Market Report

Thursday 11 February 2021

Wheat

  • US wheat markets have traded down $5/tonne w/w, as a less than expected cut in US corn stocks and increased global stocks prompted a ‘sell-off’ after corn prices reached a 7½ year high.
  • USDA left US wheat stocks unchanged m/m, and although global stocks were reduced by nearly 10mln t, these were primarily within China and India.
  • Australian exporters have resumed wheat sales to China in recent weeks despite ongoing trade tensions between the countries following a successful executed record export program in December.
  • Argentine president has pledged that his government will not raise grain export duties, or implement grain export quotas following talk with trade representatives.
  • Stats Canada estimated Dec 31st all-wheat stocks at 24.8mln t, with 21mln t still left on farm. This was down from 25.8mln t y/y and was below expectation.
  • Russian government has approved a ‘formula-based’ export tax system for wheat, corn and barley which will come into force on June 2nd, a month earlier than original envisaged.
  • Ukrainian export prices have fallen over the past week mostly due to a jump in Russian exports ahead of the forthcoming export tax.
  • EU soft wheat exports outside of the bloc had reached 15.8mln t a/o Feb 7th, which was down from the 18.8mln t cleared by the same week last season.
  • French farm ministry raised its estimate of the country’s 2021 winter soft wheat area to 4.86mln t, which would be 15% higher than the weather-reduced 2020 acreage.
  • French farm ministry raised its forecast of non-EU exports for the second consecutive month to 7.45mln t, although lower intra-EU and increased crop availability allowed ending stocks to remain stable at 2.5mln t.
  • UK futures have fallen £3/tonne w/w (old crop) although physical prices have negated the full decline due to delivery premiums firming.
  • The much less bullish reports released by the USDA for US corn and soybeans, provided enough info for the ‘long-holders’ to get-out! The ‘sell-off’ dragged wheat prices lower in its wake even though we saw a constriction of global stocks.
  • Bullish sentiment surrounding global corn and soybeans had been driving the markets higher, and although this sentiment still remains, many are now questioning whether the US will actually achieve its revised export projections.
  • The report didn’t find any more wheat for the wheat complex. In fact, lower Chinese and Indian stocks were deemed as ‘un-important’ to the global outlook, as these stocks never reappear onto the global markets.
  • Looking forward, the fact that EU exports continue at an unsustainable pace and Russian and Argentine exports remain political, future import tenders will be all about Australia, Canada and the US, which is becoming more competitively priced.
  • The market this week wasn’t about the lemmings having jumped, it was more that the cliff they were on just gave way! The trade now has to determine whether this was a major market reversal or a market just taking a huge pause for breath.

View this week’s grain market YouTube update here.

Malting Barley

  • The world malting barley market remains quiet with China absent from the market.
  • The European market is well covered and the only real buying interest is in the June to August positions.
  • It remains wet and cold throughout the main malting barley areas of the EU with little spring sowing activity.
  • There has been more cash settling of malting barley in the UK this week due to poor beer sales and reduced malt demand.
  • The 2021 malting barley market remains well supported with attractive prices and premiums.

Feed Barley

  • Spot demand has returned to the market as severe cold weather causes disruption in Northern Europe’s inland waterways. The closure of the Mittelland Canal has halted execution out of Germany and forced buyers in the Netherlands to turn to the UK market to cover nearby commitments, putting some much needed demand back into the picture for spot shipments.
  • Otherwise markets are quiet and UK consumers seem comfortable for the time being. Although we still expect demand to come for Q2 positions.
  • New crop values are holding steady despite the lower wheat market, as conditions remain poor for spring planting and consequently origination is extremely sluggish.

