Market Report

Thursday 4 June 2020

COVID-19 – Safe transfer of grain passports and self-isolating

It is important that all farmers follow UK government advice with regard to sanitising and best practice. We strongly recommend all participants in the grain supply chain read this advice from AHDB https://ahdb.org.uk/knowledge-library/coronavirus-guidance-for-combinable-crop-deliveries-and-collections

If farmers are quarantined or self-isolated for a period of time and therefore unable to load combinable crop sales or accept deliveries of seed or fertiliser, please advise your ADM farm trader as soon as possible and we can then delay the collection/delivery until the period of self-isolation is complete.

To date, the grain supply chain is working close to normality. All parts of the industry are working well together, and the situation is obviously under constant review and of the utmost importance in keeping the nation supplied. ADM Agriculture would like to thank all our customers for their ongoing support.

Wheat

  • US wheat prices are up $4/t on the week, supported by a sharp fall in the value of the US dollar.
  • While the crop condition of US winter wheat slipped slightly on the week, initial ratings for the spring wheat crop (80% good/excellent) were above last year’s 74%.
  • Argentina’s wheat sowings have reached 15% completed under talk of dwindling soil moisture – the crop expected is a record 21mln t from 6.8mln ha.
  • Ukrainian wheat exports are likely to fall to about 18mln t in 2020/21 due to smaller harvest, although no official limits has been agreed between the ministry and exporters.
  • That compares with 20.2mln t of wheat so far this season. That is part of a record 54.1mln t of grain exported to date, including 28.4mln t of maize.
  • Kazakhstan’s Ag Ministry expects the country to harvest 18.0-18.5mln t of grain in 2020, with grain exports seen at 7.0-7.5mln t.
  • GASC (Egypt’s official importer) has purchased 120,000t of Ukrainian wheat for July 10-25 shipment, as the country tries to boost its strategic stocks amidst the domestic harvest.
  • The EU Commission lowered its forecast for the 2020/21 EU soft wheat crop (non-UK) by 4.3mln t to 121.5mln t. It also reduced exports to 26.5mln t from 28mln t previously.
  • French soft wheat crop conditions fell one point in the week ending 25th May to 56% good/excellent. That is the lowest figure for this time of the year since 2011.
  • UK (London) new crop futures are down £2/t on the week and well off the highs witnessed late last week.
  • Although rain was forecast for much of the UK this week, so far, several areas have seen very little, and although temperatures have turned much cooler, moisture is much needed to stabilise current crop conditions.

Malting Barley

  • Beer sales are picking up in some parts of the world and falling in others.
  • Most of Europe is seeing cooler and wetter conditions which should help spring crops.
  • Prices went up last week on the back of buying interest for French barley and the hot weather but have eased back over the last few days.
  • UK demand for 2020 is still forecast approximately 40% less than normal.
  • There are reports of commercial and farmer stores throughout the country still waiting to move their crop 19 malting barley.
  • These stores need to be emptied before harvest.
  • UK maltsters’ intake bins are also full, with little chance of this changing anytime soon.

Rapeseed

  • Crude oil has continued to firm this week as more lockdown restrictions are lifted and talks continue between Saudi Arabia and Russia to persevere with reduced production for another two months.
  • CBOT soybeans have hit three-week highs, rallying on the idea of more Chinese business coming forward after a further 186,000mln t purchase reported on Wednesday. The market is also aided by currency. The US dollar is now trading at two-month lows, while in Brazil, the US’s main competitor, the real is trading at two-month highs, making US exports more competitive. Moreover, stocks in Brazil are beginning to fall quickly, which will mean the Chinese will have to turn to US supplies at some point.
  • US plantings continue at a good pace, at 75% complete vs 65% last week (68% five-year average). Emergence is 52% vs 44% five-year average, and the first crop ratings were 70% good/excellent.
  • Exports of veg oils are starting to pick up. Notably Malaysian palm oil has seen a reasonable recover from its recent lows in Jan-March. Increases in Indian buying have helped prices appreciate to five-week highs. Soy oil too has moved up around 25 points on the week, following crude oil and the Malaysian palm market higher.
  • In Canada, canola plantings are upwards of 80% complete now, with some strong winds which are drying out the topsoil. Whilst this isn’t a major concern at the moment, it could affect yield potential if prolonged.
  • Last month’s storm in Western Australia will cause some to re-seed small areas in coming weeks, but overall, they have showers in the forecast and the canola crop is in shape for a good start with a large export programme still expected.
  • Matif rapeseed has continued to trade within the same €365-375 range since April. Currently near the top of that channel, it is finding support in the firming crude oil market, as well as other veg oils with fresh news in Europe otherwise lacking.
  • In the UK, prices began the week lower with the stronger pound holding back levels. As Brexit negotiations have gone on with reports of little progress, sterling has weakened, which has brought prices back to the same levels we saw last week. Crush coverage for old crop remains good, while new crop will be reliant on imports, emphasising the importance of sterling.

Pulses

  • The pulse market remains quiet with little activity on old or new crop.
  • Bids for old crop beans are few and far between, with domestic shorts covered and little fresh demand. Now Ramadan is over we expect to see a slight increase in demand in the next few weeks, but with an inverse to new crop, prices are likely to continue sliding.
  • Rains in the UK this week are welcome, although many bean crops are looking short and flowering low to the ground, and yield potential is likely to be capped.
  • Farmer selling has been non-existent as a result of the concerns regarding the dry weather. New crop bean prices are unchanged on the week.

Seed

  • Winter wheat seed stocks are under increasing pressure as yield estimates continue to be brought back.
  • Other cereal and pulse products are in a similar situation to the above.
  • Our advice to growers is to get autumn cropping plans in place and get certified seed requirements covered earlier than normal this season.
  • Winter OSR – we have selection leading varieties supported by establishment schemes to help share the risk of establishment between the grower, merchant and breeder. Please call your farm trader for more info.

Fertiliser

  • CF released new season ammonium nitrate terms last week at levels attracting a good early uptake. All offers are expected to be withdrawn at COB on Friday 5th June, with values then forecast to move up and reflect the higher levels being quoted in Europe.
  • Granular urea is stable on the global market with Chinese urea exporters standing firm on pricing with the next Indian tender likely next week. Further industrial urea demand and manufacturing output increases as lockdowns ease, are providing confidence to manufacturers to hold firm on prices.
  • In the UK, despite £/$ movement this week, urea has been reflecting this firm global sentiment. Prices have marginally firmed on straight urea.
  • Reports from the Met Office suggest that lengths of extreme weather, like we have just experienced through autumn and spring, are likely to become more regular occurrences. ADM Agriculture have products with incorporated active agents, PiagranPro and ALZON® neo-N, that do not lose their effectiveness at application time when buying forward, allowing you to protect your nitrogen supply and take advantage of early season offers.
£/€ £/$ €/$
1.119 1.2535 1.12
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jun20 124-136 155-165 215-220 317-322
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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