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Market Report

Thursday 13 January 2022

Wheat

  • Global prices have been pulled lower by the overall bearish trend.
  • The US market is down about $2/t on the week. The recent USDA report provided little comfort for market bulls as both US and global wheat stocks were raised compared with the previous month.
  • EU prices have eased €5/t as global weakness and cheaper Argentine/Black Sea wheat weighs on values.
  • UK prices have also fallen from the pre-Christmas peak, down around £4/t over the week.
  • London futures for May 2022 have slipped around 5% since the December high and 10% from the contract high in late November.
  • US winter wheat sowings were reported at 34.4mln acres, higher than trade expectations and up 2% year on year.
  • Ukraine’s corn harvest is now seen at a record 40.5 mln t, which could lift exports to 33.8 mln t.
  • Buenos Aires Grain Exchange says the Argentine wheat harvest is nearing completion, with better yields expected to increase output to 21.8 mln t.
  • Conversely, Russian wheat shipments accounted to 21.6 mln t as of 30 Dec, down 18% on the year, with exports of all grains reported at 29.9 mln t.
  • Brazil’s National Supply Company (CONAB) has reduced its estimate of the 2021/22 Brazilian corn crop to 113 mln t, down 4 mln t compared with last month due to ongoing dryness concerns.
  • Turkey’s import tariffs on cereals have been eliminated through to the end of 2022 as the government tries to control food inflation.
  • EU soft-wheat exports had reached 15.1 mln t as of Jan 9th, up from 14.2 mln t year on year.
  • However, French end-season wheat stocks are now seen at 3.65 mln t, the highest for at least six seasons, due to a reduction of exports to non-EU destinations.
  • The slight reduction in Defra’s final wheat crop estimate for harvest 21 released in December will do little to affect the UK’s balance sheet.
  • Short term, we believe the downward price trend will continue as demand seems very lacklustre. As we move into late Q1, and Q2 2022, demand should pick up due to the re-opening of the ethanol plant based in Hull, prompted by the government’s drive to E10 fuel.
  • Historically, current market values are still attractive and represent good margin aspirations to growers, even with the higher input costs.

Malting Barley

  • World and UK malting barley markets continue to find good demand.
  • Prices in the main remain unaffected by the fall in feed values.
  • The question is whether this is sustainable as we head towards next harvest.
  • Winter crops look well and currently spring barley plantings are expected to be sown in the normal time frame.

Feed Barley

  • The feed barley market remains very difficult to trade on extremely thin volume.
  • Export markets are near non-existent with the UK proving uncompetitive. The best nearby demand is from the Irish, who have been buying French barley in recent weeks.
  • The dwindling FOB market has caused pressure to feed barley prices in Lincs/East Anglia. However, prices remain resilient in the north of the country and regional spreads are increasing in demand areas, further exacerbated by the ongoing difficulties with road haulage.
  • New crop markets have seen some activity from UK consumers who have been encouraged to buy with the dip in futures. Domestic prices are trading still around £15 under feed wheat domestically, meanwhile we remain uncompetitive to export into Northern Europe.

Rapeseed

  • Another very volatile week. Investors still have concerns over rising interest rates and in the impact of Omicron.
  • The US dollar traded sharply lower, whilst crude oil bounced over levels not seen since October-21.
  • Yesterday’s USDA report fell largely within trade expectations.
  • US soybean yields increased from 51.2 to 51.4 bushels/acre, whilst the harvested area dropped very slightly to 86.3 mln acres (86.4 previously).
  • US stocks were higher than estimated at 350 mln bushels (340 previously). World soybeans stocks fell from 102 mln t to 95.2 mln t.
  • USDA reduced South American production estimates by 9 mln t. Brazilian production was put at 139 mln t compared with 144 mln t last month, and Argentina’s output at 46.5 mln t versus 49.5 mln t last month.
  • CONAB released its latest estimates, reducing the Brazilian bean crop by 2.4 mln t to 140.5 mln t.
  • South American weather still looks hot until rain arrives next week. The lack of rain in Argentina is not only stressing crops, but low water levels on the Parana river is causing freight issues.
  • Malaysian palm oil closed higher this week on a more bullish Malaysian Palm Oil Board report that stated stocks were 12.9% down at 1.58mln t, with production being 11.26% down from November. Veg oil prices dipped yesterday pre-report but palm traded higher today.
  • Canadian canola values have slipped on the week as has MATIF rapeseed, which struggled to find any support in the past four sessions. Prices very quickly fell back to levels seen at the start of the year.
  • Sterling has firmed to 1.1900/1.2000, pressuring farm prices.

Oats

  • Oats have seen very little reported trade activity since the start of 2022, which has made prices hard to clarify. Since our last report, London May’22 wheat futures have fallen by a further £4.50/t (at time of writing), which represents a fall of £19/t since the close set on 23 December. In comparison, oats have seen limited reductions.
    • The stronger pound has lowered UK prices by nearly £7/t in four weeks for milling grade oats.
    • Export demand into Europe remains for both feed oats and milling oats. However, buyers are not willing to issue firm bids, which is making the market untradeable.
    • UK domestic oat millers continue to try to push prices lower, citing the over-supplied balance sheet. However, sellers are reluctant to sell at such low levels given the difference to export values.
    • Feed oats in the UK have appreciated in value in some areas, due to limited availability, combined with continued demand by feed compounders. This is also likely to be due to the on-farm feed usage being much higher than is currently being reported, due to the big discount seen to feed barley.
  • Bottom line, UK buyers are trying to force oat prices lower. However, the tight global balance sheet and lack of sellers are keeping prices supported relative to other commodities.

Pulses

  • Feed bean prices are unchanged week on week.
  • Australian values have stabilised, but are down sharply from the highs in December 21. This and the strong £/$ rate continues to put pressure on UK human consumption values, which are down sharply since December 21.
  • Fortunately the UK crop has been well received in Egypt this year, with buyers very happy with the quality and colour. UK origin beans are therefore trading at only a small discount to Australian origin beans in Egypt.
  • There will continue to be demand for UK origin beans into North Africa for the remainder of the season, but we will have to be competitive on price.
  • New crop bean and pea buybacks are available. Please contact your farm trader for further information.

Seed

  • Peas – Why not try the added benefits of using EXSEED seed treatment on your pea seed. Watch last year’s YouTube video to find out more here.
  • Spring Wheat – We have floor stocks of KWS Cochise available for immediate delivery.
  • Don’t forget ADM can cover all your stewardship and cover crop seed requirements with a wide range of mixes to choose from. Get in touch with your farm trader for more information.

Fertiliser

  • Volatility remains in the global urea market. Some traders are liquidating positions into the only sizeable market at present, the US.
  • India and Brazil will return to the market, potentially as early as Feb for March shipment, which could offer support and take the majority of supply out of the market once again.
  • UK urea remains stable to firm, with limited stock in the country and little appetite for new vessel arrivals. The 46N product remains very competitive and continues to trade at a discount to 34.5 AN product on a £ per KG of N basis.
  • UK AN manufacturer CF returned to the market at the beginning of the week, £15/t higher than previous terms issued in December.
  • Product availability/on time delivery will potentially become more relevant to late buyers than price in the coming months.
  • Potash, phosphate and nitrogen sulphur products all remain at elevated levels, and with the level of demand seen in the last week in the UK, prices remain supported.
£/€ £/$ €/$
1.1985 1.374 1.1465
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan22 200-220 207-222 258-263 598-603
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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