- This week’s USDA report made little difference to global wheat numbers, although bullish corn and soybean reports provided support to the US wheat complex before the market gave the gains back.
- The global wheat market is becoming even more complex as the trade dispute between China and Australia is seen potentially disrupting global trade flow.
- While world markets may weaken, the tighter EU and UK balance sheets should keep domestic prices underpinned. But growing optimism over a Brexit deal should offer support to sterling, providing resistance to higher UK prices.
- In more detail, US wheat prices have ended about $3/t lower on the week.
- USDA’s report on Tuesday reduced US maize yields and ending stocks for the 2020/21 marketing season. The cuts exceeded trade expectations. However, wheat numbers were virtually unchanged.
- The price of Australian wheat offered into Asia fell this week, undercutting Black Sea supplies for the first time in at least four years as the country prepares to harvest a near-record crop.
- Ukraine has exported 17.1mln t of grain so far this season, down 14.5% on the year, mainly due to lower maize exports. Wheat exports are reported at 10.9mln t.
- Market researcher SovEcon puts Russian exports of wheat, barley and maize during October at 4.95mln t, down from 5.66mln t shipped in September.
- Russia’s grain export quota is seen at 15mln t for the period Feb 15-Jun 30 2021, which was higher than expected. That suggests more optimism over the country’s 2021 harvest prospects.
- Egypt’s state buyer GASC purchased 300,000t of Russian wheat in its latest international tender.
- An attaché report from Beijing estimates China’s corn imports in the 2020/21 marketing year at 22mln t, due to ‘depleting stocks, high demand, and rising domestic prices’.
- Soft wheat exports outside of the EU had reached 7.84mln t as of 8 Nov, down 24% from the volume cleared by 10 Nov last year.
- In its monthly update, Strategie Grains’ reduced the EU soft wheat crop to 129.3mln t and cut its projection of maize output to 62.3mln t.
- UK prices are £2-£2.50/t higher on the week, despite a sharp increase in sterling as optimism over a Brexit EU trade deal becomes increasingly likely.
- The UK and Ukraine have signed a free trade agreement that will come into force at the end of the UK’s transition period and on agreement by the respective governments.
- Looking at future production, French farmers had sown 76% of the expected soft wheat area for next year’s harvest as of 2 November, compared with 66% last week and 63% last year.
- Agribusiness consultant APK INFORM reports that most of Ukraine’s winter grain crops are in good/satisfactory condition. Official figures show that 92% (5.65mln ha) of the intended area had been sown.
- Recent rain in Argentina has allowed corn planting to resume after a spell of dry weather, according to Buenos Aires Grain Exchange. It said sowings had reached 31% of the intended 6.3mln ha.
Thursday 12 November 2020
- EU malting barley prices have risen this week on the back of continuing demand from China and a firm feed market.
- UK malting prices are unchanged due to a lack of fresh demand and the rise in sterling against the euro.
- There is still good interest from maltsters for crop 2021 and prices remain attractive.
- The UK spring barley area is expected to drop back to levels last seen in crop years 2018/19.
- Feed barley markets have softened in nearby positions on firmer currency and a lack of buying interest pre-Christmas.
- Demand remains strong on the continent, although the lack of any Brexit clarity is prohibiting any trade ex UK.
- The UK is still in the frame for Third Country business, although demand continues to be elusive.
- UK buyers are comfortable for cover through to the end of the year and sat back hoping for better prices to come Jan 2021 onwards.
- News of the Pfizer vaccine that could potentially be available later this year saw outside markets including crude oil prices and stocks close higher on the week.
- The US soybean harvest is reported to be 92% complete against a five-year average of 90%.
- With the US election out of the way, attentions turned to the November USDA report and the potential changes made to the supply and demand sheet. Whilst the US harvested area remained unchanged, this season’s yields were reported below trade expectations of 51.7 bushels/acre down to 50.7 bpa.
- This in turn pulled production and US 2020/21 ending stocks lower. World ending stocks for 2019/20 actually came out higher than expected at 95.3mln t vs the 93.1mln t expected, but 20/21 endings stocks fell to 86.5mln t from the 87.6mln t expected. This would put world stocks-to-use ratios at the lowest for 23 years.
- South American weather remains a concern. Although the forecast shows light rain in southern parts on Brazil and Argentina over the weekend, there is little to no rain forecast for the next few weeks. The ongoing La Nina event isn’t expected to peak until January. Looking at planting progress in Brazil plantings nationally are estimated to be 54% complete vs an average of 52%, but a percentage of that will have to be replanted at some point.
- BAGE reduced its soybean crop estimates for Argentina to 46.5mln t vs 49.5mln t. Its estimated that 4% of the Argentinian crop has been planted vs 9% last year (13% average).
- This overall bullish sentiment gave soybean prices support, and levels have continued to break contract highs.
- US soybean sales have slowed. The USDA announced a sale of 123,000mt of US soybeans to an unknown for 20/21 delivery. But there was no action from China, which has been absent from the market since 15 October.
- Meanwhile, veg oil prices continue to make new contract highs, with Malaysian palm oil hitting 8½ year highs. Chinese Ag futures traded higher on the week, with Malaysian palm firming, fueled by higher Chinese demand and tighter global supplies.
- Matif rapeseed made new highs after the USDA report before tracking sideways today. Prices have ranged from €381.25 to the dizzy heights of €411.50 in a short space of time.
- In the UK, prices have tracked EU levels higher, although they have been pressured slightly by sterling’s rally against the euro.
February Matif (€)
- Feed bean demand continues to be relatively strong.
- The human consumption market is quiet due to Australian crop in harvest.
- The Egyptian market remains full and therefore demand is low.
- The majority of pre-Christmas business is now done.
- Demand for buybacks for peas has seen some contracts booked this week.
- We have space, so please book early to avoid disappointment.
- We also still have space for all qualities of old crop.
- Brexit and currency has caused buyer uncertainty.
- Top up orders are still coming in between showers and after some root crops have been lifted on drier ground. Stocks of winter wheat seed are very limited. Please call your farm trader with enquiries.
- Winter barley and rye drilling rates should now be increased by up to 25% for anyone sowing this late compared to September seed rate forecasts.
- Processing and delivery of spring barley has started. Please notify us if you would like pre-Christmas delivery.
- Spring wheat seed is limited, but all processed and safe.
- Pulse seed supply looks good with higher germinations than last year.
- Granular urea values have moved up this week as traders build long positions in advance of fresh buyers surfacing.
- With Chinese urea now priced out of the export market and rumours of a further India tender next week, a firmer tone is evident in all areas.
- European and UK urea buying continues to be behind the curve, so pricing now looks set to firm through to spring, with sustained higher raw material costs supporting this.
- New CF terms were issued this week. Increases on AN through to spring are emerging and NPKS availability is currently limited. February delivery is available on all CF grades.
- UK phosphates prices continue to rise towards replacement values. DAP remains around £40/t less than last year. TSP prices are increasing on the back of this.
|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.