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Market Report

Thursday 25 November 2021

Subscribe to the ADM Agriculture YouTube channel for the latest grain, seed & fertiliser market updates and much more!

This week: Late Autumn Sowing Quandary – Stick or Twist? Head of seed, James Barlow, looks at the considerations for late sown cereals or whether nitrogen fixing spring break crops provide a better option rotationally.

 

Wheat

  • Global markets have traded to record highs on concerns of declining export availability and continued import demand, supporting UK futures which hit £245 for May 22 midweek.
  • The impact of the storm damage to Vancouver’s rail links is expected to be significant and will have a cascading effect back into the prairies.
  • Badly timed rains are also hurting Australian wheat quality at a time when the world needs it most, with a possible 20-25% of the total crop being downgraded to feed quality.
  • The likelihood of export restraints in other exporting regions continues. Russia’s wheat shipments are down 18% on the year (as of 18 November) to 17.2mln t.
  • Ukraine’s government is not currently planning any wheat export curbs, but the country has already shipped 52% of seasonal export volume, or 14 mln t, this season.
  • In Kazakhstan, harvest is complete. However, grain yields were down 20% to 16.4mln t due to unfavourable weather conditions.
  • Meanwhile, Iraq’s agriculture ministry has warned of a 2mln t deficit in wheat production this year amid a severe water shortage.
  • The International Grains Council cut its forecast for 2021/22 global wheat production by 4mln t to 777mln t, mainly as a result of Iran’s announcement.
  • Strategie Grains tightened its EU export outlook by 1.6mln t as Argentina and Ukraine have become more competitive. EU exports reached 10.3mln t as of 21 November, up 4% on the year, although data from France remains to the end of July.
  • UK wheat imports had reached 627,000t at the end of September according to latest official figures, down 15% on the year but in line with trade expectations. Exports are reported at just over 91,000t as increased UK competitiveness allowed more shipments in September, mainly to Spain and Portugal.
  • UK futures eased back Thursday but remain underpinned by the need globally to curb demand. This will require higher prices, which will filter down to support UK ex-farm values.
  • Looking to new crop, the AHDB’s early-bird survey pegged the wheat area for the 2022 harvest at 1.81mln ha, up just over 1% from Defra’s June survey, projecting a crop of around 15.0-15.5mln t.
  • However, current prices of least £200 ex-farm in most areas for 2022/23 allow growers to lock in decent margins, despite higher input costs.
  • France’s new crop has also got off to a good start with 93% of the intended wheat area drilled by mid November and 99% of that deemed either in good or very good condition.

Malting Barley

  • The EU malting barley market has firmed again this week driven by strong demand, a lack of sellers and a rising feed market.
  • Crop 2022 prices have also risen.
  • In the UK, the AHDB early bird survey is suggesting that next year’s spring barley area may decline by just under 8%. This figure could be even higher if the weather continues to favour autumn sowing.
  • Please contact your ADM farm trader to discuss a wide range of crop 2022 contracting options.

Feed Barley

  • The barley market is sharply higher on the week following the recent rally in global futures markets.
  • Prices have not risen with wheat on a one-to-one basis however, which has increased the competitiveness of barley in feed rations. As a result we expect to see further support to prices, particularly as farmer selling remains slow on old crop positions.
  • More barley has been bought at tender by Turkey, most of which traded ex Black Sea. Interestingly, a few cargoes are reported to have traded ex Germany. This demonstrates the waning supply in the Black Sea region and, despite being comparatively expensive, consumers are having to stomach the higher prices being offered out of Northern Europe, where barley is also in short supply.

