- US prices are down just over $10/t on the week. Despite US all-wheat sowings being reduced fractionally, it was the corn acreage that surprised the market, at 91.7mln acres. This is up 3% y/y and 2mln acres above the Government’s June estimate.
- US winter wheat harvest has commenced, with 30% of the crop reported as complete. Early reports show yields and quality above expectations.
- Harvest has also started in southern Russia, where yields are also exceeding earlier expectations. Although too early to gauge a national trend, early results show yields up 9% on wheat and 14% on barley y/y.
- Russia’s IKAR consultancy has lowered its grain export forecast for the 2019/20 marketing season to 45.3mln t, from 46mln t previously, due to a downward revision in its grain crop forecast.
- EU prices have eased on the week, trading down €4/t, as the recent heatwave quickly abated, lessening the threat of any substantial damage to the EU’s grain crop. Market fundamentals remain bearish. EU production is set to rebound, and price levels are not only undercut by Black Sea prices, but also by new-crop imported maize.
- German Farmers Association, DBV, reported that German farmers will harvest 24.1mln t of wheat this year, up from 19.6mln t last year.
- EU and Black Sea exporters remain concerned over the lack of export business on the books, given the expected increase in production. This could lead to some aggressive offers.
- UK new crop prices are trading £3/t down on the week, reflecting the decline in the global markets. Old-crop prices in most areas have also fallen, as signs of fresh farmer selling is met with limited consumer demand, with the old-crop/harvest spread almost completely eroded to parity.
- This past season we witnessed a shift in domestic usage, as maize was deemed more cost-effective than wheat, into both industrial and feed sectors. This pattern, while initially only expected to continue through the harvest period, may now continue further into the marketing year.
Thursday 4 July 2019
- The hot weather of last week does not seem to have adversely affected EU malting barley crops and sellers have returned to the market.
- In the UK winter and spring crops look to be in excellent condition and most areas are forecasting above average yields.
- The first winter barley has been harvested in East Anglia. Yield is reported as good.
- Last Friday’s USDA report was surprisingly friendly to soybeans, confirming that 80 mln acres of soybeans had been planted, 4.6 mln acres below planting intentions back in March.
- Concerns were raised over the reliability of the data as plantings were only 77% complete when the surveys were recorded. USDA has agreed to resurvey 14 major states in July.
- US weather has improved this week, with temperatures across most states nearing normal. US soybean plantings are still incomplete, now confirmed at 92% vs the five-year average of 99%.
- Soybean crop ratings fell this week to reportedly the lowest since 2005. 54% of the crop reported as good/excellent, 35% fair and 11% poor/very poor.
- US/China talks are back and are said to be going well, though the trade seem reluctant to react on such little news. There was some activity on rumours that China may make goodwill purchases of US agricultural products.
- The market is also reacting to further news of Asian swine flu outbreaks in China. Despite official claims that herd numbers are rising, trade sentiment is that possibly half of China’s breeding stock could have been wiped out.
- In Canada, canola crop conditions are said to have improved and soil moisture levels are improving after recent showers.
- In Europe, Matif rapeseed prices broke the recent downward trend, reacting to firmer US markets. Temperatures reached record levels recently but have since cooled this week. The impact on crops at the movement is said to be limited. Harvest has started Poland, Ukraine and Romania, but its early days to get accurate yield and quality reports.
- Here in the UK, prices remain supported by the weaker sterling, however with Conservative leadership elections coming up and Brexit still to resolve, it’s hard to predict future direction.
- The last week has seen some old crop shorts appear in the market, trading at levels that show a circa +£30 premium to where millers are indicating harvest bids. As we get closer to new crop coming into the market, and the shorts get covered, we should expect this inverse to narrow sharply.
- Reports are that UK oats are looking well in the field and the expectation is that production could prise by circa 6% vs harvest 2018. This coupled with the prospect of a decent quality year should act to keep downward pressure on domestic values.
- UK bean crops on the whole look very well. The trade is optimistic regarding yield potential and crop estimates are being revised higher. Quality is still an unknown and, whilst the weather so far has been less conducive to bruchid beetle activity than last year, there are reports of high levels of insect activity in some crops.
- UK bean values have firmed over the last few weeks as a result of weaker sterling and a lack of any farmer engagement. A firming of values has certainly not helped beans force their way into domestic feed diets, with beans remaining too expensive to feature in ruminant rations all year.
- There has been a reasonable amount of feed business to the export market to date, to customers whom have inelastic demand for beans. However, those who simply need to use a pulse are buying peas from the Black Sea at a significant discount to beans. It is therefore hard to see such high bean values being maintained once harvest approaches and farmer selling occurs.
- New crop pea buybacks are available, please contact your farm trader for further information.
- KWS Firefly, KWS Extase and Theodore are all sold out. This highlights how valued Septoria resistance is. Graham, KWS Siskin and RGT Saki are still available with high Septoria resistance.
- DK Exstar is looking fantastic in trials this season. Contact your farm trader to secure your seed requirements of this leading Dekalb hybrid.
- Supply pressure is still on winter beans and winter oats. We advise those requiring seed should get orders covered asap to avoid having to make alternative cropping plans.
- India have announced this week they will buy more than 1.5mln t of urea under the tender announced on 1 July, with most being sourced from China.
- This will help to keep global supplies tight through the rest of July and first half of August. Beyond mid-August, knowing that India will be out of the market for an extended period of time, the global urea market could correct as suppliers and traders look to create demand.
- However, the UK market has been trading below replacement values for over two months, as there are still some tonnes available in portside stores that were traded when sterling was at more attractive levels. This tonnage is limited and once these tonnes are sold we will see replacement values come into play.
- As a consequence, this means that the global urea market would need to see a correction downwards of at least $40/t from today before we see any effect on the prices we are seeing at the UK farm gate.
- CF continue with ammonium nitrate on the same terms for October, but the threat of any potential import tariffs and weaker currency is limiting offers beyond October, as uncertainty hangs over the market.
- Liquid terms from ADM Agriculture are still available, but like AN, UAN is on the 6.5% tariff list, so tank fill pricing before 31 October is advisable.
- Many have seen the warning signs and have secured tonnage at today’s levels to limit risk.
|Feed Barley £||Wheat £||Beans £||Oilseed Rape £|
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.