Market Report

Thursday 29 July 2021

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In today’s update, Chris Colley, ADM Agriculture feed barley trader, looks at the current feed barley market.

Wheat

  • Chicago corn and wheat prices have dipped during the week, before rallying again, despite the persistence of drought-like conditions threatening spring crops in the US Northern Plains. This is being watched internationally and could provide a price stimulus if conditions don’t improve
  • The US winter harvest is nearing completion, while the spring wheat harvest is just commencing.
  • USDA’s Foreign Agricultural Service forecasts Australia’s 2021 wheat crop at 29.5mln t, 1 mln t above the official USDA estimate, citing very favourable conditions remaining for all winter-crop regions. This means that Australia will probably once again be a major exporter of all crops in the coming year.
  • Frosts over recent weeks, and the possibility of a sharp drop in temperatures during early August, is raising concerns over the impact upon Brazilian and Argentine wheat crops. This threatens a major wheat producing region and potentially tightens the world wheat balance sheet.
  • Ukrainian 2021/22 grain exports have increased 49% year on year to 1.7mln t, mainly due to higher corn exports. Year-to-date wheat exports reported at 399,000t, down 3% on the year. This is relevant as it shows that Ukraine will be a major exporter again in a situation where Russian supplies are hard to price or access.
  • Russian wheat shipments for the 2021/22 season are now forecast at 37.1mln t, down 1.3mln t from a previous estimates, following a smaller outlook for this year’s harvest.
  • Russia has harvested 37.2mln t of wheat (before drying/cleaning) so far this year, with an average yield of 3.48t/ha, down from 39.6mln t and 3.59t/ha respectively this time last year.
  • Wheat production in Romania, traditionally one of the EU’s country’s largest grain exporters to the Middle East, could reach a record-high this season, as first estimates show a good-quality harvest.
  • Egypt’s state buyer GASC purchased 180,000t of Ukrainian and Romanian wheat in a recent international tender for September 20-30 shipment.
  • However, Morocco has revised its 2021 wheat harvest estimate higher, to 7.54mln t, which would be the second biggest crop on record, including 5.06mln t of soft wheat and 2.48mln t of durum wheat. If realised, this would significantly reduce Moroccan demand for imports from EU and Black Sea.
  • Meanwhile, France’s agriculture ministry reported about 14% of the country soft wheat crop had been harvested as of 19 July, well behind last year’s 67%. Crop conditions have slightly deteriorated to 75% good/very good.
  • Strategie Grains estimates that France’s crop is likely to be between 37-37.5mln t, much in line with current ministry estimates.
  • EU’s crop monitoring unit MARS reports that exceptionally high rainfall in much of France, Germany and the Ukraine will probably reduce grain quality rather than yields. This potentially would mean a higher availability of feed wheat and less availability of milling wheat for export or domestic use.
  • UK spot wheat prices remain favourable for long-holders, as the late arrival of EU boats and the delayed domestic harvest has meant high prices are available for early new-crop parcels. Once the ships arrive and the UK harvest gets underway hefty premiums will very quickly erode.

Malting Barley

  • World malting barley prices are higher this week due to ongoing weather concerns.
  • The extreme heat in Canada has hit the growing crops hard and all offers have been withdrawn.
  • The wet weather and floods in the EU is also causing concern.
  • In the UK the winter malting barley crop is 70/80% complete.
  • Nitrogen levels continue to be very low but screening levels are disappointing.
  • UK prices are also firmer over the last few days.

Feed Barley

  • Harvest has continued at a fast pace over the last week, despite some patchy adverse weather across the country.
  • Yields continue to remain to just above expectation, and barley is still being cut dry. However specific weights, despite improving marginally over the week, continue to cause concern, particularly in the south of the country.
  • Farmer selling has picked up with the increasing pace of harvest, and with wheat prices continuing to climb and nearby export demand not attractive, we have seen the gap between as available movement and prices in the deferred positions widen.
  • We have seen FOB buyers looking to the UK to replace sales into north-western Africa, which may provide some much needed demand to the market.

