Market Report

Thursday 26 August 2021

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Catch up with Jonathan Lane as he looks at the grain market in our recent update!

Wheat

  • US markets have weakened slightly during the past week, although quality issues in Europe are keeping the markets underpinned.
  • Heavy rains in France have severely delayed harvest and seriously affected wheat specific weights.
  • Hopes that the situation would improve as the harvest moved north were dampened as recently cut wheat struggled to reach the 76kg/hl specification.
  • This has strengthened Matif, which has moved to new highs in recent weeks, providing an inverse in the market as market shorts try to deliver a spec that isn’t there.
  • Although there has been only a limited effect on yields, the amount of quality wheat for export will be much reduced and feed wheat supply will be much higher than normal, which may increase the need for feed exports beyond the EU.
  • Germany’s agriculture ministry predicts a 3% fall in the country’s grain production this harvest, with wheat production pegged at 21mln t due to rain affecting crops at the key grain-filling stage.
  • Despite the problems experienced by major EU producers, wheat exports, albeit early in the season, are running about 9% ahead on the year, at 2.9mln t.
  • However, it will be very interesting to see how the EU overcomes its quality issue as the season progresses.
  • Algerian shorts have been switching from French to Romanian or Baltic origins to achieve specification. China has already purchased up to 1mln t of French wheat for this season; where France will find it remains to be seen. Romanian wheat continues to dominate Egyptian interest.
  • With little French quality wheat likely to be offered, major importers will be assessing prospects, especially given the much-reduced Russian wheat crop and growing expectations of further potential government intervention there.
  • Russian farmers had harvested 19.9mln ha of wheat as of 23 August, 1.1mln ha up on 2020, but average yields are estimated at 3.13t/ha, compared with 3.58t/ha. Domestic prices have rallied to a 10-year high for August, raising concerns about food price inflation.
  • Canadian trade participants are expecting a sharp cut in the 2021 all-wheat production estimate due to be released by StatsCan on Monday.
  • However, Ukrainian farmers have almost completed the 2021 wheat harvest, threshing 32mln t of wheat from 97.5% of the sown area as of 24 August, above previous estimates, with average yields reported at 4.62t/ha.
  • The UK harvest continues to progress, as a more settled weather pattern allows increased activity. Results to date remain variable, with protein content and bushel weights lower than in 2020.
  • Official data shows end-season (2020/21) wheat stocks are projected at a historically low level, despite imports totaling 2.439mln t.

Malting Barley

  • EU and UK malting prices have come down this week.
  • The Danish harvest is nearly complete and the quality is good.
  • Harvest in the UK is underway again and the quality does not seem to have been affected by the latest rains.
  • Nitrogen levels are increasing, which is good news as the first cut barleys were extremely low.
  • It looks like the UK will have a significant spring barley surplus, but it’s not all safely in the barn yet.

Feed Barley

  • Another week passes and little fresh news to report for feed barley markets.
  • Liquidity remains extremely thin, owing to a continued lack of farmer selling while continued volatility in futures markets is not helping traders convictions. Alongside this, consumers are largely uninterested in buying feed barley at current prices, and bid-offer spreads remain wide.
  • Much of the spring barley crop still remains in the field. With recent weather we expect the so-far excellent malting quality of the crop to be compromised in the later cuts.
  • Markets for export are similarly thin. We do not see any significant destination demand, only a few shorts looking to cover. Similarly to the domestic picture, sellers are cautious of the lack of liquidity and are pricing well above buyer’s targets.

Rapeseed

  • We have seen a yet another choppy week on the markets.
  • Asia veg oil demand is helping soy oil rebound from the recent lows. In the US, soybeans were rated down 1% good/excellent compared to last week and up 1% on the poor/very poor.
  • In Canada it is now wet, which is delaying the progress of the canola harvest. On Wednesday fund traders stepped into the market and bought aggressively, following a bad crop conditions report.
  • MATIF firmed yesterday and tested recent highs again, which provided opportunity for some farmers to achieve the numbers they have been looking for.
  • In the UK, most farmers have progressed well with the rapeseed harvest, which is now almost complete.

Oats

  • The UK milling oat market has seen a jump in prices in the last week after confirmation of some export trades filtered their way into the market. A lack of nearby supply has also help push UK buyers to elevate prices by close to £10/mt. Feed oats continue to see good demand into the UK compound feed sector which should keep a floor in our domestic market.
  • Quality so far has been ok with winters averaging 50.7kg/hl with screenings of 4%, but anecdotal reports are of variability in some regions, which will allow a natural split between milling and feed markets.
  • Export buyers into Europe are buyers of min 52kg/hl oats. If we can achieve this spec then we will see good demand in the coming months with prices currently working out around £160DD Dec’21 to east coast ports.
  • Bottom line there is a good opportunity for decent milling oat prices if we can achieve 52kg/hl.

Pulses

  • The pea harvest continues to progress and is expected to be finished by next week.
  • Pea yields have been very variable with many of the lower yielding crops seeminly affected by the wet weather and strong winds having “lodged” the crop. The average yield however seems to be up on the 5 year average so far.
  • The quality of the pea harvest is generally good, with the majority of the samples suitable for human consumption, however the later harvested crops are showing higher levels of bleaching.
  • Very few bean crops have been harvested to date, with many crops not fit to be harvested. The early harvested winter beans have performed well on the whole, with yields also up on the 5 year average.
  • UK bean prices continue to track wheat futures and have therefore been relatively stable on the week. The correlation between wheat futures and bean prices is likely to be disconnected once the bean harvest gets into full swing.
  • Australian bean prices are firming, but are still trading at a discount to UK and Baltic beans into North Africa, which is currently limiting demand for UK beans into this destination.

Seed

  • Winter Wheat: Although some key varieties are beginning to look limited, we still have a great portfolio to offer. Including Group 4 Hard; Astound, with great disease resistance and very stiff straw. With the delayed wheat harvest, we urge you to work with seed processors by setting realistic timescales before expecting deliveries on to farm.
  • Winter Barley: Processing is well under way, with many varieties now making their way on to farm.
  • Rapeseed: Autumn vigour is ADM Agriculture’s most important feature when selecting an OSR variety, this is why we offer both Duplo and LG Aviron, both of which are in the top 3 for vigour in this years AHDB trials. Offering extra protection on establishment we also have DK Excited available with the establishment scheme eligible for any crop drilled before 20th
  • Other: Don’t forget ADM Agriculture can cover all of your stewardship and cover crop needs. Get in touch with your farm trader with any enquiries.
  • Click here for our 2021/22 seed varieties guide.

Fertiliser

  • Despite the weakness seen over the past few of weeks on the international urea market, increasing freight rates and currency exchanges have prevented the UK market benefiting from what is likely to be a temporary dip.
  • The market remains stable, but there is a lot of pent up demand about to surface. Europe, like the UK, remains well behind on purchasing. Brazil will enter the market soon and a further tender from India is expected soon. This process is likely to continue through to February.
  • UK ammonium nitrate producer CF has increased terms again this week, continuing to track pricing in Europe. UK-manufactured AN is now priced at over £1/kg of N.
  • ADM Agriculture can offer Piamon 33N 30SO3 compound for 2022 delivery for those drilling OSR and looking for nitrogen sulphur requirements.
  • MOP and TSP are firm, underpinning NPK blend and compound price rises significantly for the near-medium term.
£/€ £/$ €/$
1.1675 1.375 1.1775
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Sept21 166-174 185-195 225-230 487-492
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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