Market Report

Thursday 5 November 2020

Wheat

  • US wheat prices are down about $1/t on the week after earlier weakness was negated by talk of drier weather returning to the US, South America and Black Sea region.
  • We still await the outcome of the closely fought US election and its potential impact upon the US and global economic, financial and commodity markets.
  • US exports continue to slow amid concerns that prices are too high, along with increasing cases of Covid that may reduce global feed demand.
  • In Argentina, Buenos Aires Grain Exchange maintained its forecast of 2020 wheat production at 16.8mln t, despite recent rains. This follows months of dry weather that hit the central farming region and continues to affect the north.
  • Australian farmers have started what appears to be a bumper harvest, and are expected to produce the third-biggest wheat crop in 30 year, just as concern over Black Sea conditions lifts global prices.
  • Mexican grain buyers booked deals to buy their largest volume of corn from the US since last December, after farmers warned of domestic shortfalls following deep government spending cuts.
  • China has rejected Australia’s appeal to scrap a tariff on its barley exports, all but closing the door on future trade.
  • China is expected to ban imports of Australian wheat. The grain is the latest to join a list of blacklisted products as tension intensifies between the two countries
  • Russia has harvested 132.6mln t of grain (before drying and cleaning) from 95% of the area, with yields averaging 2.9t/ha, official ministry data showed
  • Ukraine’s Pig & Poultry growers association have asked the government to set a maximum volume on maize available for export, due to a sharp rise in price that could push up domestic meat prices.
  • International Grains Council trimmed its forecast for global corn production for 2020/21 by 4mln t, to 1,156mln t, reflecting diminishing outlooks for crops in the Ukraine and the EU.
  • IGC raised its forecast for global wheat production by 1mln t, to a new record 764mln t.
  • French soft wheat exports to non-EU countries reached a high for this season of 703,000t, buoyed by a record volume of exports to China, reported at 524,000t.
  • UK old-crop prices are up about £2/t, with currency range-bound. Reports that severe differences remain between the UK and EU after recent trade talks may see sterling weaken as the 31 December deadline approaches.
  • There is still much uncertainty about our trading terms with the EU post 1 January 2021. This has already created significant import programmes that need to be completed before the turn of the year.
  • UK plantings are underway again as a spell of dry, colder weather has arrived with expectations that we will see a significant rebound in UK wheat plantings.
  • French farmers had sown 66% of the expected soft wheat area for next week’s harvest as of 26 October, up from 45% a week earlier.

 

Malting Barley

  • China has rejected Australia’s appeal to remove the tariff it has imposed.
  • The Australian barley harvest is now underway and the country expects to have a big crop of malting barley.
  • The EU malting barley price is mainly being driven by the feed market.
  • In the UK the price is also being driven by a lack of supply.

Rapeseed

  • CBOT Soybeans have rallied from recent lows to touch contract highs today. Since the start of the US election campaign soybeans have seen big gains exceeding highs made back in late October. Meal and oil prices have also made significant increases.
  • US weather in the 6-10 day forecast looks dry with temperatures above average. US harvest progress is reported at 87% vs 71% last year ,which was slightly behind trade estimates of over 90% (83%  five-year average).
  • South American weather remains a concern. Northern Brazil still expects decent rain over the next 5-10 days, but the south and Argentina will remain dry.  This causes concerns for crop plantings and development and will delay the supply of new crop beans to the market in early 2021.
  • There are no USDA sales to report. China has been absent from the US market for 19 days now, amid rumours it has purchased two cargoes from Brazil. That said, it is also rumoured that Brazil is enquiring about US soybeans.
  • Asian veg oil markets saw significant gains in recent days, led by Malaysian palm oil which touched four-year highs. It was reported that October stocks were lower than expected on the back of weather events and reduced labour availability.
  • Asian rapeseed oil prices remain firm closing higher for the tenth session and is again within touching new contract highs this week.
  • It was a turnaround week for the Matif as prices rallied to contract highs again in today’s session, within cents of €400. February closed at €396.25 last night and traded at €399.75 into today. Prices followed outside markets back higher, and were helped by improved veg oil prices.
  • Sterling remains in the balance, trading at over 1.11 down to 1.10500 in the last few sessions. Brexit negotiations remain tough, whilst the Bank of England made the decision to support the economy during the lockdown by  boosting quantitative easing by £150bln. Interest rates remain at 0.10%.

Pulses

  • Faba bean prices are stable on the week for both feed and food quality. With protein markets continuing to move higher it is expected that we will see increased interest in beans for inclusion in feed rations in the weeks to come which should add support to prices.
  • Human consumption interest remains limited to Sudan. The Australian harvest continues to produce good yields and quality and therefore it is likely that the UK will continue to lose market share into Egypt this season, with Australia picking up the bulk of this lost demand.
  • With the human consumption premium still relatively small, at around £5-£10 over feed, many growers are deciding not to take the risk to sell into this market, even if beans are suitable.
  • Old crop pea markets have firmed this week as international pea markets remain well supported and are likely to do so for the remainder of the season. New crop pea buybacks are available for marrowfats, large blues and yellow peas. Please contact your farm trader for further information.

Seed

  • Winter seed – Contact your farm trader for an update on our latest stocks to fill any of your outstanding autumn seed requirements. Although stocks are very limited we do still have availability of a few key varieties for immediate dispatch.
  • Spring seed – As we begin to think about spring cropping, ADM Agriculture has good availability of both spring barley and spring wheat. We also have market-leading buybacks available on large blues and marrowfat peas. Contact your farm trader for more info.

Fertiliser

  • Granular urea has traded higher in the US this week and Chinese export prices continue to firm, reflecting a rise in domestic prices due to reduced availablity.
  • In the UK, there are early signs of firming urea values as a few buyers start to return to the market.
  • Piagran Pro, the ultimate urease-inhibited urea that reduces ammonia losses by at least 70%, is also available from ADM.
  • CF withdrew NPK and NS grades this week and the withdrawal of all terms is expected next week. Higher prices reflecting import replacement values are expected to follow.
  • The PK market is more active. DAP values have increased about £30/t since early September.
£/€ £/$ €/$
1.106 1.3085 1.1835
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Nov 20 142-147 182-192 206-211 348-356
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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