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Thursday 14 October 2021
- US markets have fallen $10/t on the week as bearish corn numbers released by USDA on Tuesday prompted some profit-taking from wheat longs, despite a supportive global outlook.
- The world supply and demand report reduced global stocks for 2021/22 by 6mln t compared with last month, mainly due to expected crop declines in the US and Canada.
- Short-term, the bearish slant from the US corn market, along with talk that Russia may increase exports in order to beat the export ban that is due to come in mid February, may keep prices on the defensive.
- However, continued import interest and dwindling export availabilities should provide support to the market, especially for the long-term.
- Some concerns over the size of the wheat area for harvest 2022 have been raised by the huge ramp up in fertiliser prices. However it looks like forward wheat prices remain attractive enough to encourage a large area to be planted, weather permitting.
- Russian fertiliser producers have agreed to extend a price freeze to the country’s farmers, giving them an advantage over foreign competitors who face surging costs.
- Ukraine’s grain association reported that wheat exports in the 2021/22 season could reach 26mln t due to a record harvest.
- However, analyst SovEcon has trimmed its estimate of Russia’s 2021 wheat crop to 75.5mln t, due to smaller crops in the central and Volga valley regions.
- Brazil’s state agency CONAB estimates that the country’s 2021/22 corn production may climb 34% on the year to 116mln t after adverse weather hurt yields last season.
- Iran’s grain supply association has reported that the country may need 8mln t of imports this season, compared with just 1mln t last season.
- France’s agriculture ministry has cut its estimate of the country’s 2021 soft wheat production to 35.2mln t after heavy rains penalised yields.
- Only 31% of France’s soft wheat harvest has a specific weight above 76kg/hl, down from the five-year average of 76%.
- Overall, French soft wheat stocks at the end of the 2021/22 season are estimated at 2.36mln t, only fractionally above last season’s 2.34mln t.
- EU soft wheat exports to non-EU countries had reached 8.37mln t as of 10 October, compared with 6.02mln t this time last year.
- In its initial estimate of the UK’s 2021 harvest, DEFRA pegged wheat production at 14mln t, up 45% on last year’s very poor harvest but probably below most estimates.
- The world’s malting barley supply problem is not going away any time soon.
- Brewers are looking to supplement malt for other ingredients, but even this is proving a challenge.
- Selling UK malting barley is not a problem, but moving it is becoming increasingly difficult.
- FOB cargoes are taking twice as long to load as normal due to a lack of lorries.
- Getting haulage for UK destinations is also very difficult and prices have risen dramatically.
- The whole supply chain is working hard to resolve the problems.
- Feed barley markets are quiet for another week, and there is no real activity to report.
- Prices continue to firm on lack of supply, despite demand remining on the sidelines.
- This week the trade focused on USDA’s October WASDE report on Tuesday night. Markets were very volatile in the lead up to the release as the trade positioned themselves accordingly.
- USDA’s bearish report, which increased US soybean yields from 50.6 to 51 bushels/acre, pushed soybean prices below $12, the lowest level since 21 March.
- US weather remained dry and warm for this week into next. On Tuesday US soybean crop condition was reported at 59% good/excellent, up 1% on the week. Harvest progress was reported at 49% complete compared with 58% last year, but still ahead of the 40% five-year average.
- The spike in fertiliser prices led to a prediction that US farmers will switch to beans over wheat and corn for the coming season.
- Soybean ending stocks were reported above trade expectations, with lower demand for old and new crop beans adding pressure to the complex.
- China came back from Golden Week holiday and purchased US and Brazilian soybeans, but remained quiet ahead of the report. USDA lowered China’s domestic soybean usage by 900,000t, which contributed to the higher ending stocks.
- In South America, Brazilian plantings are estimated to be 10% complete compared with 3% last year. Weather remains favourable for now. USDA estimated South American crops largely unchanged from the last report.
- Malaysian palm oil futures fell slightly on Monday on the back of weaker export volumes for the first 10 days of October. Palm oil stocks were reported at 1.747mln t yesterday vs expectations of 1.868mln t (1.878mln t in Aug). Palm production was unchanged at 1.704mln t, whilst exports were 1.597mln t vs 1.625mln t. Prices were flat leading up to the report before rallying to record levels again yesterday, but have since taken back those gains.
- Canadian canola futures opened lower after the national holiday on Monday, then followed the complex lower again after the USDA report. Harvest is now complete and the trade is now taking into account the lower yields and lower oil values that have been seen.
- Matif rapeseed traded at highs again last Friday before seeing a selloff. Prices traded either side of unchanged on a daily basis, but remain very volatile.
- With the market being overbought for a number of weeks, it wasn’t a great surprise to see a setback. November futures are now €40/t off the high, although the trend still feels bullish. Prices will likely follow the wider complex in the short-term.
- Winter stocks are very limited and constantly changing. Get in touch with your farm trader for a full availability update.
- As we look ahead to the spring, we have a great portfolio to offer. Including dual purpose spring barley Laureate. Order now for pre-Christmas delivery.
- Don’t forget ADM Agriculture can cover all of your grass seed, stewardship and cover crop needs. Please see page 25 on our 2021/22 seed varieties guide for more information.
- Granular urea markets await news from the most recent Indian tender. Supply is tight for nitrogen products globally and the European gas crisis has removed a lot of supply from the market in the west.
- Chinese export control and an overall reduction in production as well as firming coal prices are supporting markets in the east and heavily influencing forward pricing from China.
- News of CF’s plant at Billingham remaining operational until at least January will have little impact on UK supply and demand, with an estimated 80,000t of AN being produced in this period, only around 8% of the total UK nitrogen market.
- Nitrogen demand is estimated to be 12-20% down in the UK due to changing cropping plans and reduced application rates. However, forward crop prices remain attractive even when high fertiliser costs are factored in.
- Due to severe limitations on imported AN and a lack of UK-produced fertiliser, demand still remains much higher than supply.
- Granular lime is a fertiliser which has been relatively unaffected by external price trends. Ensuring the correct pH levels in soils helps nutrient up-take efficiency of plants, and is a way in which growers can increase fertiliser use efficiency. ADM Agriculture has granular lime available for delivery for 2021.
|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.
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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.