- Despite markets retracing from the recent multi-year high, all major grain exchanges still managed modest gains on the week.
- Talk of increased Russian taxes and the potential of further export curbs initially pushed markets higher, before spill-over pressure from weaker soybean and maize markets pulled wheat off its recent highs.
- Russia is set to double its original export tax proposal on wheat to €50/t between 1 March and 30 June. There is talk of potential further curbs on volume and an extension into the new marketing season.
- Agri-consultancy IKAR has lowered its forecast for Russian wheat exports in 2020/21 to 37.5mln t, due to the impending tax.
- Until the situation is sorted out, pricing export wheat will become a bit of a lottery.
- Algeria purchased 390,000t of wheat, including French, German and Argentine origins at the latest tender. The price paid was described as ‘aggressive’, reflecting a sizeable discount to replacement levels presumably to ensure physical execution actually happens.
- Several further international tenders are expected, although whether the ‘aggressive’ Algerian offer will be repeated remains to be seen.
- European wheat prices paused after reaching a 7.5-year high as the trade awaits further indications on how Russia’s plans will affect global prices.
- UK prices end the week on a firmer note, following other markets with currency little changed. Fundamentals also remain much the same, with the country needing to reach a price level that ensures additional imports are secured.
- Elsewhere, Ukraine will decide whether to limit maize exports in the 2020/21 season on 25 January. The move was requested by animal feed companies and meat producers to avoid higher food prices.
- Ukraine’s year-on-year grain exports have fallen 18% to 27.6mln t according to official figures, and include 12.75mln t of wheat, 10.5mln t of maize, and 3.9mln t of barley
- International Grains Council raised its forecast for 2020/21 global wheat production by 3mln t, citing higher production for Australia, Canada and Russia. However, it slashed the global corn crop by 13mln t due to lower US production.
- Strategie Grains raised its forecast of the EU-27 2021 soft wheat crop to 129.7mln t, which would be 10.4mln t higher than this season.
- Buenos Aires Grain Exchange reported that the Argentine wheat harvest was complete, with average yields reported 3% lower year on year, with just over 7% of the planted area lost due to unfavourable weather. The crop is estimated at 17mln t.
- Argentina’s government has re-opened corn exports amid surging registrations as traders believe the country could raise export taxes in the near future.
Thursday 21 January 2021
- Old and new crop malting barley continues to be supported by the feed market.
- However demand for malt is reducing due to the ongoing lockdowns.
- Demand for old crop malting barley is very weak.
- There is good demand for new crop.
- Wet weather in the UK is delaying early plantings and keeping sellers away from the market.
- The rally in barley prices continues once again, bolstered by scarcity of supply.
- We see some international tender interest from Saudi Arabia and Tunisia for deliveries over the coming months, which should lend further support.
- HMRC export figures for the season through to the end of Nov’20 have been reported at a total of 684.37Kmt, after Nov’20 shipments of 271.21Kmt, 50% of which was bound for non-EU destinations. We anticipate that from harvest through to the end of Dec’20 the UK will have shipped over 50% of its barley surplus.
- The discount to wheat on new crop positions is narrowing slightly, as wet weather may hamper spring plantings.
- US stocks were firmer this week, reaching highs on Wednesday after Joe Biden was sworn in as the 46th US president. He set out a clear ambition to turn the country around following the effects of the pandemic.
- CBOT soybeans continued the sharp sell-off this week, closing lower again for the third session in a row last night. Beans were nearly 30 cents down, but managed to claw back to a 17 cent loss at the end of the session.
- There seemed to be more profit taking in yesterday’s session, with funds again reducing their long.
- South American weather remains under a watchful eye. Rains in most growing areas have taken some weather premium out of prices , but the outlook appears dry over the next 10 days.
- Crop consultancy AgRural estimates Brazil’s soybean harvest at 4% vs 2% last year. IHS (formerly Informa) raised production estimates from 132.5mln t to match USDA’s 133mln t.
- In China Covid-19 cases are on the rise. Renewed lockdowns are now being enforced in Hebei Province. People are reported to be stockpiling food ahead of tighter restrictions.
- Veg oil markets were again lower. Malaysian palm eased 3.3% and there has been a continuation of profit taking and concerns over demand. Exports of Malaysian palm from 1–20 January were reported down 41% to 1.07mln t. Indian officials are talking of further import taxes which pressured prices.
- Matif rapeseed followed the wider market lower, although it has since traded off the lows of the week.
- Sterling is back at the highs of 1.1300 .which will pressure UK prices slightly.
- The oat market has begun to firm over the last week, as the feed market looks to oats as a significantly cheaper alternative to barley or wheat. Farm sellers however remain largely disengaged from the old crop market.
- Weather across the UK in the past week has been at the forefront of most minds as we have seen a significant amount of rain. Reports are that winter drilled oats are (by and large) standing up well to this. Although if this weather trend persists, the situation will need closely monitoring.
- Old crop feed beans continue to creep higher. With mid-range proteins remaining very firm, there have been further enquiries for old crop beans from domestic compounders this week, which is supporting prices. However, enquiries on the export market have been thin as Baltic feed beans are offered at a slight discount to UK beans.
- There remains no demand for UK beans as human consumption and therefore no premium available. Australian beans, whilst they have firmed recently, remain the cheapest origin into North Africa. With demand subdued in North Africa due to Covid-19, it’s looking unlikely that there will be any further demand for UK beans as human consumption for the rest of the season.
- New crop bean prices continue to track wheat values and prices of over £200/t are available for most. New crop bean buybacks linked to London wheat futures remain available, as do large blue and marrowfat pea buybacks.
Spring seed availability
- Spring barley availability is unchanged. We have Planet, LG Diablo and dual purpose Laureate available for immediate dispatch. We also have some Lynx spring beans to offer.
- Spring wheat is very limited.
- ADM Agriculture have marrowfats and large blue peas available on market leading buybacks. Contact your farm trader for more information.
- Remember, ADM Agriculture can cover all of your small seed requirements, including stewardship scheme mixes, cover crops and a huge range of straights.
- Granular urea has been the key driver for firmer nitrogen prices over the past week, trading up a further $25/t to reach $345/t FOB Egypt.
- Replacement values now top £300/t on farm in the UK, which will now provide support to all other nitrogen products.
- UK ammonium nitrate saw a further price jump, up almost £20/t for the same month of delivery, reflecting firmer urea price and higher UK gas prices.
- Global and domestic markets are experiencing high levels of demand with limited supply.
- Phosphate continues to rally towards £400/t and is anticipated to reach this level.
- Potash remains stable in a very active market.
|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.