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Market Report

Thursday 28 October 2021

Wheat

  • Expected declines in Russian and European exports from early in the new year continue to support the global outlook as the Australian harvest commences amid reports of heavy rains.
  • The US market has posted a 10c/bushel gain on the week, the equivalent of $3.67/t, while France’s near-month MATIF futures position posted fresh contract highs this week as prices soared to their highest level since 2008.
  • UK futures posted £4-6/t gains week on week for new and old crop respectively, following the firmer trend set in both European and US markets.
  • In its latest report, the International Grain Council left its forecast for the global 2021/22 wheat crop unchanged at 781mln t, whilst raising the corn crop 1mln t to 1,210mln t.
  • Global prices should also remain supported well into 2022 as dryness concerns across the US southern plains and the Black Sea region remain.
  • Surging prices do mean EU supplies are losing export competitiveness, although exports will rise compared with last year, factoring in a bigger EU crop.
  • Russia has shipped a 60,000t vessel to Algeria, the first since 2016 after the North African country eased requirements relating to bug damage.
  • Russian wheat exports amounted to 14.7mln t as of 21 October, down 12% on the year, due to official customs inspection prior to export.
  • Ukrainian farmers continue to harvest corn, but wheat and barley harvests are complete. The wheat figure of 32.3mln t is about 30% up on the year, but has been factored into the market for some time. Average yields are reported at 4.62t/ha.
  • Egypt’s state buyer GASC purchased 360,000t in its latest tender for Dec 1-10 shipment, including 180,000t Russian, 120,000t Ukrainian and 60,000t of Romanian wheat.
  • Morocco is to suspend its wheat import tax duties on soft and hard wheat starting 1 November as the country aims to stabilise escalating domestic prices.
  • EU soft wheat shipments had reached 8.99mln t as of 24 Oct, compared with 7.23mln t last year.
  • French soft-wheat plantings were 40% complete as of 18 October, in line with last year. Maize harvest is lagging at 32% complete, compared with 75% last year.
  • In the UK, demand for milling wheat is strong and all wheat needs sampling to establish its true value.

Malting Barley

  • The EU malting barley market is slightly weaker this weak and seems to have reached its peak for now.
  • Crop 2022 contracts are available. Please contact your local ADM farm trader for details.
  • The lack of lorries and ships continues to be a huge logistical problem for the whole industry.
  • The EU and UK supply chain is working extremely hard to keep things moving.
  • Farmers’ patience and understanding of the national logistical problems is much appreciated.

Feed Barley

  • Prices have risen again on shortness of supply and firming wheat markets. Despite demand largely remaining on the side lines.
  • Ocean freight rates continue their upward trajectory and fixing freight for nearby positions is near impossible.
  • The balance sheet in Northern Europe remains tight, and barley prices still need to move higher in order to ration demand.

Rapeseed

  • US weather shows rain in the forecast for this week and next before turning dry again. The US harvest has slowed due to the wet weather but is reported to be close to 75% complete.
  • In South American plantings in Brazil continue at a fast pace and the weather still looks good for planting. Some organisations are calling for farmers to use less fertiliser given the rise in costs.
  • China is reported to have purchased several cargoes of US soybeans this week. US and Chinese officials met yesterday to discuss plans for the phase-one trade agreement which expires in December, but no official announcements were made. Covid cases rise again in China which is causing concern over new lockdown measures and the knock-on effect it will have on the economy.
  • Oil markets looked overbought, crude oil slipped back from its recent highs with all energy markets retracting. Palm and soy oil both followed and struggled to get any support.
  • Canadian canola traded over €22 higher in yesterday’s session with November futures heading towards $1000.
  • Matif rapeseed yet again surprised everyone by trading at highs once again. November futures expire tomorrow.
  • UK rapeseed prices are still trading close to highs.

Oats

  • The rise in global grain prices has seen many hit new contract highs this week and the UK is no exception with London’s ICE May’22 wheat hitting £223.50 yesterday (£8 rise week on week). Consequentially prices for both milling and feed oats have appreciated this week. Demand into Europe remains strong with most consumers having a lot less cover than normal for Jan’22 onwards. This will continue to put good support into the UK oat market. Logistics remain a big problem given the lack of haulage, furthermore UK millers are now covered until January, therefore growers will need to make sales for Jan’22 soon if they want to get product shifted.
  • Feed oats remain valued at £30-40 discount to feed barley, which looks too cheap, however given the lack of domestic usage along with the high export demand for feed barley it is possible this differential continues into next year. Feed oat export demand is likely to be the main thing that could change this dynamic.
  • Scandinavian milling oat sellers still remain largely absent from the market; it is unknown as to when they will enter the fray but it does mean prices are being forced higher until they do.
  • Good demand remains in place in continental Europe, and farmers should look to place oats in their required movement month sooner rather than later in order to avoid grain being moved later than planned.

Pulses

  • The rally in bean prices has cooled this week and prices are unchanged on the week.
  • Importers in Europe are generally covered for their nearby positions and are starting to show resistance to these higher levels for feed beans as the spread between beans and peas has narrowed.
  • The outlook however remains supportive going forward and we would expect prices to remain firm in the short to medium term.
  • Human consumption exports to Egypt remains restricted by a lack of container freight. Ocean freight rates continue to firm on a weekly basis, which is slowing the rally in ex-farm prices.
  • The Australian harvest is due to commence in a few weeks and the outlook is for similar production to last year. The big question mark is how many beans the country is able to export this year with container freight in short supply and elevation capacity getting booked up.
  • We have seen an increased interest in new crop pea buybacks this week as growers look for alternatives because of the high fertiliser prices. New crop pea buybacks remain available so please speak to your farm trader for further information.

Seed

  • Winter Seed: Floor stocks are limited, although we have good availability on RGT Skyfall winter wheat, suitable for the later drilled spot with its flexible sowing window.
  • Spring Seed: As we look ahead to the spring, ADM has a great seed portfolio to suit all situations. This includes 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.

Fertiliser

  • Granular urea traded at $900/t FOB Egypt this week following news of the latest Indian tender. This has helped to provide further support to the broader urea market.
  • Difficulties in securing freight and product continue, with pricing for natural gas in Europe remaining at historically high levels.
  • China’s export restrictions create more uncertainty and it is very clear that little urea tonnage will move from the country’s ports at present. This is adding pressure to other key supply areas, mainly North Africa and the Arab Gulf.
  • In the UK, granular urea has continued to trade below replacement values but as volumes dry up a rise in values will happen. However, it is likely that urea will remain the most competitive source of nitrogen going into 2022.
  • Liquid UAN prices remain available for spring delivery, giving the opportunity to secure supply and fix costs for the 2021/22 season in a market that appears to be supported through this period.
  • Granular lime remains available from ADM, a product which can help the efficiency of nutrients by correcting soil pH levels.
£/€ £/$ €/$
1.186 1.3755 1.16
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Nov 21 198-208 205-215 250-255 560-565
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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