Rapeseed

  • US weather continues to dictate market direction, with forecasts showing the excessive heat easing for a few days, but returning again in the further forward forecasts. Rain or showers will hit some regions, but are said to be limited. If this continues into August, it may stress crops at a crucial time.
  • US soybean ratings are down 2% to 58% good/excellent, below the 72% last year.
  • Oil markets bounced at the start of the week. Crude oil markets traded lower to start the week, with WTI trading $1 lower to begin with, but recovered to close unchanged. Palm oil traded 3% higher with production for July estimated to be 6% lower due to lack of available labour and logistics. However, Malaysian palm oil prices fell back 3% in yesterday’s session due to covid cases causing concerns over demand.
  • After weeks out of the US market, there were rumours of renewed Chinese buying interest supporting bean prices earlier in the week, but nothing is confirmed. After a positive meeting between the US and Chinese officials, it’s hoped that China will now return to the US market under the phase one trade deal.
  • In Canada there doesn’t seem to be any relief to the heatwave, with little to no rain. Crop estimates are being revised lower, with some now below 15mln t. Despite this, prices have traded off the highs. The spread between soybeans and Matif rapeseed continuess to narrow.
  • Matif rapeseed trading is as volatile as it has been in recent months. Harvest delays and Canadian weather remain supportive, but with August futures expiring at the end of the week and month end this weekend, we may see some position squaring.
  • UK prices are edging higher, although sterling has firmed above 1.1700, which has pressured prices slightly.

Oats

  • With harvest fast approaching the trade is keen to see what quality this harvest brings. The first sample of winter oats harvested in the Cotswolds tested 55kg/hl, but 8% screenings. However, we expect some variability given the growing conditions this season and the results seen in winter barley. Consequentially, millers and feed compounders alike continue to hold off from buying until quality is known.
  • Exports for feed oats into Europe remain at big discounts to barley, with values currently calculating around £120ex-farm (subject to distance from a port). However, with quality issues seen in some of the EU crops and the drought in North America, we could see some better oat prices if the UK gets the quality 54-56kg/hl.
  • August is currently forecast to be catchy with weather systems rolling in off the Atlantic so no assumptions can be made with regard to UK crop quality at this stage.

Pulses

  • Growers should look to market any remaining old crop supplies left on farm whilst a premium over new crop is available.
  • On the whole, conditions remain favourable for the development of the UK bean crop. Trade estimates for UK bean production for harvest 2021 are up to 700kmt, which if realised, would be 40% higher than harvest 2020.
  • New crop bean prices have followed wheat futures higher on the week. These higher prices continue to switch buyers off, with little demand domestically or for export at current values.
  • Old crop Australian beans continue to trade into Egypt at a discount to EU origin beans, so importers remain focused on securing supplies from this origin.
  • The dried pea harvest is likely to commence in the UK in the next week, with the trade optimistic with regard to yield potential, with many crops looking excellent.
  • New crop marrowfat pea buybacks are available for harvest 2022. Please contact your farm trader for further information.

Seed

  • Rapeseed – ADM Agriculture have a great portfolio of OSR available for immediate dispatch, including extremely vigorous Duplo. The most powerful variety DSV has bred for the UK, with the n-efficiency trait, as well as TuYV protection, pod shatter and RLM7 stem canker resistance. Duplo is also packed in 1.8m seed packs, rather than the standard 1.5m – giving the grower greater flexibility on drilling rates. Get in touch with your farm trader now for a summary of the varieties we can offer.
  • Cereals – For our full cereals summaries, please follow this link to ourSeed Varieties Guide for Autumn 2021/22. Availability is still looking good across the board, with just a few of the newer varieties now beginning to look limited in terms of availability.
  • Cover Crops – ADM Agriculture can also cover all of your cover crop & stewardship seed, with a wide range of mixes to suit your individual needs.

Fertiliser

  • India secured 1.2mln t in the most recent tender, which was below requirements. A further tender is expected before the end of August, which should support current price ranges seen FOB Egypt.
  • UK urea prices have stabilised around replacement levels, although UK ammonium nitrate pricing has room to move higher on the next set of CF terms to be issued soon.
  • ADM Agriculture can offer post harvest delivery for nitrogen and nitrogen sulphur grades at competitive values.
  • UAN pricing has been reissued with forward prices unavailable as uncertainty around supply continues to impact the UK market.
  • Potash prices have risen following political sanctions on the world’s largest potash producer, curtailing supply at the UKs peak demand.
£/€ £/$ €/$
1.176 1.3965 1.1875
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Aug21 146-156 193-213 (spot available) 230-235 437-447 (new crop a/a)
Aug21 168-178 (new crop a/a)
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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