Thursday 16 April 2020

COVID-19 – Safe transfer of grain passports and self-isolating

It is important that all farmers follow UK government advice with regard to sanitising and best practice. We strongly recommend all participants in the grain supply chain read this advice from AHDB https://ahdb.org.uk/knowledge-library/coronavirus-guidance-for-combinable-crop-deliveries-and-collections

If farmers are quarantined or self-isolated for a period of time and therefore unable to load combinable crop sales or accept deliveries of seed or fertiliser, please advise your ADM farm trader as soon as possible and we can then delay the collection/delivery until the period of self-isolation is complete.

To date, the grain supply chain is working close to normality. All parts of the industry are working well together, and the situation is obviously under constant review and of the utmost importance in keeping the nation supplied. ADM Agriculture would like to thank all our customers for their ongoing support.

Wheat

Another week driven by bearish sentiment as the latest USDA report and a bleak IMF outlook provided few sparks of encouragement in the commodity markets.
The market is currently focused on the demand side of the equation, which is expected to decline overall from current levels, despite a few signs of lockdown restrictions being reviewed, or even loosened, in certain countries.
Concerns remain over new crop prospects, including dryness in the EU, Black Sea region and South America, and cold wet weather in the US. However, talk of improving conditions over the next few weeks, with demand still contracting, means prices will remain under pressure over the short to medium term.
USDA increased US and global wheat and corn inventories in its monthly release, as the coronavirus is seen heavily reducing domestic corn demand.
US NASS in their initial crop progress report pegged corn plantings at 3% complete, compared with 4% y/y, and spring wheat 5% complete, again compared with 9% y/y.
US wheat prices are down about $3/t on the week, due to the coronavirus effect as well as talk of improved weather in the US and Russia.
A weak IMF world economic outlook also raised concerns over future commodity demand, providing a ‘risk-off’ sentiment to markets earlier in the week.
Chinese government announces several grain policy changes to meet feed demand and confront the spread of the coronavirus:

Ukraine’s 2020 grain crop could decline to around 72mln t (75.1mln t in 2019) due to smaller wheat and barley crops. The corn crop output look similar to last year at 36mln t.
Ukraine’s state weather forecaster said winter grain crops were undamaged during the recent cold period, although frosts in March damaged a significant area of spring crops in the south.
Russia’s consultancy SovEcon kept its 2020 wheat crop forecast unchanged at 84.4mln t, but said that would be cut substantially if rainfall remains below normal through to mid-May.
Kazakhstan extended its ban on wheat and flour exports until 1 September to ensure ample domestic supplies and curb price inflation.
Egypt’s state buyer GASC purchased 120,000t of Russian wheat in its recent international tender.
FranceAgriMer left its rating of the country’s 2020 soft wheat crop at 62% good/excellent, still well below the 85% seen at this time last year.
EU (Paris) futures are down €2-3/t on the week, following the weaker US market.
UK (London) futures are down due to lower global prices, a slightly firmer currency and increased talk of lower demand from flour and feed sectors.
The UK crop needs rain. Whilst some is in the forecast it is unlikely to reach all areas.

Malting Barley

Buyers continue to assess the extent of the damage to beer sales and the impact this will have on malting barley demand.
Markets remain unseasonably quiet.
Most of the UK spring barley area has now been planted, mostly into reasonable seed beds.
Rain is needed in all areas.
The recent dry weather has led to more spring barley being planted than most people were predicting in early March.
Trade estimates have a wide range, between 900,000 and 1.2mln ha. All big numbers.

Rapeseed

Last week’s USDA had a bearish tone to it as US ending stock estimates for soybeans came in at 176mln t vs trade estimates of 158mln t. USDA did reduce soybean production estimates of America’s largest export competitor, Brazil to 124.5mln t, against trade expectations around 123.8mln t.
Canadian logistics are now back in full swing. In March one rail network reported a new record for grain movements. Canola exports are now ahead year-on-year and domestic demand is still strong, although hopes of further business to China seem to have abated for the time being.
In China rapeseed crush margins remain at attractive levels. However, long waiting times for ships to discharge and the knock-on effect of logistic problems in South America means Chinese crush utilisation is estimated around 39% for March, at a time where business and industry was meant to be picking up.
Crude oil has continued its decline, despite an agreed production cut of 10mln barrels per day. West Texas oil futures are trading below $20/barrel. Global demand is estimated to have reduced by 9-20m barrels/day, meaning further cuts will be necessary to prop the market up.
With very little topsoil moisture and no rain in the forecast, Australian farmers may decide to change cropping plans away from canola into grains given the longer planting window.
European Analyst Tallage estimates the Ukrainian rapeseed crop for 2020 at 2.1mln t vs. 3.15mln t last season, due to poor establishment, drought and now frosts. This could have a significant consequence for the European and UK balance sheet in the 2020 season as over 2mln t was imported from Ukraine in the 2018/19 season alone. With EU and UK supply already looking low (17.5mln t and 1.1mln t respectively), as well as question marks over the exportable surplus from Australia, strength of demand will play a large role in defining prices in 2020.
In the UK prices have been steadier this week. Concerns over the dry weather are shared in the UK, as this could affect shallow-rooted winter crops. That said, a drier March and April have allowed spring rapeseed plantings to go ahead into better seedbeds.

Pulses

Old crop bean prices remain well supported as shippers continue to cover short requirements for May with limited supplies left on farm.
New crop bean prices of £200/t ex farm are achievable for most despite the firmer currency. With spring bean planting now complete we are starting to see greater farmer selling than in previous weeks. Attention now turns to the weather forecast, with some rain needed soon in the UK and Baltics.
Plantings have commenced in the north of Australia and plantings are likely to be higher year on year as soil moisture levels are considered adequate.
The marketing pool for peas and beans is still open.

Seed

We have stock of spring barley ready for immediate dispatch for any last-minute cropping changes.
Spring OSR seed is still available for growers wanting a late-drilled true break crop before wheat.
Maize stocks are running very low. If you are yet to order your maize, please call your farm trader to discuss availability.
Add some life back into your soil with a cover crop on fallow land over summer. Read more here.

Fertiliser

Global urea prices have continued to be supported from the India tender last week and continuing demand in the US. Another Indian tender for around 750,000t, a similar tonnage to the previous, is expected in the second half of April.
Market direction is less clear beyond May as supply and demand dynamics are in a state of flux whilst countries are at different stages of lockdown. For example, Indian urea capacity is down 300,000t per month, whilst reports suggest Chinese urea production is increasing.
UK urea is stable, supported by an increase in spring cropping of land that growers had expected to leave fallow.
UK AN prices are stable to firm whilst some NPK compounds are good value against some blend equivalents at present.
Increased maize planting has seen a rise in demand for stabilised release nitrogen fertilisers such as ALZON® neo-N. Prices could firm on the back of this demand as stocks become limited.

£/€	£/$	€/$
1.1465	1.2475	1.0875

	Feed Barley £	Wheat £	Beans £	Oilseed Rape £
May20	125-135	146-156	245-250	306-311

NB: Prices listed may vary depending on area.

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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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