Market Report

Thursday 13 May 2021

This week on the ADM Agriculture YouTube channel we take a look at the latest USDA report, the Unium Bioscience Tiros trials site, and the key factors driving current nitrogen markets forward.

Wheat

  • US markets have turned slighty weaker over the past week as improving global wheat prospects have prompted bouts of profit-taking on the recent sharp rally.
  • USDA’s report on Wednesday did little to stir further excitement. US and global wheat numbers were slightly raised and lowered respectively, but all eyes were on the corn numbers, especially the Brazilian crop where drought is seriously affecting prospects for safrinha, the second corn crop.
  • Although USDA forecast a 7mln t reduction in Brazilian production, more than many observers expected, the overall corn picture was deemed bearish. Initial 2021/22 global numbers show a prospective record corn crop, although the resulting small increase in global stocks is likely to be offset by increased usage.
  • USDA also forecast a record global wheat crop, as expected. But, like corn, higher consumption is predicted to leave stock-to-use ratios at historically low numbers.
  • USDA’s release prompted some selling and, with wheat crop prospects showing signs of improvement following recent rains, markets may see a dip in the short-term.
  • However, the Brazilian corn story hasn’t gone away and, with no apparent let-up in the dry weather there, plus the whole of the US growing season to get through, any dips may provide buying opportunities.
  • Weather will become increasingly important. Not only will 2021 crops have to deliver, but the world will also need record 2022 crops if global stocks are to start a steady rebuild.
  • The National Agricultural Statistics Service reported US corn and spring wheat sowings at 67% and 70% complete respectively. It rated the winter wheat crop at 49% good/excellent. That is up one point on the week, but still below the 55% reported this time last year.
  • Russian agricultural consultancy IKAR has lowered its 2021 Russian wheat crop forecast to 79mln t, from 79.5mln t previously.
  • France’s agriculture ministry puts the country’s 2021 soft wheat area at 4.891mln ha, up 14.8% from last season. Crop condition declined for a fourth consecutive week, but remained well above the level of a year earlier, as crops emerge from a chilly, dry April.
  • EU wheat prices remain stable over the week, although UK old crop prices have been supported by the news that a Scottish grain merchant has gone into administration, affecting its ability to honour future store tenders.

Malting Barley

  • UK beer sales have dropped on the back of the cold wet May weather.
  • EU and UK malting barley markets went up at the end of last week only to come back down again this week.
  • EU spring malting barley crops are enjoying good to excellent growing conditions.
  • UK spring crops would benefit from some warmer weather.

Feed Barley

  • Old crop feed barley supply remains scarce. Meanwhile, demand for animal feed continues to charge on, and as a result, bids are climbing higher. It’s clear that the UK supply and demand is extremely tight and will remain so through to the end of the season.
  • Recent rains and warmer temperatures across the UK continue to bolster optimism around new crop prospects. Farmer engagement is increasing as a result and ex farm prices certainly look attractive. We are not seeing much demand for UK exports at current levels.
  • The EU supply and demand for new crop is tightening, as barley is currently the cheapest feed grain and subsequently should attract good demand. As a result, any further increases in corn/wheat prices should be reflected in barley values.

Rapeseed

  • US stocks fall this week along with Asian stock markets. On Wednesday, official figures reported US inflation was increasing at its fastest pace in 13 years, the largest rise since 2008. This led to investor fear of the US central banks tightening its monetary policy.
  • US soybeans continue to trade a weather market, but this week attentions turned to the May USDA report, which saw soybeans veg oils all trading at contract highs ahead of the report.
  • CBOT soybeans are now trading above $16 for July, whilst oil prices have climbed to new highs.
  • The report was fairly neutral and didn’t give market the news it was anticipating to rally further. Old crop US stocks were unchanged, yields were marginally below expectations, but ending stocks were slightly higher. South American crop expectations were left unchanged. The market has refocused on weather developments.
  • The veg oil story remains underpinned with world demand only set to increase. Stocks fell to their lowest level since 2010, with a stocks-to-usage ratio of 10%, while US usage has jumped for use in jet fuel.
  • Malaysian palm futures touched record highs yesterday pre-report on the back of rallying soy-oil. Markets are closed today for a national holiday.
  • Matif rapeseed rallied over €40 recently to trade at new highs ahead of USDA’s release. Markets remain extremely volatile and are likely to continue doing so until the balance sheet is rectified.
  • UK prices have trade back to highs and sterling is weaker, trading back from Wednesday’s highs to 1.1620 at the time of writing.

Oats

  • Old crop prices remain relatively unchanged and traded volume appears to be thin.
  • Recent rains have helped to cool some nerves on new crop oats, although there is still a way to go in the growing season before harvest. It will be interesting to see with the relative firmness of wheat and barley whether more feed millers look to oats as a cheaper alternative. This could act to help support domestic values.

Seed

  • With our thoughts now turning towards autumn requirements, ADM Agriculture have some great varieties to chose from, including:
    • High yielding 2-row Bolton winter barley. Offering exceptional performance in the east and also a good all-round disease package.
    • Winter wheat barn filler SY Insitor, the highest yielding group 4 hard wheat with very good Septoria resistance and RGT Wolverine which has been added to the 21/22 AHDB recommended list with specific recommendation for BYDV resistance.
  • We also have a range of stewardship and cover crop options mixes available – please contact your farm trader for more info.

Fertiliser

  • Granular urea has traded higher at $365/t and one producer in North Africa is sold out for June. Prices remain firm on the global market with India having to tender again shortly.
  • CF ammonium nitrate terms remain unchanged from the rise in pricing last week. Grassland markets are active and top-up business is still strong.
  • Imported AN terms are firm, with new season prices set at €75/t higher than terms issued this time last year.
  • Phosphate and potash prices remain stable-firm, with room for much firmer potash prices. ADM can offer alternative PK products to lock in costs for autumn now.
  • Liquid terms remain unchanged and the ENhancePro ATS product with AdvaNShield technology is available for milling wheat growers who are aiming to increase grain proteins.
£/€ £/$ €/$
1.162 1.404 1.2085
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May21 180-190 203-213 215-220 467-472
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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