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Thursday 27 May 2021
- The old adage that rain makes grain is carrying some weight in the current market. Recent precipitation across much of the northern hemisphere has resulted in a greatly improved crop outlook that continues to weigh on global prices.
- US markets remain on the defensive, with Chicago wheat trading down a further $11/t on the week. The Dec 21 position has now fallen $43/t from the market high on 7 May.
- EU and UK prices have continued to follow the weaker global trade, with new crop Paris and London prices down €5.75/t and £5.5/t respectively over the week.
- The rapid pace of spring sowings by US farmers is also adding to price pressure, as it is alleviating some supply fears. USDA’s National Agricultural Statistics Service reports corn and spring wheat sowings are 90% and 94% complete respectively, with talk that the strong pace of sowing could push final corn planting 5mln acres above USDA’s current projection.
- That said, the latest US wheat crop ratings are mixed. NASS reported that despite the arrival of much-needed rainfall across the US southern and northern plains, winter wheat crop ratings slipped a further 1% to 47% good/excellent, compared with 54% this time last year.
- NASS also said that its initial rating for US spring wheat came in at a disappointing 45% good/excellent, compared with 80% a year ago.
- However, the US’s Wheat Quality Council’s tour of Kansas continues to report winter wheat yield potential as well above last year, although higher output could result in lower protein content.
- EU prospects have greatly improved over the past week, with the crop monitoring unit (MARS) raising its projection of average soft wheat yields to 5.91t/ha, up 3.5% on the year and almost 4% above the five-year average.
- UK prospects have also improved greatly over the past few weeks, with estimates for the 2021 wheat crop back up to around 15mln t, a figure that would sharply reduce the level of imports required to balance the books for 2021/22.
- Elsewhere, Australian farmers are poised for a second consecutive bumper wheat harvest as they plant grain into near-perfect conditions, while Argentina’s farmers have started sowing their wheat crop into very favourable soil conditions.
- Whilst market sentiment has changed on the generally improved outlook, concern over fundamentals including the Brazilian corn crop, US winter wheat crop ratings and global stocks of all major commodities at historically low levels may be supportive, especially if Chinese demand turns out as expected.
- The 2021 harvest must deliver, and we remain just one major crop failure away from another march higher in prices.
- Malting barley markets were lower again this week, following the feed markets but also due to improving crop conditions.
- Demand is still strong and supply outside of the UK is expected to be relatively tight.
- UK prices and premiums remain very attractive.
- CBOT soybeans traded sharply lower on the week followed by soymeal. Soy oil bucked the trend supported by higher US demand.
- Prices continue to be pressured by perfect growing conditions in the US, at least for now. The nearby forecast still calls for widespread rain across the Central and Southern Plains and the Midwest, with temperatures below normal. US planting progress came out at 75% complete vs the trade expectations of 80%, vs 61% last week – the range of estimates being 76-85%. The total area is still estimated at 87 mln acres by USDA, whilst Informa and some private estimates are at 88 mln acres. NOPA crush figures were reported at 160 mln bushels vs the 169 expected.
- Funds were reported to have cashed out some of their length by selling 10,000 contracts of meal and soybeans, but bought 7,000 contracts of soy-oil.
- Chinese crush margins are still negative. It was reported that China purchased 7-10 Brazilian soybean cargos last week, but this is far behind the volume needed to keep in line with estimates. Soymeal fell sharply on rumours that China will reduce the amount of soymeal in its feed rations. Widespread rain across central and southern parts of China are now causing localised flooding and very high river levels, which may cause some damage to crops.
- There still seems to be some fun and games in Argentina with seven vessels needing to be towed out to sea due to low water levels in some rivers. Port workers are also looking to strike again over Covid working conditions. BAGE estimate the Argentina soybean harvest at 85% complete with crop expectations still at 43mln t.
- Oil markets all started lower with Malaysian palm oil down over 2% to its lowest level in three weeks, not helped by concerns of Covid cases in India and renewed lockdowns. Asian markets also traded lower to start the week, but have since recovered on renewed demand.
- Canadian canola plantings are progressing quickly and the recent rain across the north eastern parts of Alberta and northern Saskatchewan will be very beneficial to crop establishment.
- Australian canola plantings are progressing well, with the areas set to increase from initial planting intentions, which may see the crop grow by a further 1mln t.
- Matif traded lower on the week, pressured by weaker US and oil markets, but also reacting to the potential increase in the Australian crop.
- Sterling has lost some if its gains against the euro as the month end approaches. Most of the recent good economic and vaccine news has been factored in, although a degree of political turmoil following the recent testimony by Dominic Cummings, ex chief adviser to the Prime Minister, to a Commons enquiry on Covid may weigh on sterling.
- New crop bean prices continue to follow wheat futures with premiums over wheat firming slightly on the week as a result of some feed bean interest into Europe and very little farmer selling. The current weather conditions are very good for crop development in the UK and it’s likely that premiums will come under pressure once growers start to sell.
- There is currently little interest in human consumption beans from North Africa for new crop. Based on the current market, the human consumption premium for new crop is around £15/t.
Seed Varieties Information 21/22
In a week that has seen new season fertiliser prices released, and now that spring crops are established, thoughts are turning to cropping plans for harvest 2022. The seed team at ADM Agriculture have compiled a concise and informative guide on winter cropping varieties to help decision making for our customers. In turn, ADM Agriculture is also your customer 12 months later from the produce of these seeds, and with that in mind, this guide aims to set out our view on preferred grain products we can market together to maximise output and profitability for both partners. To have the right grain, you need the right seed! We will be compiling a spring version of the catalogue for release later in the year but please speak to the team if you have any further questions about any of our products.
Please click on the picture to view and download the 21/22 seed varieties information catalogue:
- Granular urea continues to trade higher, with strong demand from North America and Europe. This demand coincides with seasonal activity in India and Latin America, which is set to continue.
- ADM has granular urea available in the UK today and can offer both spot and forward delivery options. For those still looking at nitrogen on a cost per unit basis, this remains a good buy in the market today.
- On-farm prices for UK ammonium nitrate moved down slightly from old-season levels for a new-season reset which, despite being met by some resistance, has seen a good uptake in the June/July delivery period.
- There is plenty of room for prices to move higher. Values in Europe, where AN stocks are at a seven-year low, are about £25/t higher than the UK level.
- Liquid UAN summer and autumn fill prices are expected in the next two weeks with minimal price corrections. Please speak to your ADM farm trader with your requirements in preparation.
- ENhancePro ATS, specifically designed to increase proteins in milling wheat, is available in IBCs and pump off at a competitive price.
- Phosphate levels have risen once again and potash has also seen rises as we approach UK peak season demand.
|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.
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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.