- Coronavirus continues to dominate the markets, with its continued spread raising concerns over global economies, which is exerting pressure on equity, energy and commodity markets.
- US wheat prices are down around $10/t on the week following yesterday’s announcement by US health protection agency CDC that the coronavirus will probably spread into the US. A firmer dollar also helped push equity and commodity prices lower.
- China will ‘waive’ import duties on numerous US agricultural products from 2 March, which the US trade hopes will may spark buying interest – this remains to be seen.
- USDA’s Outlook Forum projected the US all-wheat acreage for 2020 will hit a record low of 45mln acres, with production set to fall 4% year on year and 2020/21 US closing stocks to decline 17% to 777mln bushels. The report was deemed to be supportive to prices.
- Agricultural consultancy SovEcon forecast Russia’s 2020/21 wheat production at 83-87mln tonnes, compared with the record 86mln tonnes in 2017-18.
- Ukrainian farmers are reporting improved crop conditions for the record area of winter wheat now in the ground. Officials report almost all crops successfully wintered and that winter losses are close to zero.
- Most of Europe’s winter wheat crops have emerged from dormancy more than a month ahead of normal, which may leave them vulnerable to any late winter frosts.
- EU (Paris) futures are down just over €4/t on the week, following the global trend and news that the coronavirus has spread into Europe.
- UK futures prices are down just over £2/t over the same period, although the fall in the pound/dollar rate has resulted in prices falling just over $4.50/t. Spot values remain supported by a continued reluctance for farmers to sell amidst limited demand.
- UK plantings of both late sown winter wheat and of spring crops continues to be affected by wet weather. The feeling is growing that, in some regions at least, land may remain undrilled this season.
Thursday 27 February 2020
- EU and domestic buyers continue to sit out of the market expecting prices to fall.
- EU farmers also remain absent from the market.
- Rain continues to delay plantings in both France and the UK.
- Other EU countries are also very wet, but their normal planting window is still a few weeks away.
- Another week of turmoil for world stock and commodity markets this week. Whilst new cases of coronavirus in China seem to be slowing, fears grow over the number of outbreaks that have spread into South Korea, Iran, Brazil and Europe (Italy) over the weekend. There are now over 82,000 reported cases with 2,804 deaths worldwide, over 3000 cases are now outside China with over 60 deaths.
- As expected from news of this type, global stock markets, equity markets, and agricultural markets again reacted and traded sharply lower on the uncertainty of what this would mean for the global economy and food demand. The Dow Jones posted its worst day in two years. Crude oil tried to trade higher but ended up extending losses with the benchmark West Texas Intermediate trading close to $48.
- In China, the virus seems to be stabilising for now. People are slowly getting back to work. However, the International Monetary Fund estimates zero growth for the Chinese economy in Q1 of 2020.
- Chinese interest in US soybeans may pick up, as manufacturing business get back to some form of normality. It is rumoured that Chinese buyers have requested some March soybean shipments from Brazil to be delayed, although it’s unknown how many.
- After a reasonably friendly USDA Outlook conference last week, CBOT soybeans struggled to find support this week, with a big Brazilian crop being harvested and lack of Chinese demand.
- The USDA outlook conference estimated the US planted area for 2020/21 is set to increase to 85 mln acres with yields expected of 49.8 bushel/acre, but stock are expected to tighten due to the phase-one deal. Ending stocks were pegged at 320 mln bushels vs 425 mln/bushels last year.
- South American weather is warm and dry for the next few weeks, which will help harvest progress. Brazilian soybean harvest is estimated to be 31% complete, compared with 46% last year. Higher export taxes for soybeans in Argentina, together with a weaker peso, will probably mean the Argentinian farmer will store more soybeans for longer this season.
- The market has seen a sharp setback in vegetable oil prices over the past few weeks and looks oversold. However, until coronavirus is stabilised, and the market sees some demand, prices are likely to remain pressured.
- In Canada the blockades continue, hindering logistics in Western Canada. It’s estimated that there are over 50 vessels waiting to be loaded, double the usual amount.
- European rapeseed prices also saw sharp losses at the start of the week, but closed firmer in Wednesday’s session, overcoming the five-day downtrend.
- UK farm gate prices were also supported by the weaker sterling/euro rate. In the past few days sterling fell against the euro on the back of delayed budget reports and rumours of a Bank of England rate cut due to coronavirus. Levels fell below 1.1900 yesterday and now trade close to 1.1800.
Matif Rapeseed: May (€)
- Old crop bean markets have stabilised over the last week. The rally in feed bean prices is rationing demand and the aquaculture buyers are disappearing as values rise. Whilst few buyers remain, values are likely to remain supported as the supplies left on farm are limited.
- Imported feed peas have started to arrive on UK shores to replace beans in the ration in chicken diets. However, availability of these is limited, and prices have moved higher on the week, narrowing the spread between beans and peas.
- New crop beans have firmed this week, as concerns regarding spring planting start to be discussed in the trade. Whilst it is by no means late yet, the wet conditions mean that it is likely to be the middle of March at least before spring beans can start to be planted. If plantings are delayed this may affect yield.
- New crop pea buybacks are almost sold out for large blues and marrowfats. Please contact your farm trader for further information.
- Hybrid varieties are showing their advantage in the field now, with the slow, cold, and wet growing conditions holding spring growth back. ADM have a full portfolio of winter hybrid varieties including Aurelia, DK Exstar and leading Clearfield variety RGT Nizza CL, with delayed payment on early orders and establishment risk share incentives. Contact your farm trader for more info.
- Demand has been strong this past week after the weather from the past week put to bed any final attempts to drill winter wheat.
- Supply of seed is currently good across the major varieties.
- Access to imported material is getting harder every day. We would advise covering your requirements ASAP.
- Large blue peas are now sold out.
- We have a small amount of marrowfat variety Kabuki left to cover our buybacks.
- There are very limited amounts of spring beans available. Stocks are changing constantly, so please refer to your farm trader.
- Linseed has seen a big surge in demand this season.
- The variety Aquarius is available on buyback. Please contact us for more info.
- Spring OSR is currently available is good quantities.
- In the US, urea traded at five-month highs this week. Spot demand is high, and supply is limited. North African producers have sold urea at $251/t FOB Egypt which is $5/t higher than previous sales.
- With currency range bound, replacement values continue to increase on firmer global prices. Price aspirations for suppliers are being adjusted due to these higher FOB values, despite the challenging weather conditions for farmers here in the UK.
- Yara increased its 33.5% AN price in France at the beginning of the week by €5/t. UK AN prices are currently unchanged from February, but with firmer global nitrogen prices and the usage period beginning, there is potential that price increases for March are seen here in the UK too.
- ALZON® neo-N continues to be the product of choice for farmers who are aiming to reduce soil compaction after continued heavy rainfall. ALZON® neo-N reduces applications and also protects nitrogen supply against extreme weather conditions. An incorporated duel inhibitor protects your nitrogen against losses in severe rainfall, compared to ammonium nitrate-based products. Speak to your farm trader today for more details.
|Feed Barley £||Wheat £||Beans £||Oilseed Rape £|
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.
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.