Market Report

Thursday 22 August 2019

Wheat

  • US prices continue to drift lower, down $3/t on the week, pressured by weaker EU prices and despite US exports still running 25% ahead y/y.
  • Paris wheat futures have again fallen on the week, setting a fresh contract low of €169/t (Dec19 futures) as EU wheat, and especially French wheat, struggles to find demand despite prices being the cheapest since August 2017.
  • Russian wheat offers continue to decline as exporters have started to quote aggressively in an attempt to increase export trade.
  • Excessive rains during the maturity and harvesting periods have raised quality issues in both Romania and Bulgaria, leaving exporters unclear if export supplies would meet Egyptian and Saudi buying specifications.
  • UK prices, pressured by the general global tone, have also set fresh contract lows, with Nov19 trading down £5.50/t on the week at £135/t.
  • Sterling has steadied, supported by comments made by Angela Merkel that a solution to the Irish border ‘backstop’ may be achievable, but the UK government would have to come up with an alternative proposal, and within 30 days.
  • In summary, the market has continued to weaken, as a large supply chases demand. Northern winter crops are made with higher than envisaged yields, which has compounded the problem.
  • Focus now switches to southern hemisphere crops, which will still be governed by weather, with both Australia and Argentina talking of drier conditions which could reduce final output.
  • It’s hard to find a spark that could ignite the wheat markets, as this would have to be demand-driven, but from where?

Malting Barley

  • As the weather finally improves, the EU and UK spring barley harvest is progressing rapidly and should be finished in the next few days.
  • Some of the later cut post rain UK spring barley has “lost yield” due to ripe ears falling to the ground.
  • Overall yields and quality are still excellent.
  • Most growers on a pre-harvest contract have a surplus over and above what they have sold.
  • Buyers therefore have plenty of barley and do not require extra purchases at this time.
  • Export sales have stopped as sellers access the post rain quality, especially the moisture levels.
  • Growers should carefully dry their malting barley below 14.5% as soon as possible.
  • Markets remain bearish and premiums remain low.

Rapeseed

  • CBOT soybeans struggled to make any major gains this week.
  • US weather remains non-threatening and wet for the next few weeks which should help crop development.
  • The recent ProFarmer crop tour surveys show low pod counts in soybean crops across the Eastern Corn Belt. Crop ratings also deteriorated down 1% to 53% good/excellent, 33% reported to be fair. This is the lowest crop rating for this particular week since 2012 when yields were recorded at 44 bpa.
  • More results are expected from the tour tonight, however rumours are circulating which suggest the USDA has temporarily pulled all staff from the ProFarmer tour due to a member of staff being threatened, therefore updates may be slow going forward.
  • Meanwhile the market remains hopeful that an agreement between the US and China could be signed soon. A recent statement from President Trump states the US will “probably” make a deal with China, but it doesn’t suggest when. It has now been over a year since the trade war first began, China are still absent from the US market and favour buying South American soybeans.
  • Asian Swine Flu continues to spread with numerous cases now reported across Asia/EU/Russia and Ukraine. Meal demand going forward will be impacted, but it remains to be seen by how much.
  • In Canada the canola harvest is only a few weeks away. Crop estimates for crop 20/21 are around 20mmt.
  • In Australia we are still a while away from harvest. The crops still look very patchy, which makes estimating next seasons production difficult at the moment. However, if most areas receive another shower or two in the next few weeks, then farmers will be more confident on achieving an average yield.
  • Here in Europe harvest is virtually complete, with bits left to do in Germany and the UK. Crop estimates continue to be around 17mmt but could fall below that once everyone has finished. The EU oil market remains very tight with rapeseed oil prices firming to €800p/t in recent weeks.
  • Domestically, whilst fundamentally the rapeseed market remains in an upward trend, sterling will continue to have a large impact on price direction.

Pulses

  • The feed bean market moved aggressively lower last Friday but have since consolidated this week. Demand is few and far between, with most shippers refusing to bid until they see some additional export demand, and beans remaining too expensive to find any demand into the compound feed rations. Bean prices are expected to remain under pressure as harvest commences.
  • All the samples of green peas seen to date have been suitable for human consumption, with the majority a good green colour. Very few samples have been seen of peas cut since the rain last week and these samples are expected to be higher bleached. Values for green peas for both green and bleached samples are unchanged on the week. Canadian green pea prices are under pressure and we expect this to keep a lid on UK values.

Seed

  • TuYV resistant OSR varieties – 7 sites are available to see on the AHDB 2019 trials data. The top 5 yielding varieties all have TuYV resistance showing the trait has agronomic as well as economic benefits on farm.
  • Hybrid barley varieties are all in bags and ready to go. Please speak to your farm trader to discuss availability. SY Kingsbarn is sold out with very limited amounts of Bazooka and SY Baracooda
  • Winter wheat has started being processed with early samples looking very good. Most varieties are still available; however, stocks are not endless, and we are yet to see samples of seed crops cut post rain.

Fertiliser

Urea

  • Very little fresh news in the urea market over the last week regarding price movement.
  • A few expect global prices to weaken for September due to an inactive market and falling grain prices, but this is not guaranteed with buyers on the side-lines about to surface.
  • India will soon tender again for up to 1.5mt, both Europe and South America have large tonnages to buy for shipment September/October.

Ammonium Nitrate/Urea Ammonium Nitrate

  • CF remain at the same levels and are yet to increase prices.
  • Yara posted new terms for November delivery reflecting a 6.5% tariff which will be applicable in a no deal situation.
  • Imported AN still available at a discount to UK.
  • Autumn & Spring UAN prices still available.

Fertiliser importers and UK ports continue to prepare themselves and plan for life post October 31st. With most fertilisers subject to an import tariff of 6.5% if we leave with a no deal, most of the ports throughout the UK are now lined up to accept a large tonnage of product in the September/October window in advance of any price rises. This remains the unknown and a huge area of risk for those still yet to make a commitment to buy fertiliser. That aside, the UK will adopt EU fertiliser regulations and guidelines on safety, haulage, handling and storage.

£/€ £/$ €/$
1.097 1.216 1.1085
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug19 116-120 123-125 - 327-332
Nov19 120-124 128-136 190-195 340-345
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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