- US prices are down $3/t on the week following USDA’s bearish outlook for grains in its recent report.
- USDA trimmed its forecast for US closing wheat stocks but increased the global figure, offsetting lower production in Canada, Argentina and Australia with gains in the EU, Russia and China.
- The report also raised global corn output and stocks within China – those elsewhere were virtually unchanged.
- France’s farm ministry estimated the country’s winter soft wheat area for the 2020 harvest will slip 4.8% on the year to 4.73mln ha, a 17-year low.
- EU grain lobby Coceral raised its EU production estimate for 2019 to 145mln t, from the 143.3mln t September estimate, some 18mln t more than was harvested in 2018.
- Egypt’s state buyer GASC purchased 355,000t of wheat (120,000 French, 120,000 Russian, 60,000 Romanian and 60,000 Ukrainian) for Feb 5-15 shipment, paying $2.50/t more than last week, a season’s high.
- EU (Paris) futures are down €1.50/t on the week, although cash levels remain underpinned by continued export demand and limited producer selling.
- UK (London) futures are down £2-3t on the week as the pound remains strong ahead of today’s election result.
- The AHDB crop development report issued on Tuesday presented a bleak picture of UK winter wheat, barley and oilseed rape plantings and crop condition. Only 60% of the intended wheat area had been planted by 1 Dec and, whilst more will have been planted since that date, it is the condition of the crop in the ground, almost as much as the lack of area planted, that is of serious concern.
- Today’s UK election result will hopefully clarify the position on Brexit stance and timing.
- In summary, the USDA report did little to excite the market, and since the release markets have drifted lower. The report continued to show abundant supplies of wheat, and although the USDA remains upbeat regarding US export potential, higher EU and Russian production will add to their exportable surpluses, keeping export competition fierce as we enter the second half of the marketing season.
Thursday 12 December 2019
- There has been very little activity on either the EU or UK malting markets during the last week.
- There seems to be plenty of unsold malting barley still available in both Scandinavia and the UK.
- The autumn sowing problems continue in France and the UK, increasing the chance of a much bigger EU spring barley area for crop 2020.
- Buyers remain out of the new crop market.
- World vegoil prices continue to support the oilseed complex. However, after a strong start to the week, markets are struggling to hold on to gains made in the last few sessions.
- Tuesday saw the release of the December USDA WASDE report, which widely fell within trade forecasts for US and global soybean ending stocks for the current season and South American soybean production.
- Trade negotiations between US and Chinese officials are progressing, with President Trump due to meet with top advisers today ahead of Sunday’s tariff deadline.
- Brazilian soybean plantings are estimated at 90% complete amid benign weather, whilst Argentina planting just passes the halfway mark. Weather in Argentina will be closely watched as temperatures rise in a number of areas. Cooler temperatures and rainfall in the long-range forecast will help if they materialise.
- The overall tightness in world vegoil stocks continues to support rapeseed prices. This week the Malaysian Palm Oil Board released production figures below trade estimates. With production at a three-month low, palm prices exceeded soybean oil prices for the first time in nine years.
- In Canada, Stats Can released its latest 2019/20 crop estimates at 18.6mln t (previously 19.4mln t), their lowest estimate since 2015 and below trade estimates.
- In Australia, harvest is almost complete.
- Here in Europe, rapeseed prices touched highs close to €400/t on Tuesday, before following vegoil prices lower towards the end of the week.
- The trade continues to keep a close eye on next season’s rapeseed crop, with some estimating French plantings lower than first estimated and ongoing dryness in the Black Sea. It was also reported this week that France has banned up to 36 glyphosate based weed killer products from the end of 2020, ruling there is insufficient data to exclude health risks.
- In the UK, sterling seems rangebound for now, but either way, the market would expect some volatility ahead of, and certainly after, tonight’s results.
- On Tuesday the USDA raised world oat production to 2.5mln t, up 2.7% year on year, the bulk of which was seen in Canada.
- In the UK, HMRC has released the UK harvest import/export data and have put oat exports up to end of October 19 at 52,600t. This is up 33% on the year (against 2018/19 total volume), with imports down 80%. This pace will need to continue well into the new year in order to diminish the UK’s considerable surplus.
- Old crop feed bean prices have remained stable on the week as shippers continue to cover their December requirements.
- It is becoming increasingly difficult to buy human consumption quality beans. As a result, some importers in North Africa are beginning to relax their insect damage parameters. Therefore, spring beans with up to 15% insect damage may now be suitable for human consumption.
- We continue to see strong interest in the pea buybacks for harvest 2020 and these remain available for large blue and marrowfat peas. A bean buyback contract linked to wheat futures and the marketing pools are available in all positions.
- Daytona large blue and Kabuki marrowfat pea seed remains available against our market-leading buyback contracts.
- No change on the week. Stocks remain very limited on RGT Planet and Laureate. LG Diablo is still available as a high yielding feed variety.
- Imported spring wheat stocks have been reduced dramatically on the week. Replacement costs for buying further imports are now 5-10% higher, so we would urge growers not to delay ordering spring wheat seed where it will be needed.
- Lynx remains sold out until the new year. Germination derogation’s are being applied for, which may see additional tonnage come to the market in the new year.
- Granular urea has traded $9/t higher FOB Egypt this week, whilst North American trades for January shipment are firming at $9-18/t above last week’s trades for December.
- Chinese production capacity will be limited December through to March, due to tighter air pollution regulations on coal-produced urea, reducing supply (China = 34% global urea capacity), whilst demand is expected to increase for Q1 2020.
- India is anticipated to tender for another 1mln t to be shipped January, whilst buying is expected to increase in North America and Europe.
- In the UK, election results will directly affect the direction of sterling, which will impact imported fertiliser prices for the spring market.
- Weather and soil conditions are highly variable across the country and have been affecting buying confidence. However, estimates indicate that even with significantly reduced cropping areas, there is still a lot to cover.
- Having first application requirements as a minimum on farm is recommended in the event of an early spring and difficulty executing orders placed in 2020.
|Feed Barley £||Wheat £||Beans £||Oilseed Rape £|
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.
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.