Market Report

Thursday 18 July 2019

Deferred Payment Scheme for OSR Seed

ADM Agriculture have launched a new scheme to enable growers to order and sow their OSR seed for drilling in 2019, with the ability to pay for it from the 2020 harvested crop.

Available on a range of market leading varieties of OSR, aiding cash flow on farm and removing some of the upfront costs of growing an important break crop. Please contact your ADM Agriculture farm trader for more details.

ADM Field to Flour Growers Club

ADM have launched a new wheat contract with the intention of encouraging farmers to produce food in a more environmentally friendly way and deliver improvements in food quality and safety. ADM want to work with local growers, sourcing wheat that is grown in the locality of its flour mills, but given the national coverage of our mills, we can support growers throughout the country.

In return for pledging to produce wheat that conforms with the sustainability criteria, growers will have access to exclusive contract terms to produce Group1 milling and Group3 soft wheat, and the opportunity to have a direct relationship with the end user. Please contact your ADM Agriculture farm trader for more detail.

Wheat

  • US prices are down $6/t on the week as harvest continues to produce higher than expected yields. The optimism following last week’s rise in exports reported by USDA now seems a forlorn hope, as last week’s figure was reported below trade expectations. US wheat continues to carry a hefty premium and, although this has narrowed against other origins recently, export trade remains thin as northern hemisphere harvests ramp up.
  • Argentina’s 2019/20 wheat production is estimated at 21.5mln t, according to the Rosario Board of Trade, which compares to 19mln t of wheat harvested last year.
  • Russia’s agriculture ministry expects this year’s grain crop to total 118mln t, with exports for the 2019/20 marketing season at 45mln t. This comes at a time where wheat production forecasts are gradually being trimmed due to the adverse weather conditions experienced during June, which has resulted in lower yields. The latest release by the Russian Grain Union pegged the crop at 78mln t, down from 82.5mln t previously.
  • Ukraine, which expects its 2019 grain crop to remain steady at last year’s figure of around 70mln t, has harvested 17.4mln t of early grains a/o July 15th.
  • Egypt purchased 60,000t of wheat from Russia for 21-31 August shipment. This was the first Russian purchase since June 19th. Of the 770,000t in total bought by Egypt so far this season, Russia has only sold 230,000t, with Romania the top supplier, at 480,000t.
  • EU harvests continue to progress. Reports from France continue to show big yields but low proteins, which should increase the percentage of the crop deemed as feed.
  • German farm co-op (DRV) reported the country’s 2019 wheat harvest will increase 18% y/y to 23.8mln t, as expectation of a recovery intensifies after drought devastated last year’s crop. This remains lower than its previous forecast of 24.7mln t,
  • UK new crop prices are mainly unchanged on the week, with sterling dipping on talk of a no-deal Brexit. Old crop prices continue to weaken on a lack of demand, with prices in most of the country now trading at parity, or below, harvest levels.
  • In summary, the wheat market continues to struggle as harvests progress. Although weather will have a say on final crop numbers, especially in the EU, Black Sea and US spring crops, it is apparent there is no shortage of wheat, just a lack of demand.
  • Short-term the likelihood remains that as harvest supplies increase, prices will drift lower, as exporters attempt to find demand. In the long-term it remains difficult to write a bullish story for wheat, unless it receives support from the corn story or from external markets or political intervention.

Malting Barley

  • Winter and spring malting crops look in excellent condition across the UK.
  • First cuts of craft winter barley in East Anglia and the south are reported to be above average yield, good quality, and low nitrogen.
  • Yields on French winter barley are reported above the five-year average and early reports on autumn-sown spring barley are of low nitrogen and good yields.
  • We are starting to see buying interest for low-nitrogen winter barley, but no interest as yet on springs.
  • We have winter 2020 contracts available to book. Please speak to your local farm trader for details.

