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Thursday 15 April 2021
- With little coming from USDA in last week’s report, weather has been driving the markets. Cold and drier conditions across much of the US, Canada and EU has led to increased speculative buying, pushing the market considerably higher over the past week.
- Additionally, renewed dryness concerns relating to Brazil’s second corn crop and the slow Argentinian corn harvest have supported higher global corn prices, providing external support to the wheat complex.
- While it may be too early to start writing off crops, there are enough weather-related issues to support the recent spike, as US spring sowings progress and northern hemisphere winter crops develop in far-from-ideal conditions.
- UK conditions are also less than perfect and there is little to no rain forecast in the next few weeks. Prices have rebounded and will probably be supported whilst current weather conditions prevail.
- In more detail, USDA’s report produced little surprise as lower 2020/21 US corn stocks came in line with trade expectations, while wheat stocks were increased slightly on the month.
- Analyst IKAR has raised its forecast for Russia’s 2021 wheat crop to 81mln t, up from 79.8mln t previously, citing an improved crop outlook in the southern regions of the country.
- France’s agriculture ministry estimates the 2021 wheat area (including spring crop) will be up 14.6% on the year at 4.9mln ha.
- FranceAgriMer estimated 87% of the country’s 2021 soft wheat crop was in good/excellent condition as of 5 April, unchanged on the week.
- Argentina’s corn harvest plods along, reported at 12% complete as of 8 April, compared with 26% this time last year and 21% as the five-year average.
- While increasing the Brazilian 2020/21 corn crop to 109mln t, statistics agency CONAB reduced the country’s 2021/22 wheat crop to 6.37mln t.
- Turning to old crop, FranceAgriMer has raised its forecast of 2020/21 French wheat exports to 7.55mln t, with ending stocks remaining unchanged month on month at 2.7mln t.
- Russian wheat exports slumped in March after the wheat export tax was increased to €50/t, with total grain exports reported at 2.4mln t.
- Ukrainian grain exports have fallen 23.7% to 36.5mln t so far this season, with traders selling 14.5mln t of wheat, 17.3mln t of corn and 4.1mln t of barley.
- China’s agriculture ministry has significantly raised the forecast for 2020/21 corn imports to 22mln t, reflecting strong domestic demand, although the number lags USDA’S figure of 24mln t.
- UK wheat imports slowed in February to just 94,956t, although the accumulated season-to-date figure of 1.67mln t is still well above last season’s pace.
- The EU and UK malting barley market is being driven higher due to concerns with the cold dry weather.
- The rising feed prices are also underpinning the market.
- Brewers and maltsters are looking for offers but traders and farmers are absent from the market.
- Further declines in sterling and slightly improved freight rates enabled some business to take place to Portugal, Ireland and the Netherlands this week.
- Domestic markets also seem to have rebounded off the lows, with middle-market shorts pushing spot values sharply higher as the flow from the farm remains extremely slow.
- Conditions are dry and, although it is too early to call a disaster for new crop, the recently drilled spring barley crop needs some moisture over the coming weeks or it will really struggle. We have started to lower our yield expectations accordingly.
- CBOT soybeans started the week by reacting to last Friday’s USDA report that left the bulls disappointed. World ending soya stocks increased from 83.74mln t to 86.87mln t and the US carryout was left unchanged.
- Despite starting off the week heavily down, the market rebounded to where it originally started. US weather fears are becoming a larger factor as the weather will have to be good to match market Currently US weather is looking drier than normal, with temperatures below average.
- The dryness is very supportive of fieldwork, but cold temperatures and lack of soil moisture could begin to reduce germination, which will ultimately reduce the size of the wheat, corn and soya crop. Canada is seeing similar issues and doesn’t have rain in the forecast for the next 15 days.
- South American weather is looking dry, allowing harvest to pick up in Argentina and be completed in Brazil where it is all but done now.
- This week China bought 132,000t of US new crop soybeans. For Q1 China imported a record 21mln t soybeans, but crush demand fell last week as crush margins began to crumble. Possibly another early indication that African swine fever is striking the northern hog herd.
- Soyoil continues to be volatile due to various factors. The market was well supported when Egypt put in a tender for 30,000t for June delivery. , Brazil has temporary reduced its biofuel mandate from 13% to 10% to take some heat of the internal domestic oil price. Soyoil also had a big sell off when palm oil stocks reached a four-month high at 1.45mln t, which came in way above trade expectations.
- Matif has seen large gains, due to concerns over the effect of the cold snap on the EU crop, and new crop is at contract highs. Canada saw a similar effect on old crop as dry weather continues to threaten next year’s supply.
- UK prices remain supported with sterling falling sharply against the euro this week.
- Demand for old crop beans remains subdued and this looks set to continue in the weeks to come.
- New crop bean prices have rallied on the week in line with wheat futures, which has narrowed the spread between old and new crop significantly.
- Concerns are starting to be raised regarding the development of the spring bean crop due to the cold soils and lack of rainfall in the forecast, both in the UK and in Europe.
- Aussie plantings are due to commence and subsoil moisture conditions look adequate in the major growing areas.
- Spring seed: For any last-minute cropping requirements we have stock of large blue and marrowfat peas ready for immediate dispatch.
- Autumn seed: We have consistently high yielding and stiff-strawed SY Baracooda hybrid barley, with over-yeared stocks available for early delivery onto farm.
- Looking for alternative ways to help with establishment of your oilseed rape crops? Companion crops can help by protecting against flea beetle, fixing nitrogen and reducing weed pressure. Catch up on our latest seed YouTube video on companion crops here.
- Another Indian tender is anticipated soon, which could provide some support to sliding global values.
- UK granular urea prices remain relatively stable, although stocks are now short as demand continues to surface during this cool period of weather.
- CF is seeing good demand on ammonium nitrate and NPKS with grassland markets expected to drive demand higher on the back of arable top-up business. Delivery timescales are excellent on full load orders at present.
- Liquid UAN and ATS prices remain flat whilst delivery timescales remain short.
- Potash levels could begin to rise in the UK following a supply contract of 600,000t on the global market, which was $20-30/t higher than the previous contract of this scale.
- Phosphate levels remain stable to firm.
|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.