Rapeseed

  • Another volatile week for CBOT soybeans which closed nearly 50 cents down yesterday after the USDA report on Tuesday. Broadly the report fell pretty much in line with trade expectations but didn’t give the bulls anything new. World ending stocks were lower 83.4mln t vs 84.31mln t in the last report, but that was within trade expectations. South American soybean production remains unchanged at 48mln t and 133mln t for Argentina and Brazil respectively.
  • Funds began to liquidate their soybean long to take them to approximately 169,000 contracts long in total ahead of a long weekend for US markets, which will be closed on Monday for Presidents Day.
  • South American weather remains largely unchanged, with showers/rain for the northern and central parts of Brazil, but dry for south Brazil and Argentina until March. In Brazil harvest it still the slowest in 10 years and vessel line-ups for new crop beans continue to grow. Weather and crop developments will be closely watched going forward.
  • There isn’t much activity in China with no trades reported this week. Most of the trade are now closed for Chinese New Year which continues into next week.
  • Mineral oil prices firmed close to $60 a barrel which lent support to the complex. At the start of the week veg oil prices rallied to recent highs. Soy oil in particular rose to seven year highs. Post USDA markets just edged off the highs with a number of markets now closed for New Year celebrations, but those that are open traded lower.
  • In Canada, Stats Can estimated Canadian canola stocks as of December 31st at 12.1mln t, down from 15.9mln t last year (-23.7%), although this wasn’t enough to push prices back to contract highs.
  • Matif rapeseed made new contract highs again pre-USDA, but have since traded lower following US markets. Fundamentally, the S&D still looks tight for the remainder of the season and rapeseed remains competitive within the complex.
  • UK prices remain just shy of contract highs with sterling firming in recent days to trade over 1.1400.

Oats

  • The oat market has tracked sideways over the last week or two. Millers are not chasing the market and are reporting they feel very comfortable with their cover.
  • The AHDB S&D points towards a large surplus/carry out figure, but the key question is with oats being at such a discount to feed wheat and feed barley, does the UK sees a drastically increased fed on farm figure than originally suggested?

Pulses

  • The rally in feed bean values has stalled, with UK beans now uncompetitive to export as either feed into Europe or human consumption into North Africa. Domestic demand from merchant shorts and fresh enquiries from consumers is underpinning values from here and prices will likely track sideways in the short term.
  • Whilst offers of Baltic beans are currently undercutting UK values, there are no great volumes left to export from the Baltics. With consumers still uncovered for Q2 and Q3, demand for UK feed beans into Europe is expected to return in the medium term.
  • New crop bean prices continue to track wheat futures, but there has been very little farmer engagement in marketing to date. With the AHDB early bird survey suggesting a 7% increase in pulse area, prices for harvest beans at £200 per mt ex farm look relatively attractive based on historical values.
  • New crop pulse buybacks remain available for beans, large blues and marrowfat peas. Please contact your farm trader for further information.

Seed

  • ADM have marrowfat and large blue peas available on ADM Agriculture’s market leading buybacks. Pea seed availability is good but is in high demand.
  • We have spring barley processed on the floor ready to go. Don’t forget the added bonus of using Tiros seed treatment with 0.7t/ha yield increase, giving an 8:1 return on investment.
  • There is still a small amount of Lynx spring bean seed ready for immediate dispatch, however availability is very limited.
  • Don’t forget ADM Agriculture can cover all of your stewardship and cover crop requirements. Get in touch with your farm trader now with any small seed enquiries.

Fertiliser

  • Granular urea has stabilised at $380/t FOB Egypt whilst news of the Indian tender is awaited.
  • Weakness in US$ could help edge prices to higher levels. Replacement values on farm in the UK remain well above £300/t.
  • UK AN prices have remained stable for 2 weeks. Terms are to be withdrawn tomorrow afternoon. Further rises are possible, despite muted demand due to bad weather.
  • NPKS terms have already been withdrawn. Significant rises in UK phosphate prices have driven blenders and compound manufacturers to reassess price levels.
  • Alternative phosphate products are available from ADM Agriculture that offer value savings over traditional bagged fertilisers for spring time application on stubble fields.
  • Liquid UAN spring fill prices are still available. Discussions about switching to liquid fertiliser for next season are beginning to happen on farm.
£/€ £/$ €/$
1.1405 1.3835 1.213
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Feb21 163-171 194-204 223-228 384-389
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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