Market Report

Friday 13 August 2021

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In the latest release, fertiliser traders Amy and James, take us through the discharge of an SKW Piesteritz shipment at ABP Immingham.

Wheat

  • The aggressive stance adopted by USDA in its latest report, which trimmed 2021/22 global wheat production below trade expectations, has pushed US and European markets higher, the latter to contract highs.
  • UK Nov 21 feed wheat futures had gained £9.55/t on Wednesday’s close by Friday lunchtime, with May 22 up £10/t.
  • USDA reduced US all-wheat crop output by 1.3mln t and slashed Canadian and Russian wheat projections, cutting global production by 15.5mln t. With lower usage numbers, global stocks were reduced 4.5% to 279mln t.
  • Although EU wheat numbers were increased, over the next few months USDA will have to address the current quality issue Europe has, especially in France, and the ramifications for the level of EU exports.
  • Global corn (maize) production was forecast down by 8.7mln t but, with a slight fall projected in usage, global stocks were reduced by 2.2% to 285mln t. US corn was cut by 10.5mln t and carry-out stocks by 4.8mln t due to reduced domestic usage and exports.
  • The report’s 6mln t reduction for Brazilian corn output was more than offset by lower feed and domestic usage, increasing 2020/21 carry-out stocks.
  • Scorching heat continues to hit large swathes of western Canada’s grain area amid a lack of moisture. Rain in the east is too late to save the crop and is delaying harvest.
  • Wheat yields in Russia remain below last year’s levels, averaging 3.36t/ha across 16.1mln ha, compared with 3.67t/ha over a slightly smaller area a year ago.
  • However, UkrAgroConsult has increased Ukraine’s 2021 wheat crop by 1mln t to 30.5mln t, reflecting government planting data.
  • Wheat quality in France is suffering after heavy rain. One major player reports that only 35% of the crop harvested so far has a specific weight above 76kg/hl (export quality).
  • Harvest is progressing slowly in Germany, with farm co-op DBS projecting that the 2021 wheat crop may be slightly above 21mln t, down 2mln t from its previous estimate.
  • The UK wheat harvest remains slow, keeping supplies low and prices high in certain parts of the country. Harvest activity should increase over the next few days, removing spot premiums.
  • Initial views place crop quality slightly lower than a year ago, with much regional variance. Given current price levels, we would still advise growers to adopt a little and often strategy.

Malting Barley

  • Global weather continues to reduce the world’s malting barley supply.
  • Supply and demand is getting very tight in the EU.
  • The outlook for the UK S+D is much more favourable with a surplus of 400,000t forecast.
  • The spring barley harvest is underway in the UK and early results are positive for yield and quality.
  • Prices have risen again over the last few days.

Feed Barley

  • The winter barley harvest is all but complete, and much of this grain has either moved or disappeared into stores for the later months. We are now seeing a spot squeeze as supply runs thin, following rains which delayed the onset of the spring barley harvest.
  • Demand both domestically and for export is tricky to come by with many destinations still running well inside UK replacement. The lack of farmer selling combined with the rise in futures markets has supported barley prices over the week.
  • Barley prices have not moved on a one-for-one basis with wheat, and feed barley has gained competitiveness in the ration as a result.

Rapeseed

  • US weather has turned cooler in the western corn belt and plains, with rain in the forecast for next week.
  • Yesterday was all about the USDA report, with the market taking a risk-off approach ahead of its release. The report itself was more bullish for wheat/corn, with beans being the weak link. Beans rallied over 27 cents after the report, following wheat and corn higher, but couldn’t hold on to those gains later in the session.
  • Updated USDA WASDE numbers:
    • US 21/22 production were estimated at 4.375 BBU, but reported at 4.339 BBU (4.405 BBU last month). Yields were estimated at 50.4 BPA, but were lowered to 50.0 BPA (50.80 BPA last month).
    • US 20/21 ending stocks were estimated at 0.148 BBU, but actually came out higher at 0.160 BBU (0.135 BBU last month).
    • US 21/22 ending stocks were unchanged verses the estimated 0.159 BBU (0.155 BBU last month).
    • World 20/21 ending stocks were estimated at 91.37mln t, but reported at 92.82mln t (91.49mln t last month).
    • World 21/22 ending stocks were estimated at 94.65mln t, but reported at 96.15mln t (94.49mln t last month).
  • Brazilian soybean production remains at 137mln t, whilst Argentinian production fell to 46mln t.
  • China is back in the market purchasing US soybeans for the first time since the end of June. There were also reports that Chinese officials will also sell some commodities from state reserves due to the country’s recent floods and spike in Covid-19 cases.
  • China’s pig herd is estimated to remain at 43 mln head from 2021 – 2025. Margins are improving which lends support to beans and meal.
  • Malaysian palm oil dipped pre-report after touching contract highs earlier in the week on lower stocks.
  • In Canada the weather remains warm. USDA reduced rapeseed production by 3mln t to 16mln t, which is still above expectations. However, lower export figures offset that fall, which pressured prices.
  • Matif rapeseed traded higher this week, following the US market. Prices are now trading at contract highs.

Oats

  • Oats remain the cheapest grain in the market with feed trading around £50/t below feed wheat. Demand from the millers at present is limited to spot Aug/Sept positions, with prices around £125-140x/t available depending on location.
  • UK quality is mixed, with Mascani samples averaging around 50kg/hl, but ranging from 48-56kg/hl. Springs are reported to be slightly better but, with the majority of oats still in the field, it’s too early to draw any conclusions.
  • Exports into Europe remain at a discount to UK domestic prices, with values around £125x/t for Sept/Oct, subject to distance from port. However if we achieve milling specs of +52kg, we could have an opportunity to see prices £15-20/t higher. But demand is currently hard to come by.
  • Bottom line, oats look cheap.

Seed

Deciding to bring new wheat varieties onto your farm can at times be a daunting task as is the breadth of varieties available. Here’s our checklist to help narrow down choices:

  1. Decide on a grouping. Think about locality to mills (feed or milling wheat etc.) to reduce haulage costs and premiums available locally.
  2. Think about specific agronomy needs such as BYDV resistance (early sowing) or OWBM resistance. Varietal resistance is the only defence in some circumstances.
  3. Consider regional disease pressure, for example Septoria in the south west, yellow rust in the east.
  4. Consider rotational limitations, for example late sowing after sugar beet, your variety will need a lot of vigour and tillering ability.
  5. Only at this point should a variety now be chosen based on all the above considerations.

The key point is not to jump into a variety based on hype and hearing good harvest results. Make sure it’s right for you and your target market.

Fertiliser

  • Granular urea values, having corrected by $30/t, have now stabilised and appear to be supported in the forwards as fundamentals remain unchanged.
  • Europe is in a summer lull and a further Indian tender is likely to be announced next week. With bumper sales reported, an additional 5mln t of urea is estimated to be required by India before Q1 2022.
  • In the US and South America, demand is expected to increase through Q4 2021 and both Europe and the UK remain behind on buying.
  • ADM has a granular urea vessel arriving in September and with AN values continuing to firm, offers today may still represent an opportunity to take some cover.
  • UK and European ammonium nitrate prices remain firm as gas and ammonia levels remain at almost record highs.
  • Phosphates remain stable, whilst potash prices continue to rise on the impact from the sanctions on Belarus, one of the world’s largest potash producers.
£/€ £/$ €/$
1.1745 1.3795 1.175
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug21 156-164 184-194 230-235 458-468
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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