Market Report

Thursday 10 September 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

  • Markets await Friday’s USDA report and eyes will be fixed on the US maize numbers.
  • USDA is expected to cut its production estimate which, along with talk of increased buying interest from China, will point to a much tighter US maize balance sheet.
  • However, higher wheat production forecasts from Canada, Russia and now Australia suggest no shortage of global supplies and will provide resistance to higher wheat prices, unless we see a real surprise in the maize numbers.
  • In more detail, US wheat prices are down $5/t on the week as talk of increasing export competition weighs on values.
  • But US maize prices are about $1/t higher on the week, with the trade expecting USDA to cut its harvest estimate in tomorrow’s report.
  • ABARES has raised its forecast for this season’s Australian wheat crop to 28.9mln t from 26.7mln t in June, after heavy rains across the east coast boosted prospects.
  • Recent rains have bought relief to parched fields in central Argentina, although damage to yields was expected to be irreversible after months of extraordinary dry weather.
  • Russian agriculture ministry predicts a total grain crop of 122.5mln t, unchanged from its previous forecast in July.
  • SovEcon has raised its forecast for this season’s Russian wheat crop to 82.6mln t, up from 81.2mln t previously.
  • Russian wheat export prices continue to firm, as farmer retention in the wake of a heavy export program helps to support domestic farm levels.
  • Ukraine’s Grain Trade Union sees the country’s 2020 wheat crop at 26.6mln t, while maize output is expected at 35.3mln t. Exports are forecast to hit 17.5mln t and 29mln t respectively.
  • UK futures (London) are up over £5/t on the week, mainly supported by a fall in the value of the pound as concerns mount over Brexit and the tariff regime that may come into force on 1 January 2021.
  • UK spot ex-farm prices have followed, spurred on by harvesting delays and the general tightness of supply, despite the arrival of imported feed wheat vessels.

Malting Barley

  • EU malting markets are higher on the week due to quality problems in the UK and higher feed prices.
  • The UK spring barley harvest is finally drawing to a close with better weather in the forecast.
  • Nitrogen levels are much higher than normal ,averaging around 1.87%.
  • The lowest nitrogen areas are in Lincolnshire, Yorkshire and Scotland.
  • There are germination problems and sprouted grain in some of the later harvested crops.
  • UK prices have risen over the last few days.

Feed Barley

  • A better weather window has been seen across much of the UK and is forecast to continue over the weekend. Hopefully this will allow growers to combine the remainder of the spring crop.
  • Barley markets are firmer again on the week. The sharply weaker sterling has helped to support FOB levels and ICE wheat futures, which has also dragged internal values higher. Competition for ownership remains, particularly in the nearby positions.
  • We have seen some more consumer activity for the winter months, with higher values prompting buyers to take some cover.
  • Better buying interest has been seen from Ireland for Q4.
  • Cheaper offers in the Black Sea/Baltic regions are drying up and USD FOB levels in most major origins are firmer on the week. With GBP/USD approximately 300 points lower since this time last week, UK barley is looking much more competitive into Third Country destinations.

Rapeseed

  • CBOT soybeans trade higher for the twelfth session in a row this week. Chinese buying continues daily, supporting nearby prices. Managed funds also continue to buy soybeans futures, taking their long positions close to levels not seen since 2016 and 2018.
  • Soybean ratings declined again this week, adding support. USDA reduced the good/excellent rating to 65%, down 1%, but better than some of the trade expectations of 2%.
  • USDA is likely to adjust some figures in tomorrow’s monthly report as a result of the storm back in August, but that’s likely to impact corn more than soybeans. The report is likely to adjust Brazilian soybean exports and probably Chinese import figures. The expected US harvest for 20/21 is estimated to be lower, at 82.9 mln acres vs 83 mln acres in the last report. Yields are estimated to be 51.8 bushels/acre vs 53.3 in August, which brings overall production estimates lower.
  • Weather in Brazil is starting to cause some concerns, with dry conditions likely to delay plantings until October, which would keep the US in the market until late January/early February.
  • Crude oil prices tumbled more than 9% at one point on growing fears of global oil demand. Saudi Arabia, one of the world’s biggest producers, cut oil prices below the benchmark for the first time since June to try to create further demand. WTI oil trades at $36.74, having traded at closer to $43 earlier in August.
  • Matif rapeseed returned to recent resistance levels this week, but fell as oil prices weakened. The market has tried to break €385 on the November Matif several times recently, but with EU coverage looking good for the rest of this calendar year, and imports still being available, it needed a new story to feed the bulls.
  • UK prices were again supported by the weaker pound. Sterling fell from its 12-week highs, down 1% against the euro in yesterday’s session alone, as investors started to become nervous over increased Brexit tensions and how a no-deal might play out for the UK.

Oats

  • The UK oat harvest has made some significant progress in the last week. However, anecdotally, yields are down circa 25% vs expectations on much of the spring crop.
  • The price remains governed by the spot market as consumers continue to bid for their near cover. Sellers remain reluctant if they are able to store, and so ex farm values continue to be supported.

Pulses

  • ABARES latest estimate forecast Australian faba bean production for harvest 2020 at 418,000t, up from 327,000t last year. September is a crucial month in the Australian growing season and one decent rainfall event should be enough to secure above average production.
  • The Baltic harvest is approximately 25% complete with yield reports ranging from 2-7t/ha, but on the whole, better than last year. Most market participants continue to talk of a crop ranging from 275-300,000t, up at least 10% on last year. As a result, Baltic feed beans are now offered at around €10 discount to UK feed beans.
  • The bulk of the UK crop is still to be harvested. Early yields have been disappointing with the quality also very poor, with high levels of insect damage present in the majority of samples. Whilst the supply of human consumption quality beans is limited, so is demand. High stocks in Egypt should give at least another two months of supply. This combined with competitive offers from the Baltics and Australia, continues to quash demand for UK beans.

Seed

OSR

  • If you are still thinking about establishing OSR, ask your farm trader about our most vigorous late sown varieties: LG Aviron, Aurelia & DK Excited. All are available for immediate delivery.

Winter Wheat

  • Quality wheat seed is beginning to look very tight. Please cover any seed requirements ASAP to avoid disappointment.

Winter Barley

  • We can still offer conventional variety KWS Gimlet and high yielding hybrid barley variety SY Baracooda.

Fertiliser

  • Granular urea prices have weakened in the UK. The market was not carrying sufficient discount to ammonium nitrate, trade is thin and lower FOB values reflect the pound/dollar rate.
  • PiagranPro and granular urea are available to be offered for later movement periods.
  • Spot terms still stand on CF products, but there is a £7/t rise for October movement.
  • Drilling is progressing. A firm UK nitrogen market lies ahead if a large winter cropping area is realised.
  • We have seen the floor with the PK market with trade picking up. Alternative PK fertilisers are available for those looking to reduce their impact on the environment. Fast full load deliveries available on both products.
£/€ £/$ €/$
1.0895 1.2945 1.1875
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Sept20 130-137 170-180 199-204 335-340
Nov20 132-141 172-182 201-206 340-345
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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