This will be our last market report in 2020. The next edition will be published on Thursday 7 January. We wish all our readers a very merry Christmas and a healthy, happy and prosperous new year.
Thursday 17 December 2020
- News that an export tax will run alongside Russia’s export quota from mid February to the end of June has dominated this week’s market news.
- The tax, set at €25/t, is aimed at reducing record high domestic prices, although Russian farmers seem less than interested in selling at the moment, given concerns over new crop prospects.
- Exporters still have to cover existing sales up to the start of the quota. With seasonal logistics also starting to bite, prices may remain underpinned by export demand into the middle of January.
- US prices are up about $3/t on the week in response to the news.
- Egypt’s state buyer GASC has purchased 120,000t of Romanian and 115,000t of Ukrainian wheat for Feb 1-15 shipment. Russian prices were uncompetitive due to sellers adopting export tax price protection.
- In its monthly update, Strategie Grains lowered the projection for the 2020/21 EU soft wheat crop by 300,000t to 129.6mln t, whilst citing a heavier outlook for 2021/22 following the tight 2020/21 season.
- Non-EU soft wheat exports in the 2020/21 marketing season had reached 11.6mln t as of 13 Dec, down 17% from the volume cleared last year.
- Australia will launch a formal appeal to the WTO later this week, seeking a review of China’s decision to impose hefty tariffs on imports of Australian barley.
- Brazil expects to harvest a record grain crop of 266mln t in the 2020/21 harvesting season, mainly due to an expansion in its soybean crop.
- Buenos Aires Grain Exchange sees Argentina wheat harvest at 53.5% complete compared with 61% this time last year.
- Egypt aims to produce more than 10mln t of wheat this year, as the world’s largest importer tries to lower its dependency on imports.
- UK prices are trading up about £1/t on the week, despite a firmer pound that reflected renewed hopes that a Brexit trade deal may be close to agreement,.
- Over the next few weeks, cash markets will become ill-defined as seasonal logistics lower availability. Cash premiums should remain well supported into the new year, when hopefully we all should know where the UK stands trade-wise!
- EU markets are very quiet as we head towards 2021.
- China is absent from the market after already buying a reasonable tonnage.
- UK buyers are also very quiet, concerned about ongoing hospitality closures and the effect this will have on beer demand.
- Hopefully a positive trade deal in the coming days will open up more markets and opportunities.
- Crop 2021 prices remain firm, underpinned by the feed markets.
- A frustrating end to the year for the feed barley market. The market is still frozen and will remain so until we see some more clarity on future UK/EU trade relations.
- Logistics remain the main obstacle, with road haulage and ocean freight all proving difficult to manage in the approach to Christmas.
- Tunisia bought 100,000t Jan-Feb’21 shipment at 242.62 USD CIF – below UK replacement levels. This shows that defensive FOB prices from UK sellers, combined with the recent upward move in sterling, have caused us to lose competitiveness against other origins.
- After a pretty lacklustre start to the week, CBOT soybeans attempted to break $12/bushel once again. The National Oilseed Processors Association released the latest November soybean crush figures, stating another monthly record, one million bushels higher than trade estimates.
- South American weather will still be watched closely. Forecasts now show rain for Argentina over the weekend, but turning dry beyond that. Brazil remains largely dry at the moment with little to no rain in the forecast. Workers in Argentina strike again over pay, which will hinder logistics, but are likely to be short lived.
- Soybean plantings are 95% complete in line with the five-year average, but it will be interesting to see what needs redrilling. Brazilian crop estimates are still being lowered, mostly ranging from 127mln t to 133mln t.
- Plantings in Argentina are reported at 62% complete compared with 54% last week, slightly behind last year’s 64% but close to the five-year average of 63%.
- According to reports, China’s pig herd has now recovered over 90% of its normal levels from the African Swine Fever pandemic. Numbers are expected to return to normal in early 2021.
- Veg oil was firmer with palm leading the way. Despite Indian imports falling 8% in November to a five-month low, palm futures rallied to touch contract highs this week on continued production concerns and exports rising 9% from 1st-15th
- Rumours of a 15% Russian export tax on sun oil pushed the market higher.
- Matif rapeseed rallied to three-week highs this week on the back of firmer US soybeans and veg oil markets. Prices are now returning to the top end of the recent range.
- Sterling has firmed from the lows of the week, but Brexit negotiations will keep prices volatile.
- ADM has market-leading buybacks available on large blues and marrowfat peas. Pea seed availability is good, but is in high demand. Please call your farm trader for more information.
- We have spring barley processed on the floor ready to go. Don’t forget the added bonus of using Tiros seed treatment with 0.7t/ha yield increase, giving an 8:1 return on investment.
- We have opportunities for some additional seed growers with premiums paid over feed grain equivalents. Please speak to your farm trader or a member of the seed team on 01427 421217.
- Granular urea has eased off globally as we head into the holidays. US urea is firm, whilst North African prices remain stable, supported particularly by European buying in recent weeks.
- UK markets have been active over the past week with business on granular urea increasing. Replacement values for January are circa £20/t higher than current levels and stocks of the product are short in the UK. Price increases are therefore likely.
- PiagranPro, the ultimate urease inhibited urea (46%), has been the product of choice when considering the environment and reducing ammonia losses to the atmosphere this season. Product is still available.
- UK ammonium nitrate values remain unchanged at present, although firmer urea prices could help support the market after the Christmas break. More buying commitment has been seen.
- Liquid UAN values are stable and terms will be pulled tomorrow for the Christmas break. Spring fill business could be higher afterwards if the expected increases on urea and AN materialise.
|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.
“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.
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.