Market Report

Thursday 25 April 2019

Wheat

Another week and again lower prices. Despite US spring sowing lagging the five-year average due to inclement weather, wheat markets have fallen to fresh contract lows. Fund traders seem happy to discount current weather issues and extend their already short positions. A firmer US$, higher-than-expected Canadian spring and durum sowing and the general expectation of a major rebound in 2019 global wheat production keeps the bearish overview intact.

European prices have followed the US market lower, setting new-crop contract lows despite a near two-year low on the euro/US$ rate. EU exports continue to rise, now seen only 2% down year-on-year at 16.5mln t. However, maize imports are reported at just under 20mln t, up 41% on the year, and continue to provide a more cost-effective alternative to wheat in feed diets and industrial usage. Russian wheat exports continue to slow, with analysts now projecting a seasonal total of 33-34mln t against the current USDA projection of 37mln t.

UK prices have also slipped over the past week. Old-crop physical prices continue to divorce themselves from what will become a technical May futures position, while new-crop prices remain pressured by the bearish global outlook.

In summary, with a lack of supporting news, markets continue to drift lower. No news from Chinese trade talks, improving US winter crop ratings, a more favourable US and EU weather outlook and an apparent oblivious appreciation to current US weather/sowing issues leaves the markets completely on the defensive. We are now at contract lows in Chicago and Paris (with London only £1 away), and some think we still haven’t seen the bottom. Weather and potential US sowing issues struggle to keep any remaining market bulls interested, although at present, the market bears are firmly in control, with no sign of any major factors that may change the current market sentiment!

Malting Barley

The continuing dry weather has brought renewed interest from buyers for both crop 2018 and 2019. Not surprisingly, growers throughout the EU are reluctant to sell, preferring to wait for the forecast rains to arrive to improve crop conditions before they make any marketing decisions.

Rapeseed

CBOT Soybeans closed lower for a third consecutive session bouncing off seven-month lows. With a lack of supporting news, funds increased their net short positions this week. Chinese demand remains questionable as African swine fever continues to spread, further enquiries to purchases of US soybeans are non-existent and the reality of a burdensome carryout at the end of this season begins to weigh on the market. US/China negotiations are set to continue next week and will hopefully conclude in early May, though it’s now doubtful any further Chinese purchases will help alleviate the record carryout.

Soybean plantings have started in the US, currently 1% complete vs. 2 % last year and the five-year average. The trade will keep a watchful eye on weather developments going forward. Mixed forecasts going forward with some drier/warmer conditions in some areas may help with land work, but rain continues to spread across the country which is likely to hinder planting progress.

The Chinese canola market is in stalemate, oil margins continue to trade at the higher end of the recent range, though with seed vessels still waiting to be discharged new business is hard to put on.

Further afield widespread drought across Australia is likely to start impacting on this year’s canola plantings. As we near optimum drilling times there is little rain in the forecast, farmers may switch planting intentions towards wheat rather than risking planting into arid conditions.

In Canada, trade disputes with China are unresolved, ending stocks are now estimated to be closer to 4mmt and as a result, canola futures made new contract lows. On a supportive note, Stats Can have estimated lower canola plantings for the second year running, down -6.6% to 21.3 mln acres (22.8 mln acres last year), which may lend support to Canola prices in the near term.

Meanwhile European rapeseed futures briefly touched two-month highs this week. Trade got off to a slow start after the long weekend due to a lack of nearby demand and farmer selling. It will be weather that supports new crop prices. Despite showers, much of Europe is in desperate need of rain. The EU rapeseed area for 2019/20 could be further reduced towards 18.3 mln t (20.1 mln t last year). Rain will be crucial in the up and coming months to stabilise crops.

Closer to home UK rapeseed prices trade near recent highs. Old and new crop prices have seen support from firmer European pries and slight weakness in sterling.

Seed

Vibrance Duo

Although most of the country is forecast some rain, if it has not already had some, we have already started to see significant differences in how wheat varieties and seed treatments have coped with the recent dry spell. In the picture below from our winter wheat seed treatment trial, you can see the same variety (LG Skyscraper) drilled side by side on the same day at the same seed rate. The only difference is the crop at the right of the line has had Vibrance Duo and the left has had another growth promoter product as well as a single purpose dressing. The difference in colour and tiller counts is plain to see with Vibrance Duo again showing, as it has done in previous years, how much better it is at providing a solid root structure to help plants better cope when stressful conditions arise. Vibrance Duo in our opinion should be the standard treatment applied to wheat seed, but is a must on late-drilled crops, light land, low fertility sites, and second wheats in combination with Latitude for take-all.

Autumn OSR

ADM Agriculture has fantastic early offers on its extensive OSR portfolio of varieties to offer partner growers. For more details and bespoke advice on which varieties will do well on your farm, please call your farm trader or the seed desk.

Fertiliser

Granular Urea

Globally urea has firmed, with trades being reported at $263/t fob Middle East. US urea prices jumped $25/t last week, as manufacturers drive the market. Demand is increasing in the east and there is an expectation of another 500,000-600,000mt being shipped in May/June to India/Pakistan. In the UK, stocks are limited, but continue to be sold at below replacement values as importers try to clear positions. Growers looking at urea top-ups are in a good position to take advantage of this opportunity with prompt delivery available on full loads. Varied weather conditions once again have some growers looking into inhibited urea for next year. ADM Agriculture can offer the most advanced form of inhibited urea from SKW Piesteritz, ALZON® neo-N, with urease and nitrification inhibitors. For enquiries or more information, speak to your local ADM Agriculture farm trader or the fertiliser desk on 01427 421237.

Ammonium Nitrate

With much-needed rain finally forecast, growers have been applying fertiliser once again. CF terms are continuing into May with immediate delivery available for full load orders. Imported AN spot prices are varied, depending on location, but overall have weakened slightly from last week. The market remains relatively unchanged as importers are currently unwilling to commit to long positions due to uncertainty over future pricing caused by rising energy costs and potential import tariffs.

£/€ £/$ €/$
1.156 1.2875 1.113
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May19 125.00-135.00 155.00-167.00 242.00-252.00 306.00-311.00
Nov19 119.00-127.00 137.00-145.00 188.00-198.00 310.00-315.00
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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