Market Report

Thursday 14 January 2021

Wheat

  • Markets began the week firmly higher on news that Russia is expected to increase its wheat export tax that is due to commence on 15 February.
  • Additional support came from USDA’s bullish global outlook in its January report. Wheat showed little change, with most of the 3mln t fall in global stocks seen in China, but reductions in US corn yield and production took centre stage.
  • The aim of Russia’s planned tax is to stabilise domestic prices. However, it has resulted in global values firming higher than the original €25/t tax proposal and provides no incentive for Russian farmers to sell.
  • This means Russian export prices are virtually impossible to fathom and leaves the potential of export trade switching back into Europe, which the balance sheet can ill afford, or into the US.
  • In addition, Ukrainian livestock and poultry producers have asked the government to limit corn exports in the 2020/21 season to 22mln t to avoid a domestic shortage. So far exports have reached 9.7mln t.
  • European prices rose to an eight-year high (front month) on Russia’s news. The market has since retreated from the multi-year highs, but UK prices remain £3-4/t higher on the week.
  • UK prices are still not high enough to achieve the level of imports required to balance the books. We can expect some profit-taking to occur, which may deter from the recent highs. However, EU and UK prices should overall remain underpinned, driven by the tight domestic balance sheet and limiting export availability as food security become a greater factor in many key export regions.
  • In other news, Brazil’s government agency CONAB reduced its estimates for the country’s current corn crop to 102.3mln t, although that is still well below the revised USDA projection of 109mln t.
  • Argentina has lifted a suspension on corn exports announced in December, opting instead for a temporary 30,000t daily cap on export sales.

Malting Barley

  • EU malting barley markets have risen on the back of rising feed markets.
  • Demand however is reducing due to national lockdowns.
  • The trade is now speculating that it could be May before hospitality starts to open again.
  • Crop 2021 malting prices and premiums have also moved up over the last few day.
  • Please contact your local farm trader for information on our 2021 contracts.

Feed Barley

  • UK feed barley values continue to rally as we see continued demand from domestic consumption and middle market buyers who are all keen to take ownership. Very little barley is offered freely from the farm or by the trade.
  • We see the same competition for ownership in the FOB markets, where the MATIF market is also helping to support prices across northern Europe.
  • Russian barley exports will now also be subject to a tariff of €25, therefore removing one of the UK’s cheapest competitors on third country business and tightening supply and demand further.
  • New crop prices remain stable at around £15 under feed wheat values. Domestic consumers are happy to pay these prices, although at this level we are above export parity.

Rapeseed

  • US soybeans saw big gains again this week on the back of Tuesday’s USDA report. trading above $14/bushel.
  • The soy report itself wasn’t as bullish as some expected, but was enough to push the market to new highs. USDA kept Chinese imports at 100mln t (+ 1.5% on last year), but some feel it could be more. US production fell to 112.5mln t (113mln t previously) with yields dropping to 50.2 bushels/acre and the harvested area increasing to 82.318 mln acres.
  • Ending stocks fell to 3.7mln t, which leaves the stocks to use ratio at 3%, the lowest ever reported in January. Some feel that it could even be less as time goes on. World ending stocks were lower, but above trade expectations, at 84.31mln t.
  • In South America, central parts of Brazil should see showers over the next few days, but the south and all of Argentina remain dry for the rest of January. Interestingly, USDA kept soybean production in Brazil unchanged at 133mln t, but did reduce the crop in Argentina from 50mln t to 48mln t.
  • As above, China imported 7.52mln t of soybeans in December, taking the total to 100.3mln t for the year. USDA announced more sales of US soybeans this week, with a further 464,000t sale yesterday.
  • The balance sheet is extremely tight. Demand has to be rationed somehow, and that would usually be through price, but if sales continue it shows current values are not doing the job. Any further cuts to South American production would cause concerns and, as USDA figures are still higher than trade estimates, it could happen.
  • Veg oils weakened this week. Malaysian palm trading off the recent highs on the back of the decision to maintain the 8% export tax. Buyers are also concerned over the increase in Covid-19 cases and lockdowns, which could curb demand from the food service sector.
  • Matif rapeseed made new highs in the session before dropping back slightly before the close. May still closed higher last night, but will be reactive to oil and soy market direction from here. Markets were overbought, so there is some room for a correction.
  • Sterling closed above 1.1200 vs the euro, which is up on the week. That pressured UK rapeseed prices slightly, but prices are still trading close to season highs.

Pulses

  • Sterling rallies have seen prices for all commodities come under pressure.
  • The market remains relatively quiet as farmers and traders have caught up from Christmas.
  • Demand remains in place for feed beans for longer term, as a mid-level protein it looks relatively cost effective.
  • Our buybacks remain open for both peas and beans for crop 2021 and are attractive as a spring crop.

Seed

  • We have spring barley stock of Laureate, Planet and LG Diablo on the floor ready for immediate dispatch.
  • Spring wheat is VERY limited. We do however have a small amount of winter wheat KWS Cranium for anyone looking for a suitable late-drilled variety.
  • ADM Agriculture has market leading buybacks available on large blues and marrowfat peas. Contact your farm trader for more information.

Fertiliser

  • Nitrogen markets, both globally and domestically, are firm as higher gas prices and limited availability continue to drive markets higher.
  • Granular urea has traded over $320/t FOB Egypt this week, putting replacement values at almost at £300/t on farm in the UK.
  • For those urea users looking to the future and wanting to trial PiagranPro, call ADM Agriculture today, as we have a short term opportunity on a limited tonnage.
  • UK AN producer CF has withdrawn terms again this week, with the likelihood of firmer prices when terms are issued again.
  • Phosphate prices continue to increase whilst potash prices have remained stable.
  • Liquid UAN and ATS terms firmed £20/t for spring fill. Prices are likely to rise again as UK markets continue to firm.
£/€ £/$ €/$
1.123 1.365 1.215
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan21 161-166 204-214 215-220 383-388
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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