Market Report

Thursday 28 January 2021

Wheat

  • In a roller-coaster week markets have managed to recover some of the losses following the sell-off into last weekend, but are still trading down overall.
  • Wheat market fundamentals remain unchanged. Russia’s government has approved the higher €50/t export tax on wheat from 1 March in a further attempt to curb rising domestic prices, which is envisaged as constricting the availability of export wheat onto the global markets..
  • The country’s government has also approved an export tax on corn and barley of €25/t and €10/t respectively, starting 15 March running through until 30 June.
  • Although markets remain very nervous after the recent sell off, it remains hard to find a reason why cash values should decline from current levels. There is limited volume available from the Ukraine and Australian elevators are booked solid for the next few month, and EU exports need to slow and UK imports need to rise.
  • Soft wheat exports from the EU had reached 14.5mln t as of 24 January, down from 17.1mln t cleared by the same week last season. However, the tonnage remains too high in context to the EU balance sheet.
  • The need to slow exports remains a tough proposition, as demand is expected to continue from North Africa and the Middle East countries when Russia is trying to price itself out of the market.
  • But, unless that demand switches to other origins such as Argentina, Australia, or the US, the EU market could move higher to try to choke overseas trade.
  • Australian wheat prices offered to Asian destinations have climbed to a seasonal high on expectations of lower supplies from the Black Sea region.
  • Further bullish news continues to emerge elsewhere. Condition ratings for US winter wheat declined during January in many key producing HRW states (Kansas, Colorado, Nebraska and South Dakota), although they improved in Montana and several SRW producing states.
  • Despite warnings that authorities might block wheat from Australia amid escalating tensions, exports to China surged last month to 600,000t, with a further 110,000t being shipped in January.
  • Return of rain in Brazil is disrupting the soybean harvest and slowing down fieldwork, potentially delaying sowing of the country’s second corn crop.
  • Rains in Argentina have improved prospects for recently sown crops, but worries about potential crop yields persisted ahead of February, usually one of the driest months of the year.
  • Grain crops in the EU have mostly acquired greater frost resistance during the cold spell since December, but an unusually mild winter in the south east of the bloc has limited plant sturdiness.

Malting Barley

  • The old crop market remains very quiet with little buying interest.
  • The first spring barley plantings in Europe are expected to start in the next few weeks when the land has dried out.
  • It’s also very wet across the UK, which is holding back growers from planting the early sown areas.
  • The main planting window is not until mid-March, so there are no planting concerns today.
  • There are one or two buyers in the market for Crop 2021, but there are few farmer sellers at the moment.

Feed Barley

  • We have seen some lower levels trading in the domestic market over the last few days, as sellers search for outlets and buyers follow wheat lower. Although overall volume supply remains extremely thin, and we still do not anticipate any significant pressure to prices in the near term, with demand forecast to continue.
  • The recovery in the Matif has helped to support values in the Dutch interior, and the UK is getting closer to being competitive again there.
  • We are seeing some demand from Third Country destinations, as there is little offered in global markets, although German origin still remains a touch cheaper.

Rapeseed

  • Outside markets are slightly weaker this week, with crude oil trading marginally down. US stocks also closed lower ahead of earnings reports.
  • US soybean markets have recovered following a sharp fund sell-off last Friday. After being 60 cents down, prices have recovered to within touching distance of $14/bushel once again.
  • In America showers are continuing this week into the weekend, although it’s worth noting that the La Nina weather system has not gone away and dryness is expected to return from next week.
  • Crop conditions in Argentina are improving. Farmer selling remains slow, but crop estimates seem to have stabilised. The Brazilian harvest is less than 2% complete with vessel line-ups increasing. It seems harvest will be delayed until mid-late February, which would force buyers to switch back to US soybeans.
  • Chinese buying interest has not stopped. Due to South American supply issues, the country has returned to the US market this week buying several more cargoes. The Chinese new year, which starts on 12 February, will slow buying activity.
  • Veg oil markets recovered from last week’s sell-off. Asian oil markets all closed firmer, with Malaysian palm up 3% yesterday, ahead of national holiday today. There still seems to be underlying demand for veg oil, despite an increase in Covid-19 cases. Production in Malaysia may still be threatened by a lack of labour availability and localised flooding.
  • Canadian canola reached 13-year highs this week, trading over $710/t.
  • Matif rapeseed also traded back at contract highs this week after a sharp sell-off in recent weeks, with May futures touching €437/t.
  • UK prices bounced back to season highs, despite prices being slightly pressured by the firmer pound which reached the highs of 1.1300 this week.

Pulses

  • Pulse markets have been quiet on the week. Farmer selling has slowed considerably and as a result exporters are reluctant to offer on the export market, despite enquiries from a number of destinations in Europe.
  • Domestic compounders continue to make enquiries for beans for the first half of 2021 as they remain an attractive source of protein and bean prices continue to creep higher as a result.
  • Looking ahead to new crop, bean prices continue to track wheat futures at an attractive premium. Prices of over £200/t ex farm are available for many. Buyback contracts and ADM’s marketing pools remain open.

Seed

Spring Beans

  • ADM Agriculture can offer high yielding Lynx ready for immediate dispatch. Lynx is on the PGRO descriptive list with the highest standing ability at harvest and highest equal resistance to downy mildew.

Spring Barley

  • We have good availability of agronomically strong RGT Planet, the most widely grown cereal variety in the world, as well as dual purpose varieties Laureate and LG Diablo.

Small Seeds

  • Remember that ADM Agriculture can cover all of your small seed needs, from grass seed to stewardship schemes. Please contact your farm trader for more information.

Fertiliser

  • Granular urea continues to find higher bids on the global market. Cargoes traded this week from Egypt at $360/t FOB, reflecting a weekly increase of $15/t.
  • UK values have risen sharply as stocks dwindle and new replacement higher value cargoes arrive in the UK. The price on farm has increased again and the outlook for Q1 looks firm.
  • UK ammonium nitrate has also risen due to higher global nitrogen prices, increasing gas values, the firmer European nitrate market and limited supply in the UK.
  • Freight rates are reportedly high and delays are occurring on some product.
  • Demand has remained strong through January despite price rises and a bout of wet weather in the second half of January, delaying some earlier applications.
£/€ £/$ €/$
1.129 1.366 1.21
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Feb21 166-174 202-212 223-228 382-387
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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