Market Report

Thursday 23 January 2020

Wheat

US prices are up about $2/tonne on the week, hitting 4-year highs, with values supported by ongoing strength relating to rising EU / Black sea prices.

 

US markets generally took the signing of Phase One of the US/China trade deal in its stride, initially moving lower as reports from China stated, ‘they will only buy what they need, and when they need it’.

 

Argentine wheat shipments to Asia are poised to climb to a record high over the coming months as a drought curbs Australian production, and Black sea inventories tighten

 

Precautions are being taken in China as the Government attempts to control the outbreak of a new coronavirus that threatens to spread across the country, raising concerns on the financial markets and its potential impact upon the economy

 

Export prices of Russian wheat reached their highest level since the marketing season began, due to demand from major customers and risks relating to Russian proposals to introduce an export quota

 

EU prices are up about €1.50/tonne on the week touching a near2-year high, supported by good international demand, with little signs that the trend would ease in the coming weeks

 

French prices continue to firm as the ongoing transport strikes over pension reform cripples rail services, and rolling stoppages by dock workers leaves exporters struggling to get supplies to export and domestic locations

 

EU exporters are seen switching cargoes away from France due to the logistical problems, to either Germany or the Baltic states, although this is also seen inflating their regional premiums as an already heavy export program has reduced available supplies.

 

UK prices are down 50p/tonne on the week, as slightly firmer global markets are negated by a rise in the UK£.

Much focus has been centred on UK planting progress – or the lack of it – over the past week or so of dry weather. Currently the dry period looks like ending, at least for a while, next week so progress may be only possible in the short term.

Imported maize continues to be a competitive option for UK compounders for the 2020/21 winter feeding season and this remains as a threat to UK wheat prices next season.

Likewise, UK millers, who are well aware that milling wheat imports will almost certainly increase significantly next season, are monitoring the price of imported German A wheat, and other wheat from other origins, which will then set a cap on UK milling wheat prices.

 

Short-term, demand isn’t going away, and prices will stay supported. Long-term the market will be driven by weather, and by when the farmer ‘brings the wheat to market’ especially across much of the EU and Russia.

Malting Barley

Brewers have bought a small amount of malt over the last few days, which has led to a few UK Maltsters looking at buying barley for April-June delivery. The FOB export market has also seen buyers looking for offers, however it remains very quiet on farm with few sellers. The 2020 market is very quiet with most farmers wanting to book Pool or open price movement contracts.

Rapeseed

  • It was a slow start to the week for U.S markets with offices closed on Monday for Martin Luther King Day.
  • Last week the market U.S and Chinese officials signed the historic “phase-one” agreement which struggled to give support to the Soybean market. Full details were not disclosed but a summarised report highlighted that China were under no obligation to buy U.S soybeans and would only purchase from the U.S subject to market conditions.
  • The agreement did state that China would pledge to spend $80 billion on Agricultural purchases over the next two years through Feb 2022 (Year 1: $36.5 billion / Year 2:$43.5 billion).
  • In South America, weather conditions are favourable with normal rainfall in the northern parts of Brazil, but southern parts of Brazil and parts of Argentina remain very dry. Harvest in Brazil is still lagging, with crop maturity behind the normal trend. AgRural estimates the Brazilian Soybean harvest at 1.8% complete vs. 6.1% LY).
  • Chinese markets remain quiet ahead of New Year celebrations. The deadly Corona virus has been detected in some areas of China, particularly the city of Wuhan which has now reported 600 infections and 17 deaths. Public transportation is now on lock down until further notice to try and stop the virus from spreading.
  • Asian oil markets remain mixed ahead of the new Lunar New Year holiday. Veg oil markets mainly palm oil continues to trade close to recent lows. At the start of the week Malaysian palm oil and Soybean oil futures traded at 5-week lows, with Rapeseed oil trading at 4-week lows.
  • The knock-on effect of India curbing palm oil imports continues to pressure veg oil markets. If these diplomatic issues are not resolved then restrictions placed on traders buying Malaysian palm oil will continue, should that be the case then Indian palm oil imports could be down as much as 11% in 19/20.
  • Matif Rapeseed continued to consolidate from contract highs, following weaker veg oil markets and weaker crude oil prices, which hit a 5-week low. Further EU imports of rapeseed and rapeseed oil help ease the old crop balance sheet.
  • UK farm gate prices were also pressured over the last few trading sessions as Sterling extends its gains against the Euro on the signs of growing economic optimism in the UK. As we head closer to the end of January, we expect Sterling to remain volatile.

Pulses

Supplies from the Baltic states are well exhausted and with Australia having a much lower crop than expected (and their prices rallying as a result), Egypt is looking to the UK to cover their requirement for splitting beans. This demand is driving prices higher, with both feed and human consumption quality beans higher on the week.

 

Old crop peas have also firmed as some micronisers look to take cover towards the later end of the year.

 

We continue to see good interest in new crop pea buybacks with a small area remaining for marrowfats, large blues and yellow peas. Please contact your Farm Trader for further information.

Seed

Sadly, the weather continues to hamper efforts to sow winter cereals – although the recent frosts have aided progress to a certain extent.

For anybody that has a window to sow winter wheat, we still have availability of KWS Crispin – one of the most suitable varieties for sowing at this late stage, we also have limited access to Skyfall.

 

Spring seed demand continues at a pace , along with deliveries of existing orders. We have availability of RGT Planet and LG Diablo along with the dual-purpose variety Laureate.

 

Spring pulses are also in limited supply. Spring beans are difficult with issues around germination causing multiple problems with seed lots but peas are still available to go along with our market leading buyback contracts on both marrowfats and large blue types.

We are offering a micro-nutrient seed dressing on spring peas this year called StartUp Maxx – containing a number of micro-nutrients to help the crop get away to the best possible start.

 

One option that is likely to see some demand is Spring Oilseed Rape – with high commodity values – we could see a spike in the acreage which we haven’t seen since the Spring of 2013, following the very wet autumn in 2012.  There are a number of high yielding varieties with good all round agronomics including the varieties Lagonda, Lumen and Performer. We recommend farmers use the link to the new AHDB descriptive list – https://projectblue.blob.core.windows.net/media/Default/Imported%20Publication%20Docs/AHDB%20Cereals%20&%20Oilseeds/Varieties/RL2020-21/Spring%20oilseed%20rape%202020.pdf

 

For more information on any of this above please contact your Farm Trader for more details.

Fertiliser

  • Granular Urea traded at $240/t FOB Egypt on Sunday following trades at $250/t the previous week. Sterling was trading at £/$1.29 at the time which put replacement values on farm at £252/t.
  • Urea in the UK is firming towards these replacement values as demand has increased through January. ADM can offer February and March delivery although this month is still possible.
  • Demand in the UK AN market has been very active this week with incentive to take delivery in January. The January terms are still available and those still to buy can still take advantage of these terms.
  • Gas prices in January have hit 3-year lows continuing the downward trend since Q3 2019 and has been trading sideways this week.
  • The Phosphate market has seen the floor following global oversupply, production operations have been reduced and FOB values have reacted to this by moving up around $20/t over the month of January.
£/€ £/$ €/$
1.184 1.3313 1.1085
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan 20 124-133 145-157 200-205 331-337
May 20 128-137 149-161 204-209 332-337
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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