Market Report

• Weather has moved centre-stage this week following winter storms in the US and a severe drop in temperatures seen there and across much of Northern Europe and the Black Sea region.
• Most of these areas had sufficient protective snow cover so damage is believed to be minimal here, but it could be different where snow cover was low or non-existent.
• US wheat rose about $3/t and then fell again as the trade tried to assess crop conditions.
• Further uncertainly has emanated from Russia. The wheat export tax is now in operation and due to increase in March before the floating tax system is being adopted in June, making forward pricing of Russian export wheat almost impossible, especially for new crop.
• Russia is usually the world’s biggest wheat exporter over the July-September period. Unless the situation becomes more transparent, key importers may be forced to look elsewhere for supplies, underpinning new crop values.
• Russia’s February exports of wheat, barley and maize will only fall slightly on the month to 3.1mln t, as a surge in wheat exports prior to the introduction of the wheat export tax will boost the monthly total.
• In its monthly update, Strategie Grains increased the forecast for current season wheat exports from the EU and UK to 26.1mln t, reflecting a shift in demand away from Russia.
• Soft wheat exports from the EU had reached 16.25mln t as of 14 Feb, down from 19.53mln t cleared by the same week last year.
• Ukraine grain exports have reached 29.8mln t so far this season, down 20% on the year, with traders reported to have sold 13.16mln t of wheat, 12.21mln t of maize and 3.96mln t of barley.
• In the UK, official data continues to show a slowing in domestic demand across all sectors – industrial, food and feed – due to lockdown restrictions. Although the UK is reported to have imported 1.42mln t of wheat to the end of December, a further 1mln t is expected to be needed during the second half of the marketing season to make up for harvest 2020’s dramatic shortfall.
• This means the UK will have to remain at import parity. EU values are likely to remain supportive due to Russia’s export tax. That said, actual import requirements will depend on how current Covid restrictions prevail.
• Looking ahead, Strategie Grains cut its forecast of the 2021 EU soft wheat crop to 129.6mln t, down fractionally from the 129.7mln t forecast last month.
• Analyst IKAR said earlier in the week it had raised its estimate for Russia’s 2021 wheat crop by 1mln t to 78mln t, due to an improvement in weather conditions.
• Australian farmers will harvest a record wheat crop in 2020/21, after heavy rains in key producing regions boosted yields, according to ABARES who now estimate the crop at 33.3mln t.

• Feed barley markets remain quiet, and we have seen some pressure from slow demand combined with a firmer pound on the week.
• Overall the old crop picture remains one of short supply and origination is still slow, with good demand forecast through to the end of the season from UK consumers as barley remains good value against other raw materials.
• HMRC export figures released showing another strong month in December 20 at 283,000t, taking the season to end of 2020 to just under 1mln t, almost 60% of our exportable surplus, which is higher than the pace in previous years (see graphic below).
• New crop markets are dormant with low demand, but also little supply as the spring crop still needs to be planted.

***Click here for this week’s grain market update featuring feed barley on the ADM Agriculture YouTube channel***

• Old crop pulse prices continue to track sideways. Green pea values are up nearly £40/t since harvest, but values have now stabilised as most consumers domestically and abroad seem to have most of their old crop requirements covered.
• Bean prices are stable on the week. UK beans remain uncompetitive for export, but domestic shorts and a lack of farmer selling is keeping a bid under the market.
• With the continued wet weather, we are seeing increased interest in pea buyback contracts. We have buybacks available for marrowfats, large blues and yellow peas. Please contact your farm trader for further information.

• Granular urea has traded at $390/t FOB Egypt. Cold weather in the US has increased energy costs and forced some ammonia and urea producers to turn off capacity.
• This will tighten supply to the relatively firm US market and reduce global tonnage, potentially adding further support to the world market.
• UK ammonium nitrate prices have moved up, following urea prices higher in what is a well-supported domestic nitrogen market.
• Phosphate values have risen significantly. TSP and DAP are much firmer than last month.
• Warmer weather has led to increased demand for fertilisers following the cold snap in the UK, creating high pressure on deliveries.