This will be our last market report in 2019. The next edition will be published on Thursday January 9th. We wish all our readers a very merry Christmas and a healthy, happy and prosperous new year.
Thursday 19 December 2019
- US prices are up just over $10/t on the week, as renewed export optimism swept through the grain/oilseeds markets on news that an agreement on phase 1 of the China/US trade deal was near completion.
- China called off additional tariffs set to kick-in on imports of US products over the weekend and agreed to provide tariff waivers on a more regular basis to buyers of US products.
- Continued heat and dryness persist across much of Australia, threatening final wheat harvest numbers, as prices reached a two-month high. Harvest is put at 80% complete, although the heat has taken its toll regarding specific weight.
- Argentina’s new government has hiked up export levies on soy, corn and wheat exports, with exports temporarily suspended to allow new rates to be adopted.
- Extremely dry conditions through the autumn has seen a near 10% drop in winter wheat sowings by Ukrainian farmers, to just under 6mln ha. Reports place just over half of the crop in good condition.
- EU (Paris) futures are up €3/t on the week, supported by ongoing export demand, logistical issues, in part caused by ongoing industrial strike action, and reduced producer selling.
- Frost tolerance for winter cereals in the EU is much weaker than usual this year, due to the above-average temperatures and excess moisture for an already delayed sown crop.
- UK (London) futures are up just over £4.50/t on the week, as the firmer global markets and the current supply squeeze pushes prices higher.
- There are a number of issues facing the UK market. These include getting accurate detail as to the size and condition of winter plantings and therefore the potential size of the 2020 harvest. The success of ongoing Brexit negotiations for the long-term trade agreement with the EU, which will have to be concluded in 2020, and the level of sterling vs the euro and US dollar are further uncertainties.
- All-in-all, the market doesn’t look like falling in the short term, especially with growers shutting-up shop as the festive period approaches at a time when continued demand, both domestically and internationally, remains very evident.
- EU old crop prices remain very quiet as we head towards the new year.
- The trade is reporting an increasing amount of rejections due to infestation and loss of germination.
- Growers should aerate their stores on cold nights.
- The 2020 malting market has come under pressure in the last few days, with sellers keen to market what looks like a very big EU and UK crop.
- Continuing uncertainty over Brexit means that EU maltsters are currently unwilling to buy crop 2020 from the UK.
- Oil markets again led the way again for the oilseeds complex this week, with global oil demand still outweighing supply for the 2019/20 season.
- Palm oil prices have seen significant gains over the last few months, with lower production supporting all veg oil prices. Soybean oil made a new 18-month high earlier this week before seeing consolidation.
- This week US and Chinese officials confirmed a phase one trade deal had been agreed. Full details of the agreement are still to be seen, but both sides hope to have everything signed by 20 Jan 2020, although the US would like this date to be brought forward.
- The new Argentinian government has increased export taxes on soybeans to 33% this week. This again changes the trade flow for global soybeans with buyers preferring cheaper supplies from Brazil or the US.
- In Canada, Canola futures traded at a four-week high, following oil and Matif rapeseed futures. The aftermath of the recent national rail strike continues to effect deliveries, though it’s expected to take some time before normal services can resume. Farmer selling is slow with growers still hopeful that China may return to the market in the new year. Canadian delegates are travelling to Beijing this week to discuss trade matters, although it’s unlikely that a deal will be struck anytime soon.
- The canola harvest in Australia is now complete. The weather remains very hot and dry, which may deter farmers from planting in the new year. Farmer selling remains quiet, with most growers estimated to be further sold than in a normal season.
- Matif rapeseed futures continue to hit new highs this week on the February position, rising at a faster rate than other oilseed markets. Charts now appear to be overbought in the short-term and it may not be surprising to see some profit taking prior to the end of the month. However, the overall problem with the tight seed and oil supply and demand for this season and next still remains, so another rally cannot be ruled out.
- Here in the UK, farm gate prices have seen significant gains in the last week, helped by a weaker pound. This week the Prime Minister outlined plans to outlaw delays to the Brexit transition period beyond 2020. As such, sterling fell over 2 cents from recent highs. As more Brexit plans become unveiled going forward, we expect sterling to remain volatile.
- The domestic oat market has been devoid of any fresh news or impetus on the week. The market seems focused on December execution and fresh trade was relatively thin.
- The £/€ retracement back to pre-election levels has meant that the UK is back in line with indicated feed oat demand on the near continent. However, sellers remain cautious of offering beyond January 2020.
- The window to make fresh sales of human consumption quality beans to Sudan, which has been trading at a premium to Egypt, is closing rapidly. UK beans need to be shipped by the middle of January at the latest in order to be custom cleared before the end of February ’20, when Sudan’s import restriction comes into place.
- The Australian faba bean harvest is approximately 40% complete and is producing slightly lower yields than expected, and quality appears to be variable. With limited farmer selling and a number of shorts in the market, Aussie prices are firming. As a result, we have seen some demand from Egypt this week for UK spring beans and have markets for spring beans up to 15% insect damaged as human consumption. There is less demand for winter beans and as a result they are trading at a significant discount to the springs.
- We continue to see good interest in the new crop pea buybacks. Please contact your farm trader for further information.
- Stocks are sold out; however imported replacements are available. Please talk to your farm trader for the latest availability.
- RGT Planet and Laureate remain limited, LG Diablo is widely available as a high yielding feed variety.
- Provisional derogations have been provisionally approved for germination down to 70%, this will release a few extra tonnes into the market in the new year.
- Stocks remain good for Daytona and Kabuki to cover our large blue and marrowfat buyback contracts respectively.
- The urea market is waiting for news on the Indian tender for further price direction as we enter Q1. Trades this week were at higher numbers seeing increases of $9/t FOB Egypt and $9-18/st FOB US.
- Replacement values continue to be marginally impacted by volatility in sterling, which is still reacting to the result of the election last week.
- Anticipation of a busy spring is building, with the possibility of many returning to the market in January. Eyes will be firmly on weather and soil conditions over the next two weeks.
- ADM Agriculture is offering soil nitrogen testing over the next four weeks, which needs to be logged before 18th Speak to your farm trader as soon as possible regarding the service, as it is imperative that following this adverse wet weather, accurate and well-informed decisions about nitrogen requirements for spring are made to optimise yields and returns.
- Current estimates suggest that even with an increased spring crop and a reduced fertiliser demand, buying is still significantly behind following this unfavourable autumn and end to 2019.
- CF will release new terms to the UK market in early January and will want to capitalise on a big spring market still to surface.
|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.