Market Report

Thursday 13 August 2020

Sampling – Harvest 2020

As many of our farmer customers already know, ADM Agriculture will not be sending samplers out to farms for the forthcoming harvest. We need to be able to test the crops we buy, and it remains our intention to do this in as efficient manner as possible, whilst reducing the risks associated with this service. If you have not already done so, please contact your farm trader to arrange for sample bags to be sent to you. Once you have samples ready, we will collect them and the results will be available via our online portal, ADM 365, or from your ADM farm trader.

Wheat

  • US prices are down $6-7/tonne on the week, as continued talk of increased export availability from Russia, Australia and Canada keeps Chicago market pressured.
  • USDA raised Global 2020/21 wheat ending stocks, although US stocks were reduced slightly mainly due to an increased export projection.
  • USDA raised US maize stocks as a result of a higher-than-expected hike in yield, up 3.3pba to 181.8pba, with also Global 2020/21 ending stocks being revised higher.
  • Ukraine grain exports stand at 2.96mln t, down from 3.96mln t y/y a/o July 26th, due to lower maize shipments – exports include 1.46mln wheat, 490,000t maize and 1mln t of barley.
  • Ukraine central and southern regions are suffering from a lack of moisture, creating unfavourable conditions for winter crop sowings.
  • CONAB has raised its forecast for this season, Brazilian total corn production to 102.1mln t, up from 100.6mln t in July – left the recently harvested soybean crop unchanged at a record 120.9mln t.
  • Egypt continues its international purchasing, buying another 2 cargoes of Russian wheat in their latest tender.
  • EU has re-introduced an import levy on maize of €5.48/tonne effective from 12th August – also applies to rye and sorghum imports.
  • Strategie Grains in its latest update, has again reduced its estimate of the EU 2020 soft wheat crop to 128mln t, down 2.3mln t m/m.
  • German farmers co-op association sees the 2020 wheat crop falling 7% y/y to 21.5mln t.
  • In summary, the USDA put some bigger-than-expected numbers out for US maize and soybean yields, but the wheat numbers were deemed as neutral. US wheat crop was raised slightly, mainly due to an upgrade in spring wheat production, offsetting a reduced outlook for winter wheat. Talk of larger export availability from Russia, Canada and Australia continues to provide pressure onto the Chicago market, as traders believe US export prices remain too high.
  • In the UK, the harvest creeps northwards, with new crop supply able to find plenty of outlets, and as you would expect given the expected smaller UK harvest, there remains little sign of harvest pressure. The lack of availability in the more northerly and western regions, is ensuring that spot prices remain underpinned for the time being, although wheat is travelling from the south and east to ease some of the requirement needs.

Malting Barley

  • The Scandinavian spring barley harvest is well underway with a favourable weather forecast.
  • Yields are reported as above average with bold grain and nitrogen’s around 1.65.
  • The UK spring barley harvest continues slowly. A lot of barley still needs another 7 days before it is ready to combine.
  • Yields are so far below average. Samples are dry and bold, but the nitrogen levels are much higher than normal.
  • Maltsters remain absent from the market due to reduced demand and high stocks.
  • Could growers kindly let us know when their samples are ready for collection.
  • We can then test the samples and arrange to collect the barley.

Feed Barley

  • Another extremely quiet week for feed barley markets, overall, the picture remains one of extremely low liquidity.
  • Spring barley is still not flowing freely onto the market, which is keeping shorts on their toes and as a result spot values remain supported.
  • We are still seeing very little engagement from the UK consumer in the nearby and deferred positions.
  • The disappointing yields that are being reported and the resulting slow pace of origination, is causing the discount to feed wheat in the deferred positions to narrow slightly, as sellers become more cautious going into the winter period where good demand for feed barley is anticipated.

