Market Report

Thursday 1 August 2019

Wheat

  • US prices are down $5/t on the week, as the US central bank cuts interest rates for the first time since 2008. The winter wheat harvest is reported as being 75% complete. Spring wheat harvesting will commence this week. Exports running 25% ahead y/y.
  • President Donald Trump rattled financial markets by accusing Beijing of trying to stall trade talks in the hope he will fail to be re-elected in 2020.
  • Wheat farmers in Argentina are preparing for a record harvest this year, supported by an increase in planted area that could produce 22mln t.
  • Algeria purchased over 570,000t of optional-origin wheat, at a price which indicated a slight discount to replacement, meaning the origin is likely to be French.
  • Strategie Grains raised its forecast for France’s soft wheat crop this year to 38.98mln t, from a previous estimate of 38.2mln t, and 34mln t harvested in 2018.
  • The association of German farmers, DVB, reported it had cut its forecast of German winter wheat production in 2019 by about 2mln t to 22mln t, after the heatwave this summer, but the crop will still be up y/y.
  • Russia farmers had harvested 47.9mln t of grain with an average yield of 3.52t/ha as of July 28th, data from the Ag Ministry showed. Up from 34.3mln t at an average of 3.68t/ha a year earlier.
  • Ukrainian farmers had harvested 21.7mln t of wheat from 80% of the sown area as of July 29th, data from the Ag Ministry showed. Although the ministry gave no wheat crop forecast, analysts see output up 22% at 30mln t.
  • UK new crop prices are unchanged on the week, supported by a weaker currency, which recently slid to a fresh 2-year low against the US$. Pre-harvest prices have firmed over the past few days, as a weather market develops due to heavy rain and the unsettled forecast.
  • In summary, the US harvest is progressing showing good yields. French and Russian exports continue to drag. In the UK, sterling seems to continue to be a barometer to the Brexit process.
  • With global supplies increasing as harvest progresses, US/China trade talks seemingly at stalemate, and international export demand limited, prices seem likely to drift lower into the WASDE report on the 12th August.

Malting Barley

  • The EU continues to report high yielding good quality spring barley crops.
  • However, the French nitrogen levels may be lower than some buyers would like.
  • The first cut Scandinavian and UK spring barley also looks very promising.
  • EU and UK prices are slightly weaker.
  • UK buyers are saying that they are well covered before the New Year and remain out of the market.
  • 2020 domestic contracts are available for both winter and spring barley.
  • Currently there are no export markets available after 31st October 2019 due to Brexit.

Rapeseed

  • Having treaded water recently, US soybean prices liquidated into month end, following improved weather and disappointing progress on US/China trade talks. Whilst recent talks were deemed constructive, the market seems hesitant to believe it until evidence of new business is seen.
  • The upcoming USDA report on 12th August remains the key focus, whilst weather in the next six weeks will have a key influence on soybean yields.
  • In Canada, the canola harvest is 4/6 weeks away with production estimates still 20mln t+. However, farmers are reluctant to sell, as yield and quality remains uncertain.
  • Australian crop conditions currently point towards a 2.5mln t canola crop, but whilst topsoil moisture levels remain adequate, regular rain events will be required to reach this level.
  • The Ukrainian rapeseed harvest should be wrapped up at the weekend. Oil contents have improved slightly but remain below average.
  • In Europe, harvest is delayed in some areas due to wet weather, whilst others are making good progress. Overall production estimates continue to slip lower with a sub 17.5mln t crop now forecast. One benefit from the wetter weather is the easing of concerns of low water levels for the Danube, Rhine and Elbe.
  • Domestically, the rapeseed harvest is a mixed bag in terms of harvest progress and yields. Some farmers in the south and east have finished, whilst rain has delayed progress in other areas. Yield reports also vary with current forecasts suggesting average yields slightly down on last year.
  • The sharp drop in sterling to circa 2-year lows has boosted UK prices. The fortune of the £ will remain a key driver to UK prices.

Oats

  • First cut oats are largely reporting decent quality at comfortably over 50kg/hl and yielding +3mt/acre. However, further progress has been significantly hampered by wet weather in the UK.
  • Prices on the week remain largely unchanged at between £115.00-£120.00 ex farm for spot movement. However, farmer sellers are understandably not engaging at present due to the weather.

Pulses

  • The long-range forecast in Australia is still on the dry side, which if realised could cause faba bean production estimates to be revised lower.
  • There have been a handful of winter bean crops harvested in the south of the country. However, most crops are still some weeks away from being fit to harvest.
  • Despite currency volatility, bean values have remained unchanged and are likely to track sideways until the quality of the UK and Baltic crop is known.
  • The few samples of early harvested pea crops that we have seen look excellent. However, with the current forecast, there are concerns that some of the crops may become bleached.
  • New crop pea buybacks are available. Please contact your farm trader for more information.

Seed

  • Early OSR yield results are showing a strong advantage for varieties with the TuYV resistance trait. We know there has been a high level of infection of the virus this year, so the TuYV resistance trait is obviously negating the yield loss seen in other varieties without it. Temptation and Aurelia are putting in strong performances within that group. Please speak to your farm trader for more information.
  • Craft winter malting barley is sold out.
  • SY Baracooda hybrid winter barley is top of the AHDB trials list currently for yield across six trials. SY Baracooda is exclusive to ADM Agriculture.

Fertiliser

  • The global urea market currently remains stable, trading sideways only, with limited demand from China, Brazil and Europe.
  • As we enter September, Europe, like the UK, are massively behind on purchasing, and with India still to tender again, the forecast looks firmer as we enter Q4.
  • In the UK, weaker sterling is continuing to support prices, with all imports being directed by currency movements.
  • MOP prices have increased due to impact from currency, as the UK market is solely reliant on imported product.
  • Fibrophos & P-Grow continue to be highly cost-effective alternatives against the imported PK blends on offer. These totally renewable UK produced compound fertilisers are not directly impacted by currency fluctuations.
  • Taking cover at today’s pricing should be considered on all products, to remove the risk of any potential upsides on UK fertiliser pricing post October 31st.
£/€ £/$ €/$
1.095 1.209 1.1035
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug19 115-120 134-142 - 322-327
Nov19 120-130 140-148 198-208 332-337
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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