Market Report

Thursday 1 April 2021

Please click *here* for this week’s market updates on the ADM Agriculture YouTube channel.

Wheat

  • The wheat market had been waiting for a catalyst to break the downward sentiment and it received one on Wednesday from the bullish corn and soybean outlooks in USDA’s Prospective Planting report.
  • USDA projected US corn sowings for 2021 at 91.14mln acres, up from 90.82mln acres last year, but below trade estimates of 93.21mln acres. The intended soybean area was also down on expectations.
  • Continued buying in both commodities will probably keep wheat underpinned. However, on their own, there was nothing bullish in the wheat numbers. USDA projected US all-wheat sowings at 46.36mln acres, up 2mln acres on the year, mainly due to a higher winter wheat area.
  • Weather has been firmly placed in the driving seat as the US will need almost perfect conditions to maximise the yield potential from lower-than-expected corn and bean areas.
  • Earlier weakness in the US wheat price was tempered by the USDA data, limiting the market downside to $2-3/t over the past week.
  • EU and UK prices have traded lower during the week, down €3/t and £3/t respectively following the global trend, with prices bouncing off the weekly lows following the release of the US planting data.
  • Wheat prospects elsewhere generally appear good. Australian wheat farmers are the unexpected beneficiaries of the country’s most devastating floods for more than a century, with the deluge priming land just in time for the major planting window.
  • Recent rains have also set the stage for smooth wheat sowings in Argentina, although the total area is expected to be lower year on year, mainly due to possible government market intervention and better returns seen from sowing barley.
  • Market analyst IKAR has raised its forecast for Russia’s 2021 wheat crop to 79.8mln t, citing favourable weather in the southern producing regions for the increase.
  • Farms from Ukraine’s southern and eastern regions have started the 2021 spring sowing season, with the overall grain area likely to total 15.5mln ha, slightly up on 2020.
  • Iraq is expected to produce 5mln t of wheat locally this season, with any surplus above domestic requirement to be stock-piled rather than exported.
  • Overall, IGC forecasts that global wheat production will rise to 790mln t in 2021/22, up from this season’s 774mln t, with corn production also higher year on year at 1193mln t.
  • More immediately, EU wheat exports reached 19.79mln t as of 28 March, down from 25.62mln t cleared by the same week last season, albeit from a much smaller crop.
  • Ukraine’s grain exports have fallen 22.7% on the year to 34.73mln t so far this season (14.22mln t wheat, 15.83mln t corn and 4.1mln t of barley), with the ministry stating that the country was unlikely to reach its wheat export quota of 17.5mln t.
  • China sold a further 1.03mln t of wheat at an auction of state reserves last week, although the volume and price paid were lower on the week due to declining domestic corn prices.
  • Buenos Aires Grain Exchange reports that Argentinian farmers had harvested 7% of the country’s corn crop as of 25 March, with estimates for the total crop put at 45mln t.

Malting Barley

  • The new crop malting barley market has drifted lower again this week in line with the feed markets.
  • Prices and premiums however are much higher than this time last year.
  • EU and UK spring barley plantings continue to progress well and on time.
  • Most of the English area is in the ground and Scotland is around 40% complete.
  • English crops that have been in the ground for a few weeks would benefit from rain.

Feed Barley

  • There is little fresh news in the barley market.
  • Demand on old crop positions is subdued for the moment, but on-farm stocks are low and the farmer also remains noticeably absent from the market. Anecdotally we still expect demand on old crop positions.
  • Export interest is also limited, particularly with the recent recovery in sterling. Last week some harvest business to Spain/Portugal was concluded, although this does not look repeatable today and once again buyers are scarce.
  • Warm and dry weather over the course of this week should see the spring barley plantings largely completed, although once again origination is extremely slow on new crop positions, despite historically good values.
  • Saudi Arabia’s SAGO is auctioning its domestic barley stocks and arriving cargoes to the private sector, confirming the privatisation of the barley trade, which will likely lead to an increase in compound feeding, and subsequently a fall in demand from one of the world’s big importers.

