advice to farmers is to place their seed orders early to avoid disappointment.
  • If you’re still deciding what to do this autumn about establishing OSR, ask your farm trader about the OSR establishment schemes we have to offer. We have a great portfolio of winter OSR varieties with a selection of different traits to suit your needs.
  • It’s not too late to establish cover crop mixes or environmental plots following the recent rain. Please follow the link to our cover crop guide or ask your farm trader for more information.

Fertiliser

  • Granular urea has firmed on the global market this week. Sales have been confirmed at $225-229/t FOB Egypt for July, $5-9/t above previous trades, with new offers for August now above $230/t.
  • The Indian tender has also been delayed and so Chinese export urea prices are remaining firm, helping to support global trades.
  • Despite the slightly firmer £/$ rate week on week, UK pricing is increasing – reflecting the higher FOB values and freight costs.
  • SKW innovative nitrogen stabilised products, ALZON® neo-N and PiagranPro, are now available until to the end of the year, and with increasing urea values, booking tonnage today should be considered.
  • ADM also have SKW Piamon 33N + 30SO3 to offer for Oct – Dec delivery. A high-quality compound product capable of spreading 36m.
  • ADM Liquid Solutions offer a quality, serviced based liquid fertiliser for your nitrogen and Sulphur requirements. Summer, autumn and spring 2021 terms are now available.
£/€ £/$ €/$
1.115 1.261 1.131
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jun20 123-135 154-164 210-215 319-324
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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