Market Report

Thursday 18 March 2021

Please click *here* for this week’s grain market update on the ADM Agriculture YouTube channel.

Wheat

  • As wheat prices come under pressure and fundamentals remain weak, the market will need a catalyst to spark a turnaround in sentiment.
  • Market longs are staring at a huge old/new crop inverse in prices. Given the size of the US carry and increasing freight rates, US prices are not enticing buyers, particularly as key international buyers’ own domestic harvests are only a matter of weeks away.
  • US wheat prices have traded down a further $4-5/t on the week due to the current sluggish sentiment and an improving new crop outlook.
  • EU and UK prices have followed the global downward trend, losing €6/t and £5/t respectively.
  • Spring sowing has commenced in the northern hemisphere, under mostly favourable conditions. Weather will now take greater importance as US plantings begin.
  • The EU’s crop monitoring unit MARS reported winter grain crops in the EU are entering spring in fairly good condition and yields should rebound in 2021.
  • Spring sowings are making good progress in Western Europe, particularly in France and Germany, both key producers. However, a drop in the planted area is expected from last season’s unusually high levels.
  • Most regions in the Ukraine will have optimal soil moisture reserves and near-ideal conditions for the start of spring sowing over the next few weeks.
  • Australian farmers are scouring the market for crop-planting machinery and other ag products, with many betting on back-on-back bumper harvests, buoyed by good moisture levels in main growing areas.
  • There have been some rumours that the Russian Government is prepared to stop interfering in the regulation of grain exports when the market stabilises and will consider various other approaches in order to secure domestic supplies.
  • Looking at more immediate events, Ukraine’s grain exports have fallen 23% so far this season, to 33.4mln t, with traders exporting 13.9mln t of wheat, 14.9mln t of corn, and 4mln t of barley.
  • Egypt purchased 360,000t of Romanian wheat in its recent tender, with offers over-subscribed, as traders believed this could be the country’s final tender for this season.
  • Egypt expects to procure 3.5mln t of wheat from local farmers when the harvest starts mid-April, with current strategic stocks standing at a four to five-month supply.
  • China sold 2.26mln t of wheat last week at an auction of state reserves, continuing the strong demand from the feed sector which is using the grain to replace pricey corn.

Malting Barley

  • The EU old crop market is slightly weaker this week due to lack of demand.
  • In the UK there are a few merchants who are short and needing to buy, which is underpinning the market.
  • The EU and UK spring barley plantings are progressing well, which has led to a drop in crop 2021 prices.
  • Feed markets are also weaker.
  • Prices and premiums for crop 2021 remain very attractive.
  • Please contact your local ADM farm trader for crop 2021 buyback options.

Feed Barley

  • It has been a thin week for the UK feed barley trade and we have seen a sell-off in values as sterling and ocean freight remains firm, and cheaper German/Baltic stocks continue to undercut our prices into the Netherlands.
  • Domestic consumers are encouraged by the softer values and remain largely absent from the market.
  • Barley stocks left on farm are in short supply though, and replacing any larger volume sales is still tricky.
  • New crop is once again feeling the pressure, with further progress anticipated in the spring drilling campaign over the coming weeks. Meanwhile we remain too expensive to compete into nearby European markets.

Rapeseed

  • US stocks traded higher yesterday, bouncing off the weeks lows. The US economy is estimated to grow by 6.5% this year, which gave some confidence to investors, and as such, unemployment is set to fall by 4.5%.
  • The US’s National Oilseed Processors Association crush figures for February showed a slowdown in crush pace, which pressured soybeans, but gave meal a boost. Soy oil stocks were lower than expected, but prices couldn’t sustain the highs.
  • South American weather is starting to look better now with hotter, drier conditions in central and eastern parts of Brazil, but with rain in the south. Sorriso, a major farming community in Brazil, declared a state of emergency following last week’s heavy rains which caused damage to property as well as crops. Nationally the Brazilian harvest is 46% complete vs 59% last year.
  • Yesterday China’s agriculture ministry released plans to launch a campaign to reduce the amount of corn and soymeal going into feed rations, but these are said to be guidelines and not compulsory.
  • Veg oil markets were mixed yesterday with Asian markets lower, Malaysian palm higher, but soy and crude oil both closed down.
  • Markets are again all lower on Thursday on the back of renewed lockdown concerns and increase in palm production in the first half of March. Indian veg oil imports were reported to be 25% down from Jan, 27% down vs last Feb.
  • Matif rapeseed followed other markets lower due to concerns about the possibility of further EU lockdowns and the consequential effect on fuel demand. Chart-wise, markets have looked overbought for a long period of time and a correction would be healthy.
  • UK prices remain rangebound, with sterling trading between 1.16 and 1.17 vs the euro.

Seed

  • Spring seed supply is now running low, with a small quantity of Laureate and LG Diablo remaining and ready for immediate dispatch. Take a look at the most recent seed video *herefor an insight in to the spring barley market.
  • ADM have marrowfat pea variety Kabuki available on our market leading buybacks. Contact your farm trader for more info.
  • Don’t forget we can cover all of your stewardship and cover crop needs with various mixtures and choices.

Fertiliser

  • India tendered for 1.5mln t of urea at the beginning of the week. The long-awaited tender is the first of this year and will set price direction.
  • North African supply is reportedly tight. Offers remain at $400/t FOB Egypt. US urea prices support these levels, with higher demand being realised in March.
  • ADM has full loads of granular urea available to be delivered before the Easter weekend, which falls early this year.
  • UK ammonium nitrate producer CF has corrected NPK, N/S and AN levels to reflect the competitive pricing in the UK market.
  • Liquid terms have been withdrawn, but prices are available on POA basis. This is due to limited supplies of sulphur product ammonium thio-sulphate (ATS).
  • PK and alternative PK products are available for immediate delivery.
£/€ £/$ €/$
1.1695 1.396 1.194
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Mar21 160-170 197-207 222-227 430-435
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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