Market Report

Thursday 1 October 2020

Sampling – Harvest 2020

Knowing the quality of crops is especially important this year so if you have not already done so, please contact your farm trader to arrange for sample bags to be sent to you. Once you have samples ready, we will collect them and the results will be available via our online portal, ADM 365, or from your ADM farm trader.

Wheat

  • A surprisingly bullish quarterly grain stock report released by USDA on Wednesday sparked a strong market rally that saw US wheat prices jump $10/t after a fairly quiet week.
  • Much lower than expected US corn stocks set the tone for the late rally and, although the wheat numbers came within the trade’s expected range, they were still deemed as supportive, mainly due to reductions seen for both the 2019 and 2020 US wheat crops.
  • The International Grains Council trimmed its global corn crop forecast by 6mln t, although at 1.160bln t it would still be a record if realised. The IGC left global wheat crop forecast unchanged at 763mln tonnes, also a potential record.
  • The USDA release certainly overshadowed the Russian hike in wheat production. Russia’s agriculture ministry expects the 2020 grain harvest to top 125mln t, including no less than 82mln t of wheat.
  • However, the ministry commented that Russia’s grain export quota mechanism remains relevant despite the large crop being harvested this year, and that a quota could be set for Jan-June 2021 if there is a need to secure domestic supplies.
  • Kazakhstan has also had a good harvest and is likely to export 6.7mln t of wheat/wheat flour in the 2020/21 season, due to a higher quality wheat crop of 11.6mln t, up from 10.8mln t last year.
  • But Argentina’s 2020/21 wheat harvest, set to start in December, is now expected at 17.5mln t, down from 18.8mln t last season, mainly due to dry weather affecting yields.
  • And Ukraine, hit by severe drought, plans to cut its winter wheat area to 6.1mln ha, from around 6.7mln ha a year ago, according to the country’s economy minister.
  • The UK wheat balance sheet received a surprise last week after the AHDB’s end-of-season update showed 2019-20 carry-out stocks almost 1mln t lower than previously projected in May.
  • Most of this was attributed to the likelihood that the 2019 crop was overstated and that the fed-on-farm figure was higher than previously envisaged.
  • The lower carry-in almost certainly increases the volume of imports required this season; to offset it the UK would need a substantial fall in demand.
  • Tighter restrictions due to the resurgence of Covid may affect domestic feed and food demand, while the level and pricing of imports will be dependent on the strength or weakness of sterling, against a backdrop of ongoing uncertainty regarding Brexit and the UK’s future trading relationship with the EU.

Malting Barley

  • The EU malting barley market has firmed on the back of the firmer feed values, but there is little change to the UK values.
  • We are seeing very little demand from maltster customers. The government curfew and restrictions are further impacting this.
  • There is some demand for merchant short covering, but there is very little tonnage being offered.
  • As harvest is now complete, we would urge growers to send us samples of their malting barley. Please contact your farm trader with regard to collection of samples or request pre-paid postage sample bags.
  • We now have crop 2021 buybacks available. Please contact your local farm trader for details.

Feed Barley

  • Northern EU FOB prices are firmer after Matif gains, keeping the UK in the frame for Third Country demand. The prospect of connecting on this business is keeping traders friendly and increasing competition on farm in the nearby positions. As a result, UK feed barley markets are firmer again on the week with continued weakness in sterling also helping to underpin prices.
  • China continues to be a buyer of barley, helping to keep a floor under global values.
  • Meanwhile demand from nearby EU destinations is poor, with buyers reluctant to pay the prices offered out the UK.
  • Firmer grain markets in general have caused some buying from the UK feed sector, where barley remains very cheap vs other products at about £40/t under feed wheat.

Rapeseed

  • A surprisingly bullish USDA report on Wednesday put soybean stocks as of 1 September at 50 mln bu below trade expectations (523 vs average trade estimates of 576 mln bu). The figures for 2019 remained unchanged vs. trade expectations of an uplift. Soybeans reacted, funds bought back into the rally, taking beans 30 cents higher at the close with oil and meal following.
  • US weather remains favourable, with some showers and cooler temps moving in, but harvest is progressing at a fast pace and is reported to be 20% complete at the start of the week. Crop ratings improved 1% to 64% good/excellent.
  • China was absent from the market for most of the week and started its “Golden Week” holiday today, so won’t return until the middle of next week.
  • Weather needs to be watched in South America, particularly Brazil. Persistent dry conditions could delay the planting of the 2021 soybean crop.
  • Palm oil opened slightly higher at the start of the week, with the Malaysian government imposing movement restrictions on four regions which are large palm production areas, due to a rise in Covid-19 infections. Demand fears and outside market pressures are keeping prices suppressed in the short-term.
  • In Canada, the weather is largely dry with temperatures above average, which will help harvest progress. Futures soared last night following US markets higher. As of last week, harvest progress reached 50% with yields in line with the three-year average.
  • Matif rapeseed ended last week sharply lower until the release of last night’s USDA report. The market has largely followed US and world vegoil markets lower and now higher again. November futures were €15 off the recent highs at one point.
  • EU coverage is still good until the new year. There has also been better EU weather with rain spreading across northern Europe, Baltics and the Ukraine, which eased concerns in the short-term.
  • Here in the UK, sterling continues to be a big influence. Brexit negotiations continue and further economic stimulus packages are being discussed, which makes for a very volatile market and is likely to be the case going forward.

Oats

  • The UK oat market has continued to drift sideways with no real move in ex-farm values on the week.
  • Last week the AHDB sent out the final UK supply and demand estimates for 2019/20, removing 50,000t from the ending stocks carried into 2020/21. However, the good quality and availability of oats this harvest have negated any upward move in price that may have occurred from this reduction.

Pulses

  • The Defra June survey revealed a 38% increase in the faba bean area year on year to 185,800ha. The large increase in area has been more than offset by a large reduction in yields, with total production likely to be down at approximately 10% year on year.
  • Prices for feed beans remain firm as shippers look to cover short positions for October 20. The rally in the feed bean price has squeezed the human consumption premium which is now nominally £10 over feed. Demand for human consumption remains subdued, with UK beans remaining outpriced into Egypt and demand into Sudan thin. The small premium is resulting in a number of growers selling beans of human consumption quality as feed.
  • New crop pea buybacks are available. Please contact your farm trader for further information.

Seed

  • Winter wheat – quality wheat seed is now very limited. However, we still have availability of a selection of feed wheats, including short, stiff, KWS Parkin.
  • Winter barley – stocks are very limited, but we can still offer conventional variety KWS Gimlet and high yielding hybrid barley variety SY Baracooda.
  • Contact your farm trader for up to date seed availability to cover your requirements.

Fertiliser

  • India has returned to the market, announcing a further urea tender for an undisclosed tonnage late yesterday.
  • Prices reacted immediately, rising $5-10/t on the day, having traded down almost $30/t during September from the August highs.
  • The UK urea market remains slow, but there is still a clear opportunity to buy today for Q4 in a market that, at some stage, will move up again.
  • CF pulled terms with a firming picture for Q4 emerging. A large winter cropping area is slowly being realised, there is new-found stability in the urea market and raw material costs remain steady to firm.
  • Phosphates values are increasing as replacement costs continue to rise.
£/€ £/$ €/$
1.093 1.2835 1.1745
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Nov20 139-144 180-190 206-211 345-350
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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