Market Report

Thursday 30 January 2020

Wheat

  • US prices are down about $6/t on the week as the fall-out from the coronavirus outbreak in China weighs on the commodity markets. Traders fear it could dampen Chinese demand and weaken its economy.
  • Trade reports show China has purchased roughly 1mln t of wheat over the past two months from Australia, Canada and France to fill quotas from the WTO, which was deemed as negative to the US market.
  • South American weather has turned more favourable, with good rains in the forecast supporting estimates for a record Brazilian soybean crop.
  • Russia’s agriculture ministry stated it will consider offering annual export quotas for grain exports to help manage domestic supply. It reiterated there was no reason to cut its 2019/20 export forecast of 45mln t, including 36mln t of wheat.
  • EU prices are down about €4/t on the week, following the weaker trend in the US.
  • EU wheat exports were reported at 15.9mln as of Jan 26th, which is 69% ahead of last season’s pace.
  • Continued transport strikes in France are still heavily disrupting the movement of grain, leaving exporters little option but to switch the loading of vessels to either Germany, or the Baltic states.
  • Tunisia’s state grain agency has asked one of its main grain suppliers to avoid importing French wheat due to continuing strikes at French ports.
  • UK prices are down £4/t on the week, as the weaker global trend and continued currency strength weighs on values.
  • With UK prices currently at import parity, action on the global grain exchanges, political events and currency fluctuations will now have a greater influence on the future direction of UK farm values.
  • The UK’s departure from the EU on 31 January is not expected to change the UK’s grain trade flows into/out of the EU as the withdrawal agreement provides for a transition period until 31 December 2020. What happens after that date will depend on the trade negotiations that are due to start soon.
  • In summary, the escalation of the coronavirus outbreak in China has cast a shadow over the country’s import requirements, resulting in a commodity and other markets sell-off in the US markets over the past sessions.

Malting Barley

  • Domestic malting values are slightly firmer due to merchant shorts appearing in the market.
  • The trade is also seeing an increasing number of rejections due to high moisture, germination and infestation.
  • The mild wet winter is the likely cause of the problems and growers need to monitor their stores carefully.
  • The old crop export market is very quiet with plenty of sellers at very low premiums.
  • Crop 2020 is also very quiet with buyers sitting out of the market due to the forecast for another big spring barley crop.
  • Premiums are very low for the time of year, bearing in mind we have not yet started sowing the EU spring barley crop.

Rapeseed

  • Coronavirus is the topic of the week. Whilst fundamentally nothing has changed in the agricultural markets, fears over the Chinese economy has put pressure on prices across the board. Last Friday China began week-long celebrations for Chinese New Year whilst also trying to contain the deadly coronavirus.
  • The outbreak has sparked fear into global markets, whilst the Chinese government has already warned of a possible 1% fall in Chines GDP because of the epidemic.
  • As such, markets traded lower for most of the week. Crude oil prices fell to the lowest level since October, west Texas crude nearly 20% off recent highs. CBOT soybeans have struggled to find support this week and traded at eight-week lows.
  • Chinese buyers are out of the market for at least a week, if not longer. It is unlikely the market will see any pick-up in demand until things return to normal.
  • Weather remains hot in some parts of Argentina, but on the whole, is non-threatening in other parts of South America and unlikely to change crop estimates.
  • In Brazil the soybean harvest has picked up. Estimates suggest harvest progress is 4% complete vs. 13% last year.
  • Malaysian palm oil prices have struggled to make gains on a lack of Indian and Chinese demand. As such, both palm oil and soy oil will end the week on a weaker tone. Malaysian palm oil futures opened, after the weekend’s celebrations, to trade limits down, playing catch up with outside markets. Futures closed 10% lower on the day (290 ringgits), the largest daily fall in 11 years, which is 18% down since 10 January.
  • In the next few weeks it will be interesting to see if the tightness in the oil market lends support to the market.
  • Closer to home, Matif rapeseed prices remain volatile, whilst regaining some of the last weeks losses, prices remain under pressure from lower oil markets.
  • Canadian canola traded at six-week lows while Matif traded down to seven-week lows, 5% off recent highs.
  • Here in the UK, sterling continues to have a big influence over UK rapeseed prices. UK base rates have rather unexpectedly been kept unchanged at today’s BOE meeting, which has strengthened sterling.

Oats

  • The domestic milling oat market remains relatively lacklustre, with farm selling remaining at low volumes. The feed oat market continues to be supported by the UK’s export programme, however, as with milling, sellers remain reticent to commit volume at this time.
  • Looking to new crop, the EU commission has granted a temporary authorisation to market spring oat seed below the statutory minimum germination level, at 75% vs the standard 85%. This may well have implications on crop yield and quality for the 2020/21 harvest.

Pulses

  • The old crop feed bean market continues to see demand, as availability worldwide remains relatively tight.
  • All types of crop peas are sought after, so please bring them to your farm trader if you have anything to offer.
  • Peas contracts for 2020 are still available, but are rapidly being booked, so please book early to avoid disappointment.

Seed

Winter Wheat

  • The latest safe sowing date for most varieties is now here (end of Jan), and as such, attention is turning to spring orders where we have seen a spike in demand this week, particularly for spring wheat. Theodore has been given an extension to its latest safe sowing date by the breeder to mid/end of Feb. We have stock on the floor ready for immediate dispatch.

Spring Wheat

  • Imported stocks are still available including varieties Tybalt, Lennox and Mistral. Please raise any enquiry with your farm trader ASAP as stocks are not endless.

Spring Barley

  • No changes to stocks on the week, with Laureate, RGT Planet and LG Diablo all widely available.

Spring OSR

  • We have seen a lot of demand for spring OSR in the past fortnight. Growers are turning to spring OSR to give flexibility over drilling date for a spring crop on ground, where in many places ground conditions still look a while away from even getting a cereal crop established. We can buy the crop back on a variety of contract types – please speak to your farm trader for more info.

Fertiliser

  • There has been little activity on the global urea market this week, with last trades reported similar to that of last around the $240/t FOB North Africa.
  • US demand is the only obvious support to these FOB prices. The direction of sterling will also determine UK urea values, as illustrated with today’s decision by the Bank of England to hold interest rates, which has firmed the pound and pressured prices.
  • ADM Agriculture can offer granular urea today in bulk or bags. Speak to your farm trader today on ways in which we are able to offer savings on your urea-nitrogen requirements for this spring.
  • Irregular weather patterns, that seem to be becoming more frequent and extreme, put the nitrogen supply to your crops at risk this spring. Ensuring nitrogen losses are minimised is integral to good crop development, yield and plant health. ALZON® neo-N has two integrated inhibitors within the granule, which minimises both volatilisation and leaching, making it one of the best products for your crop’s nitrogen supply on the market, whatever the weather.
  • The UK ammonium nitrate market has been very active this month and interest continues whilst AN levels remain at 18-month lows. Prices have found stability following high demand and as cropping plans become clearer.
£/€ £/$ €/$
1.1815 1.3025 1.102
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Feb20 125-134 143-155 207-212 325-330
May20 128-137 146-158 210-215 327-332
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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