Rapeseed

  • US soybean planting is now complete, and the market is focusing on the US weather to dictate market direction.
  • Tropical storm Barry arrived in Louisiana bringing rain which is causing some flooding in the Delta. Meanwhile whilst parts of the western corn belt and northern plains received beneficial rain, in the Midwest hot and dry conditions are starting to stress crops. Despite this, crop ratings have improved from last week, now reported at 54% good/excellent, (53% last week and 69% last year). Bean emergence is reported at 95% vs 99% average.
  • US/Chinese trade talks continue over the phone, though there seems to be very little progress reported. President Trump focused on the news that China’s Q2 GDP rose just 6.2%, the lowest for 27 years, also stating the possibility of additional tariffs on a further $325 billion of Chinese exports.
  • Meanwhile, it has been over a year since the first Asian Swine Flu outbreak, and now a new case of ASF is reported in China’s Sichuan province. The Chinese agricultural ministry estimates China’s hog herd in June to be down 25.8% and puts pork prices up 33% year-on-year.
  • In Canada, crops are looking in good condition, although some are still in need of rain. No concerns just yet, with temperatures remaining normal and reasonable rainfall forecast.
  • In Europe, Matif rapeseed reached recent highs this week on the back of lower production estimates in the EU, increasing the need for EU imports this season. Oil World estimates EU rapeseed imports now at 5.6 mln t for next season, taking into account mixed yields and lower oils that have been seen over the last few weeks.
  • The UK harvest has started. Prices have also followed EU markets higher but have been further supported by weaker sterling, which remains under pressure following the latest Brexit developments.

Oats

  • USDA raised world oat production by 1.7%. The expectation is that prices will continue to drift lower as the crop expectations start to be realised.
  • In the UK, reports on crop quality are positive, however the expectation is that it may be another fortnight until we start to see any volume of oats being harvested.

Pulses

  • The bean market has remained well supported over the last week helped by weaker sterling. Confidence in the crop is increasing with many market participants revising their production estimates higher over the last few weeks. Export demand remains for feed beans for vessels to load and arrive at their destination before the end of October, but beyond that buyers are reticent to buy UK origin beans due to the threat of the import tariff if the UK leaves the EU without a deal.
  • Domestic demand is very limited. Beans are too expensive for compounding and the extruder market is considering using imported peas to replace beans. It is therefore likely that feed prices will soften once harvest commences and farmer selling occurs.
  • The human consumption market appears supported in the short term, with Baltic crop estimates being revised lower in recent weeks. UK quality will be a big driver of this market and we won’t have an idea regarding that until harvest commences. The expectation is that we will not see the extremely high levels of insect damage that we saw last year.

Seed

  • Market leading HOLL OSR contracts are still available for sowing this autumn – please contact your farm trader for more info. There is a very limited amount of V353OL still available with excellent yield potential and increased autumn vigour.
  • Autumn cereal seed sales have been in full flow over the past week. Some varieties are already sold out or very close. Please contact your farm trader for bespoke variety advice to suit your farm.
  • Winter beans and oats are both getting short in supply and expected demand is high so requirements should be covered ASAP.

Fertiliser

  • Global granular urea market is flat to firm once again. Traders found themselves with short positions last week for the Indian tender due to fewer exports from China than thought. Global demand could be sufficient now through August to support current prices for over a month.
  • UK granular urea market is trading about $25/t below replacement costs. Any further weakness in sterling will firm prices as UK importers will have to trade at replacement values soon.
  • UK ammonium nitrate prices are stable with the same price for spot delivery as October. UK and imported AN and nitrogen sulphur compounds are available from ADM Agriculture. Speak to your farm trader or the fertiliser desk for prices.
  • Liquid terms for spring tank fills are now available. Consideration of these spring terms are encouraged, as securing prices now mitigates risk with uncertainties around UAN tariffs and currency.
  • Fibrophos and P-Grow are available from ADM Agriculture as an alternative PK fertiliser. Fibrophos and P-Grow are a UK produced fertiliser that can reduce input costs, increase secondary and trace elements in your soils, and improve yields. Speak to your farm trader today and find out how much you could benefit from renewable compound fertilisers.
£/€ £/$ €/$
1.1135 1.248 1.121
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jul19 117-122 133-143 319-324
Nov19 121-131 138-148 199-209 329-344
NB: Prices listed may vary depending on area.

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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