Market Report

Thursday 5 September 2019

Wheat

  • US prices are down about $5.50/t on the week after much larger deliveries were witnessed against the September position.
  • US corn prices have also hit fresh contract lows as exports continue to decline. This suggests further increases in stock levels, due to be reported on 30 September.
  • Harvest progress in Canada has been limited by rains. There are reports of quality losses in wheat and yields are said to be average to slightly below average in all parts of Manitoba.
  • A third straight year of drought in Australia, hit by below-average rains during the crucial growing season, means the country’s wheat output could shrivel by 10% from previous forecasts to below 19mln t.
  • Brazil is expected to introduce a tariff-free wheat import quota of 750,000t per year, starting in 2020. US wheat producers are seen as potential beneficiaries.
  • Russia’s agriculture ministry forecasts the 2019 grain harvest will total about 118mln t, including 75mln t of wheat.
  • EU prices are down €3/t on the week, despite Brussels reporting exports of EU soft wheat running 20% ahead year on year, at 3.63mln t.
  • London wheat futures are slightly firmer on the week, despite the pound gaining strength due to recent political developments.
  • The UK wheat harvest is nearing completion with crop estimates ranging between 15.8 and 16.2 mln t.
  • In summary, despite US, EU, and Ukrainian exports running ahead year on year, and Russia close, grain exchanges in the US and Europe have seen fresh contract lows set in the last week, except Chicago which got to within 10c/bushel of its previous low set back in May.
  • We mentioned last week that traditionally seasonal lows are set around this time, and that appears to be the case again this season. However, this year global production is expected to rise by 35-40mln t, so past experience may not provide a clear guide to what may happen this year.
  • With the UK’s future becoming as clear as fog with the latest Brexit developments, market rallies appear to be potential selling opportunities, although a delayed Brexit would allow the UK to continue to trade on current UK/EU terms.

Malting Barley

  • There is little change to the EU and UK malting markets with buyers well covered and happy with the supply situation.
  • Premiums remain low and a lot of good malting barley is having to move as feed.
  • Scotland still needs to cut around 30% of its spring barley, but so far yields and quality are excellent.
  • England has started its export programme, which is much earlier than normal due to Brexit.
  • UK ports are extremely congested, and it is difficult to find a slot to sell any extra shipments.

Rapeseed

  • US soybean crop ratings held steady at 55% good to excellent (55% last week, 66% last year for the same week). This is the lowest crop rating for this week since 2013.
  • Private forecasts of US soybean yields continue to come in below the current USDA estimate of 48.5 bushels/acre ahead of next week’s report.
  • Canada’s canola harvest is still two weeks away from being in full swing, with no weather problems to report.
  • Australian canola prices firmed up A$8-10 this week. Western Australia had 10-30mm of rain last week, which is holding the crop, but high temperatures and dry weather are forecast for the next 7 days. The increased share of GM varieties in the national crop is also causing concern over how much seed will be available to export to Europe.
  • In Europe, biodiesel margins remain very strong and the extremely tight supply and demand is still the main focus. To put it into context, this year’s EU production (below 17mln t) plus Ukraine’s record output is still less than last year’s EU total, whilst rapeseed crushing is forecast to remain at similar levels.
  • EU rapeseed futures made new highs this week, up €5.
  • In the UK, imports of Ukrainian seed will keep domestic crushers supplied for the next few months, filling any gaps in our own tight balance sheet.
  • Whilst EU prices continue to firm, stronger sterling has taken the edge off UK prices. This will continue to have a significant influence.

Oats

  • UK quality is showing considerable variability this season, with winter oats consistently outperforming all spring varieties where low specific weight remains a common trend. However, there are still oats to be cut in the north of England and in Scotland, where there are ongoing quality concerns. The trade awaits these oats to be cut and sampled before it can fully understand the quality split of this year’s harvest.
  • With an increase of 8% on the drilled oat acreage in the UK, and winters accounting for circa 50% of that acreage, in theory there should be ample supply of domestic milling quality oats this year. This is a fundamental reason as to why domestic values remain low, and without any further direction on the UK export tariff situation past October, buyers will aim to keep current values unchanged.

Pulses

  • With the pea harvest complete we now have a more accurate picture regarding the quality but are still waiting for the last few samples. Most samples have been suitable for human consumption, with only a few failing due to high insect damage or cracked seed coats.
  • Colour overall has been very good. Most samples have a good green colour, which is surprising given the wet weather throughout harvest. As a result of the good quality and yields, we expect prices for green peas to drift lower in the coming months.
  • The faba bean harvest continues to progress north. Insect damage is less prevalent in samples than last year, but many samples are still not making the grade for human consumption, with the majority of samples seen above 10% insect damage.
  • We may see specifications reduce if the crop has high insect damage. This is still up for discussion, depending on full harvest results.
  • After a significant move lower, prices for beans have stabilised, and we expect a period of consolidation over the next few weeks as the first vessels start to arrive on UK shores.

Seed

OSR

  • ADM Agriculture is still able to provide next day delivery on OSR seed. Late drilling conditions are excellent, with cooler temperatures now reducing the threat from flea beetle. Winter OSR is still by far the best margin break crop and provides a true break in the cereal rotation.

Winter Wheat

  • Sales have been strong over the past 10 days, with a lot of cereal seed tonnage booked. Certain varieties are getting tight, especially the popular hard feed wheats.

Hybrid Barley

  • SY Baracooda, the highest yielding hybrid variety, is still available in small quantities. All other hybrids are now sold out.

Fertiliser

  • Urea FOB prices in Egypt and Algeria rebounded last week by $15/t, driven by European buying.
  • The firmness is localised to Europe and Africa, so the question is whether the rest of the international market will now follow the bullish trend.
  • The announcement of another Indian tender is expected shortly, which should put a floor under Chinese prices.
  • In the UK, currency continues to direct prices. Existing stocks are priced well below replacement values and should be considered.
  • CF still has terms available for October. With the threat of tariffs still not off the table after 31 October, these terms still look extremely attractive to remove risk.
  • Fibrophos and P-Grow are still available to be applied to stubble to fulfil PK requirements. A UK-produced renewable fertiliser, it is a way to reduce input costs in a firming market.
  • Enquire about our products through your ADM Agriculture farm trader today or via our website adm-agri.co.uk.
£/€ £/$ €/$
1.1155 1.2335 1.1055
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Sept19 111-113 121-129 170-180 330-335
Nov19 113-115 125-133 172-182 336-341
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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