Rapeseed

  • The US soybean harvest is estimated at 95% complete, almost matching the five-year average.
  • Soybean export sales will be announced on Friday, but the trade expects no major changes from last week which showed a 27% decline on last year. On Wednesday USDA announced a 330,000t sale to an unknown destination and 30,000t of soy-oil to India.
  • China remains out of the market for the time being, although there were rumours of some unreported cargoes trading last week.
  • In South America, the weather looks favourable. Ag Rural consultancy estimates Brazilian soybean planting at 86% complete, five points behind last year, while Argentina’s progress is put at 28.6% planted, close to 2020. It has been rumoured the Argentinian government will look to raise export taxes.
  • Malaysian palm oil markets are still volatile. They traded down 2% at the start of the week following concerns of renewed EU lockdowns, but recovered just over half of that loss on Wednesday as Malaysian exports picked up.
  • In Australia rain continues to fall heavily in some regions causing disruption to harvest.
  • Canadian canola hit a new contract high following soy-oil higher in the session, trading back above $1024. StatsCan will release its next crop update on 5 December, which may reduce the crop further. CP rail announced that services through parts of British Columbia may resume as early as this week, but some observers believe this is optimistic.
  • Despite firmer oil markets, last Friday afternoon Matif rapeseed closed €16.5 down on the day. The market has been volatile ever since, trading back up on Monday, before taking those gains back on Tuesday. EU imports are estimated at 1.7mln t behind last year, which failed to offer support. Cold weather in the Ukraine will be watched carefully, especially in regions where crops in some areas have only just emerged.
  • UK prices are still trading slightly below season highs. Sterling remains at 1.19000.

Oats

  • The upward trend in the markets kicked on to new highs over the course of the last week, with London ICE May’22 wheat futures contracts trading up to £244.95 (up £12.7 on last week). This rise in wheat/barley prices has added further support to the UK’s domestic and export oat markets. However, given the main focus is on logistics, it is challenging to quantify how much the domestic oat prices have rallied on an ex-farm basis. The reason for this is due to the range in haulage rates we are seeing. As mentioned last week, haulage rates have rallied significantly, but many believe the situation is unlikely to be sorted for a while yet. Only when the buyers are really hungry will we see the true value of oats.
  • UK milling oat customers remain buyers for February onwards. However, little seems to be trading due to a lack of fresh farmer selling. Feed consumption continues to grow and some may see the differential between milling and feed narrow. But, with North American milling oat prices nearly double those seen in the UK, one cannot help but feel that UK oats look cheap.
  • Export business continues to be written with EU buyers, but trades are becoming harder to confirm, with sellers needing greater confidence in their logistics before selling.

Pulses

  • Demand from Egypt for UK origin human consumption beans remain strong and prices continue to rally as a result. This strong demand looks set to continue until February, when it is likely to cool slightly as Australian supplies become available.
  • Wet weather in Australia is causing concern regarding the quality of this year’s crop. Despite similar production to last year, export capacity is limited, due to a lack of bulk containers and limited elevation space following large production and exports of other commodities.
  • Demand for feed beans is not as strong as human consumption and prices are only up a few pounds on the week, despite the significant wheat rally.
  • The AHDB released planting intentions for crop 22, which suggested a 5.1% decrease in pulse plantings. This was lower than many would have expected a few months ago, probably because of high fertiliser prices.

Seed

Spring Seed

  • As we look ahead to the spring we have a great seed portfolio to suit all situations. Including high yielding spring barley Skyway and dual purpose Laureate.
  • With the high nitrogen prices growing a pulse crop for Harvest 2022 is a great option. A new addition to our portfolio is Yukon spring beans, with really early maturity and good downy mildew resistance.

Winter Seed

  • Floor stocks are limited, but we still have availability of RGT Skyfall winter wheat, suitable for the later drilled spot with its very flexible sowing window.

Fertiliser

  • UK ammonium nitrate producer CF has released new terms for Nitram, moving prices up a further £15/t for December and January delivery.
  • Russian ammonium nitrate producers have reported that the lack of railcars has accelerated this month. This has resulted in some cargoes being stuck at their plants, leaving purchasers unclear as to when they will reach designated ports.
  • The global granular urea market is still showing healthy demand, keeping prices stable. Europe is well behind usual purchasing by this time of the year.
  • The US is expecting a bumper corn crop and subsequently forecasts strong spring demand. India is running at its lowest stock level for seven years so a further tender will be released at some stage in December. This will further tighten global availability.
  • We have a good supply of granular urea already here in the UK and available for delivery through to Q1 of next year.
  • DAP prices have risen, reflecting lower stocks in the UK, and TSP prices remain supported at historical high levels.
  • MOP is again in the headlines, with tensions rising in Belarus, which supplies 30% of the world’s potash. Current sanctions in place may restrict buying options, changing trade flows and adding additional shipping costs.
£/€ £/$ €/$
1.187 1.3315 1.12
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Dec21 205-225 227-242 259-264 578-583
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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