Market Report

Thursday 24th October 2019

Wheat

US wheat prices are $3/t up on the week, as the recent rally seems to have ‘run out of steam’ with prices moving off the three-month high set earlier this week.

US spring wheat harvest is finally complete, after suffering weather delays with winter wheat sowings reported as being 77% complete

NASS will produce initial US winter wheat crop rating next week, which will be closely monitored given talk of major dryness concerns in the southern plains

Russia’s 2019 wheat crop estimate has been raised to 75.5mln t, according to UkrAgroCosult, who also raised their export projection to 33mln t

Russia’s export pace has slowed, falling behind last season’s pace, just at a time when the country’s crop estimate is expanding

Ukraine’s 2019 grain harvest is likely to rise to a record 71.8mln t this season, including 28.1mln t of wheat, 8.9mln t of barley and 32.8mln t of corn

Kazakhstan’s 2019 grain harvest is almost complete with a total of 19.3mln t of grain versus 21.8mln t by the same time last year, despite an increased 2019 harvested area

EU (French MATIF) prices are up just €1/t on the week, although cash prices remained underpinned from strong export demand, and recent international tenders that showed EU supplies competitively priced

Fieldwork in north and western Europe should hopefully gain momentum with the return of drier conditions, although many areas remain waterlogged following recent heavy rains

UK prices are up just over £1.50/t on the week, as the country remains on ‘Brexit watch’ with the latest developments looking likely for an extension period to be granted, despite the PM pushing for a 31st October Brexit. If an extension is agreed the door to the EU for further exports will open for 3 months at least.

UK winter plantings are also delayed with another spell of wet weather now forecast. Regional differences are evident but we all need a good spell of dry weather to see the rapid progress needed.

In summary, the US markets found good early underlying support on ideas that China will soon be a significant buyer of US soybeans, which attracted ‘spill-over’ support into the corn and wheat pits

US farmers continue their struggles to get corn and soybean crops harvested ahead of a forecast for bitter cold temperatures, and snow, due to hit the Northern plains later this /early next week

As with all ‘bull’ markets, they need to be constantly fed, and if fresh supportive news is not forthcoming, they leave themselves open for bouts of profit taking which seems to be the case for US wheat this week, although short-term, the downside looks limited.

 

Malting Barley

  • Brexit continues to frustrate malting barley exporters
  • The market has remained very quiet over the last few days although buyers have appeared for Jan-June 2020 delivery
  • The weather continues to hamper winter barley plantings
  • The trade estimates that only 40% of the intended area has been sown
  • We have booked a large volume of 2021 spring barley in the last 10 days
  • Growers are advised to book their spring malting barley seed sooner than later

Rapeseed

  • U.S soybeans trade within a narrow range over the last week. Better weather has helped harvest advance, at the start of the week it was estimated 46% of the crop had been harvested vs. 51% last year (64% 5 yr av)
  • South American weather is improving, and planting progress gathers momentum. Reports suggest Parana bean planting is 45% complete vs. 59% LY (60% av), though this is the slowest pace in 4 years.
  • On Tuesday the Chinese Government called a meeting with several major Chinese crushers, where Chinese officials granted permission to Chinese buyers to purchase 10mmt of U.S soybeans tariff free. The talks did not discuss the possibility of opening trade relations with Canada to increase Canola imports.
  • Canadian Canola futures find nearby support. The weather is starting to improve which is allowing harvest to gather pace. Last week was the biggest week for farmer deliveries in 20 years, moving 720,000mt.
  • Harvest has started in Australia and the weather looks favourable for the next few weeks. Harvest progress is less than 1% complete, accurate yield/oil data is not yet available, and with the recent fall in Matif and firmer Australian Dollar farmer selling has dried up.
  • European Rapeseed prices finally find support, bouncing off recent low. Crush coverage remains good pre-Christmas but the S&D for 2020 remains tight.
  • Here in the UK, Brexit dominates the news which in turn brings uncertainty to the direction of Sterling. This will have a large impact on the price direction going forward.

Pulses

UK ex farm beans prices are unchanged on the week. The domestic demand for feed remains quiet and limited to spot interest to the ports.

The strengthening of GBP over the last few weeks means buyers and sellers for feed are some way apart on the export market.

Australian values have drifted lower on the week driven by increased confidence in their crop. The spread between Australian and UK beans into Egypt has narrowed and at the current spread buyers are looking to Australia to cover their requirements.

Seed

Autumn Seed

Barley – Some barley has made its way into the ground this week – we have a small stock of seed if any top up orders are required.

Wheat – although this planting season feels late, it is worth remembering we are only one week into the ideal sowing window for most wheat varieties. Vibrance Duo should be standard SPD now on all orders placed, we have stock available of the key late drilling varieties.

Spring seed

Spring Wheat is extremely tight – cover requirements ASAP.

Spring Barley – we have a decent stock of LG Diablo which is one of the highest yielding spring barley varieties suitable, especially to those looking to replace winter feed grains with a feed spec spring barley. Alternatively, we are contracting LG Diablo on premium specs for Distilling in some areas of the country.

Of the mainstream malting varieties Laureate and RGT Planet are both nearly sold old already so cover requirements as a priority.

Fertiliser

Demand this week has been muted with buyers unlikely to return to the market until we see more Autumn drillings complete. This picture is mirrored across Europe who, like the UK, are well behind on ordered tonnage as we approach November.

France has still 70-75% of its urea requirements to be bought for Oct-Feb, this is no small amount and equates to about 750,000t which will soon become a major logistical feat if left much longer.

India also, after ideal weather conditions, will be back to purchase another 1.3-1.5 MMT soon for shipment before the end of the year.

Granular urea has traded at $260/t FOB Egypt this week, $5 tonne up on the previous week, with manufacturers hopeful that future support is now on the horizon.

Recent strength in the GBP has helped to maintain relatively flat prices at the farm gate in the UK with the risk of tariffs on imported fertilisers now reduced but not yet completely eliminated.

The current crop 2019/20 situation is causing a lack of confidence to forward buy for the spring but suppliers are reluctant to change pricing structures at present.

£/€ £/$ €/$
1.1575 1.2885 1.113
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Nov 19 117-121 128-136 175-185 315-320
May 20 123-127 134-144 181-191 321-326
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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