 

Rapeseed

  • US markets saw heavy liquidation across the board in the run up to the USDA report last night. However the bullish figures reported by the USDA on corn and soybeans reignited the bulls appetite to go long again.
  • In terms of the USDA report, US soybean ending stocks were higher than the trade estimates at 1.564bln bushels. Soybean planting estimates were particularly disappointing at just 87.6mln acres, well below the expected at 90.1mln acres that some predicted. Should the weather conditions not be perfect and a record yield is not reached, there could well be problems further down the line.
  • Weather in South America has largely remained dry, which has allowed farmers to ramp up harvest speed; Brazil’s harvest is 71% complete vs 70% average. Argentina’s harvest has only just begun and is only 1% complete vs 10% average. BAGE have also just increased its crop ratings from 7% good/excellent to 8% good/excellent, reflecting the beneficial effect of last week’s rains.
  • China has stayed out of the market all week, possibly due to negative crush margins. However, it may also be an indicator that it might again be struggling with African Swine Fever issues.
  • Thankfully the ‘Ever Given’ managed to be freed despite some predicting it could take weeks, but there is still a 300-boat backlog to go through the Suez, which may take a little while to clear.
  • Veg oils rallied on the back of the USDA. Soy oil reached just below limit up after several limit down sessions recently. Palm oil recovered this morning after several lower sessions due to increase in production and lack of demand. Prices across the board still remain off the recent highs.
  • Matif rapeseed has had a rocky ride, targeting the lows of €500 at the start of the week but last night rallying to €514. August futures rose to narrow the May/Aug inverse. Canadian canola also recovered last night, having spent most of the week heading lower.
  • Sterling had a strong week, with the EU still suffering vaccine woes. However, after fresh news last night that the EU will be receiving a boost in vaccines, sterling took a downturn but remains supported at above 1.17 vs the euro.

Oats

  • The old crop oat market remains very illiquid. Buying interest is currently very sporadic, and so with sellers starting to come to the market with old crop balances, it is very much a buyers’ market.
  • Spring drilling continues apace with positive reports across the country on both spring progress and winter oat conditions.

Pulses

  • The old crop bean market continues to drift lower with little demand domestically or for export. However, protein prices are sharply higher following the release of last night’s US Planting Prospects report, which may attract some old crop demand.
  • New crop bean prices continue to track wheat futures and have traded lower on the week as a result. Plantings are progressing well, into considerably better conditions than the last few years, and most in the trade are optimistic that the UK will see a rebound in production of at least 20%.
  • With production in Australia likely to be down sharply to levels which would be considered ‘normal’, the UK is likely to regain some of the market share its lost in North Africa next season.

Seed

  • Spring seed stocks are now very limited across the board. Contact us now with outstanding seed requirements to avoid disappointment.
  • For any late spring cropping opportunities we have the following pea seed available: large blues Bluetime and Blueman, Manager white peas and Kabuki marrowfats – all on market leading buybacks.

Fertiliser

  • Granular urea has corrected slightly following the Indian tender where fewer than anticipated tonnes were booked for shipment April.
  • Higher prices for corn globally could encourage more corn plantings in North America, increasing nitrogen demand globally. This would be beneficial for North African urea prices and for levels to remain stable to firm.
  • UK urea prices are currently trading well below replacement costs. Large corrections on the global urea market would be needed to undermine this market.
  • Liquid prices remain stable, as do AN levels. For milling wheat growers we can offer ENhancePro ATS – a product designed to increase proteins in milling wheats.
  • Phosphate prices also remain firm. ADM Agriculture can offer renewable alternative PK fertilisers for both spot and harvest delivery. Please speak to your farm trader today about Fibrophos and P-Grow.
£/€ £/$ €/$
1.1725 1.377 1.174
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May21 155-170 193-203 218-223 421-431
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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