Market Report

Thursday 29 October 2020

Sampling – Harvest 2020

Knowing the quality of crops is especially important this year so if you have not already done so, please contact your farm trader to arrange for sample bags to be sent to you. Your farm trader will also arrange a method to get the samples back to us for analysis. The results will be available via our online portal ADM 365, or from your ADM farm trader.

Wheat

  • US wheat prices have fallen just over $10/t week on week, as a more favourable weather outlook for the US and Black Sea region has resulted in long-holders liquidating their position.
  • Weather conditions have improved the outlook for Russia’s 2021 grain crop, after rains were received in several regions last week. Farmers are reported to have sown winter grains on 94% of the intended area (18mln ha).
  • In Ukraine, growers have sown winter crops on 7.3mln ha (89% of the intended total area).
  • Argentina still remains dry, and its upcoming wheat crop is now being projected at sub 18mln t, against earlier season optimism of a record 21mln t crop, mainly due to the continued lack of moisture across much of the country’s grain belt.
  • As far as the 2020 crop elsewhere is concerned, Russia has harvested 131mln t of grain (before drying/cleaning) from 94% of the sown area, with average yields of 2.89t/ha, according to official data.
  • Ukraine has harvested 50.5mln t of grain from 12.9mln ha (84% of the total sown area). The country is no longer planning to review its current export quota, with traders/government agreed on a cap of 17.5mln t for wheat. So far this season, just over 10mln t has been shipped.
  • The country’s total grain exports so far have fallen 16% on the year to 15mln t, mainly due to a sharp reduction in corn exports, reported at 1.54mln t and compare with 3.59mln t this time last year.
  • Egypt’s state buyer continues to purchase wheat on the international market, buying 165,000t recently from Russia.
  • Algeria recently purchased near 600,000t of optional-origin wheat, with European traders thankful that this should not include Russian wheat.
  • In summary, the return of much-needed rain in key producing areas has resulted in a sell-off of long positions built up over several weeks, when ongoing dryness concerns pushed markets upwards.
  • One could argue that the bullish sentiments towards the 2021 crop still remain, although traders are also becoming more concerned over a potential fall in industrial, food, and feed demand due to the renewed escalation in the global Covid-19 epidemic.

Malting Barley

  • Covid-19 continues to hit EU beer demand as new lockdowns in France and Germany are announced.
  • UK malting barley demand is also being negatively impacted as more areas move into tier 3.
  • Malting barley markets remain relatively quiet with prices unaltered over the last few days.
  • There are a few domestic enquiries for crop 2021, but the export market is shut awaiting Brexit terms to be finalised.

Feed Barley

  • We have seen another week of good buying interest for Nov/Dec coasters, particularly from the Netherlands, where demand has been strong for these positions.
  • In the latter half of the week however, barley markets have gone cold, as futures markets globally retreated. Meanwhile, farmer selling is slow and subsequently the offered level in the UK remains unchanged.
  • The lower Matif has increased the competitiveness of German barley for Third Country demand vs UK origin.
  • The domestic market is still only just ticking over, despite barley looking increasingly cheap. Buyers are seemingly reluctant to commit to forward positions.

Rapeseed

  • Covid-19 cases continue to rise globally, with no sign of another federal bailout ahead of next week’s US election. Investors are also moving positions ahead of month end.
  • Agri-commodities have followed outside markets lower with CBOT soybeans, soymeal and soy oil all closing sharply lower on the week.
  • US soybean harvest progress fell short of expectations yesterday, with USDA pegging progress at 83% vs trade estimates closer to 86% (76% last week). US weather across the Midwest looks drier, which will help those who need to finish harvest.
  • China seem absent from the market, but USDA announced further sales to Egypt and unknown destinations.
  • South American weather continues to improve, with sporadic rain heading across central Brazil, but temperatures vary. AgRural estimated plantings in Brazil to be 23% vs 8% last week.
  • The market seems to have run out of steam in the short-term after touching four-year highs, and outside market pressure prevails. Managed money reduced positions in the last few days, but are still estimated to be 248,000 contracts long.
  • Veg oils remain firm with Chinese demand still strong. There are supply concerns in Malaysia, but the recent rise in Covid-19 cases is a concern for demand going forward.
  • In Australia, harvest is progressing well. ABARES estimate the 2020/21 crop at 3.4mln t.
  • All EU markets fell yesterday as talks of renewed national lockdowns were announced for Germany and France as Covid-19 cases rise.
  • EU rapeseed prices fell sharply yesterday. February futures have fallen €14, trading down to levels not seen since the end of September.
  • Sterling remains volatile and will continue to do so as we get closer to the Brexit deadline, but recent strength is pressuring UK prices.

February Matif Rapeseed (€)

Pulses

  • Prices for both feed and human consumption beans remain stable on the week.
  • The UK is still not competitive into Egypt for either feed or food quality beans, with the Baltics and Australia continuing to take market share from the UK this year. Fortunately, limited demand to Sudan means a small human consumption premium of around £5-£10 over feed is available.
  • New crop pea and bean buybacks are available. Please contact your farm trader for further information.

Seed

Autumn Cereals

  • The autumn drilling campaign continues to drag on with parcels getting drilled in between showers. ADM have wheat and barley seed ready for immediate dispatch to top up seed rates, which is advisable in many cases now, with slugs being reported as a particular issue this year.

Spring Options

  • Thoughts are now turning to spring cropping intentions and especially lower input options like peas and beans. Seed supply of both is good at present supported by our leading buyback opportunities.
  • Other spring break crop options are available and worth considering, with spring OSR benefiting from high forward prices at the moment and spring oats showing good margin opportunity.

Fertiliser

  • The Indian tender finally resulted in 2.184mln t being awarded, with Chinese prices moving up as news broke. However globally, pricing was broadly stable as the enormity of this award is digested, and many try and figure out how this amount can be shipped in such a tight time frame.
  • Along with China, tonnes will likely be sourced from the Black Sea, Middle East and Egypt, adding support to values in all these areas.
  • Urea pricing in the UK has remained flat, whilst currency has negated small gains on the global market.
  • New CF terms are unlikely to remain in the market for an extended period of time, with buying gradually increasing.
  • UAN continues to remain stable. Importers are unable to secure vessels beyond January, with more risk averse homes on the continent available.
  • UK fertiliser prices do not seem to currently reflect global market/replacement values, with upside potential looming.

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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