Rapeseed

  • China continue to purchase new crop U.S soybeans this week, taking the total close to 12mmt with another 258,000mt traded yesterday prior to the USDA report. It seems there is some positional play from the Chinese before this week’s meeting with the US, regarding the Phase-one deal.
  • US weather will be watched closely going forward. A storm of hurricane force spread across the Midwest on Monday which cause widespread damage to crops and property, many towns are still without power. Soybean crops conditions improved 1% yesterday to 74% good/excellent verses expectations of a 1% decline. These are the best crop ratings since 1994.
  • Yesterday saw the release of the August USDA supply and demand report, one which most expected to be bearish.  The USDA increased US soybean yields from 49.8 bpa to 53.3bpa with some estimating yields could be higher come harvest.
  • Key info from the August USDA supply and demand:
    • Soybean ending stocks 19/20: 610 mbu vs. the average trade estimate of 526 mbu (425 mbu in July)
    • Soybean ending stocks 20/21: 615 mbu vs. the average trade estimate of 616 mbu (620 mbu in July)
    • Soybean production 20/21: 4.425 bbu vs. the average trade estimate of 4.258 bbu (4.135 bbu in July)
    • Soybean yield 20/21: 53.3 bpa vs. the average trade estimate of 51.3 bpa  (49.8 bpa in July)
    • World soybean ending stocks 19/20: 92.85.4 mmt vs. the average trade estimate of 99.08 mmt (99.7 mmt in July)
    • World soybean ending stocks 20/21: 95.4 mmt vs. the average trade estimate of 97.92 mmt (95.08 mmt in July)
  • In Canada weather remains favourable and crop estimates remain unchanged at 20 mmt. Margins are still attractive which creates demand, but farmer selling is still slow.
  • Veg oils continue to slide this week with palm oil down another 2.4% in Tuesday’s session. Matif rapeseed traded lower with EU harvest now nearing completion and Imports still readily available to cover any nearby shorts. This week Matif rapeseed broke its recent €380-385 range to the downside to trade at €374, last night’s pick up in oil helped November futures recover to close above €375.
  • In Australia weather is also favourable to crop conditions, but with the recent downtrend in the Matif farmers have become reluctant sellers at these lower levels.
  • UK prices were again pressured by the firmer Sterling which has held its levels against the Euro, despite the release of data confirming the UK are in a recession.

Pulses

  • The pea harvest continues to produce variable results, with yields for large blues and marrowfats ranging from 1.5t/ha to 5.5t/ha. The pea harvest in the south is approaching completion and the average yield from the data seen so far is 3.5t/ha.
  • Quality on the whole is excellent, with the samples seen to date, a good green colour.
  • The early cut winter beans have yielded poorly and the majority are only feed due to very high insect damage. Demand on the export market has been quiet, with many buyers of feed looking for lower prices and UK / EU human consumption quality beans uncompetitive into Egypt vs Australian.
  • Australian origin beans into Egypt continue to trade lower, down another $10 on the week with the recent rainfall received over the last few weeks, assuring at least average yields in most market participants eyes. The long range forecast looks good for September rainfall, which if realised could give production over 500Kmt.

Seed

  • OSR – We have a great portfolio of OSR varieties. TuYV resistant hybrids seem to be topping the yield tables so far this year, ADM can offer both Aurelia, DK Excited and Voltage with the TuYV trait. All 3 of these varieties are available for immediate dispatch.
  • Cereals – We are beginning to be well sold on a few key winter wheat varieties, including KWS Extase & RGT Saki. We have limited availability of barley seed, both conventional and hybrid. Our advice to farmers is to get in touch with your farm traders and get your seed orders booked now to avoid disappointment.

Fertiliser

  • Granular urea has traded up from the $260/t mark to reported offers of $280/t FOB Egypt. UK urea levels are steadily climbing, but have not reached replacement values yet as nitrogen markets remain relatively quiet in the UK.
  • PiagranPro – the most advanced incorporated urease inhibited urea – is available for those looking to improve nitrogen efficiency. Terms are available today for delivery Oct, Nov or December.
  • UK AN manufacturer, CF Fertilisers are pulling forward terms tomorrow with pricing expected next week. September tonnage remains sold out. Market sentiment for Q4 remains firm in the UK and on the continent with high nitrogen demand anticipated for 20/21.
  • Alternative PK registered fertilisers have been delivered onto farm as land is being cleared. There is August and September delivery available at the buyers call. Using alternative PK fertilisers, Fibrophos and P-Grow have benefits including comprehensive secondary and trace elements for well-rounded crop nutrients, a carbon neutral product, reduced workload at harvest and cost effectiveness against traditional bagged fertilisers.
  • MOP and TSP values have little changed on the week with DAP seeing incremental rises.
  • Liquid UAN terms are currently withdrawn as availability is limited and prices are firming on the global market.
£/€ £/$ €/$
1.106 1.3095 1.184
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
August 20 £123 - £133 £155 - £168 £200 - £205 £326 - £331
November 20 £127 - £136 £159 - £169 £201 - £206 £336 - £341
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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