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Market Report

Thursday 6 January 2022

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Wheat

  • Despite the ups and downs over the festive period, market prices are virtually unchanged since our last report.
  • A lack of short-term demand for US wheat, plus a lack of a cold-weather threat for the central plains, has left buyers absent from the market.
  • However, export tonnages are under review in several key producing countries.
  • Argentina’s government will limit grain shipments to bring equilibrium to domestic markets, with wheat capped at 12.5mln t and corn at 41.6mln t for the current season.
  • This is despite Buenos Aires Grain Exchange raising its estimates of Argentina’s wheat crop to a record 21.5mln t, citing better-than-anticipated yields with around 90% of the harvest now completed.
  • Russia has approved an 8mln t wheat export quota to take effect from 15 Feb until 30 June 2022. Up to 9 mln t had already been priced into the market.
  • In mid-January Ukraine’s government will consider whether it needs to limit milling wheat exports amid worries of rising domestic bread prices.
  • China will sell 500,00t of wheat from state reserves this week at auction, although this is only open to wheat flour processing companies.
  • As of Dec 31 India’s sown wheat area was estimated at 32.6mln ha, about 1% lower year on year.
  • Egypt’s wheat purchases are running 17% behind last year. Romania accounts for 42% of the total imports, although Egypt has bought French wheat for the first time this season.
  • EU soft wheat exports had reached 14 mln t as of 2 January, up 2.8% on the year, although the commission cited that French numbers only included shipments up to the end of November.
  • DEFRA has trimmed its UK 2021 wheat harvest estimate to 13.988mln t, based on an area of 1.79mln ha and yields of just over 7.8t/ha.

Malting Barley

  • The world malting barley market remains well supported despite the fall in feed values.
  • UK domestic buyers are still in the market for the February to June period.
  • The UK FOB market is also well supported.
  • Crop 2022 contracts are at historically high levels.
  • Please contact your local ADM farm trader for 2022 contract details.

Feed Barley

  • We have seen a slow start to the new year for the barley market. Demand appears to be limited, particularly for exporting feed barley, as the UK is currently uncompetitive. Meanwhile freight availability remains a challenge.
  • Domestic demand also feels lacklustre, however anecdotally, UK consumers still have old crop positions to cover, particularly in the north where demand is strongest.
  • Farmer selling is however still extremely limited and it does not feel as though there is much in the way of barley stocks left on farm.
  • New crop feed barley is still largely undiscussed, with no activity to report from either buyers or sellers. Prices continue to track wheat values at anywhere from a £17-£20 discount depending on location.

Rapeseed

  • CBOT soybeans rallied significantly over the festive break, trading from $12.5/bushel in mid-December to touch $14 this week.
  • Further sales out of the US remain slow at these higher numbers, with USDA announcing a 132,000t sale yesterday to an unknown destination.
  • This recent price rally is focusing on the deterioration of South America weather. Drought continues across the southern parts of Brazil and Argentina, with temperatures soaring to over 40°C, whilst parts of northern Brazil are receiving above normal rainfall.
  • Whilst there is rain in the forecast for southern Brazil/Argentina next week, many remain fearful it won’t materialise.
  • Crops are under severe pressure, to the point where one of the largest brokerage firms reduced its Brazil crop estimate by 14mln t below USDA figures.
  • Oil markets found support, with crude oil firming despite OPEC going ahead with increased production in February. Palm oil rallied on lower production estimates (-5%), added to flooding and labour shortages. This supported soy oil prices.
  • Canola prices struggle to trade though recent highs. Temperatures across the prairies are unseasonably cold, touching -40°C in some areas, with the associated wind chill affecting logistics.
  • MATIF rapeseed continues to break contracts highs with Feb 22 futures trading through €800 yesterday to close at €806.50. February futures expire at the end of the month so the market is now focused on May.
  • More restrictions on palm-oil usage in EU biofuel lent support, along with the lack of seed availability. Crush margins are pressured, which lessens the appetite to own seed at the highs.
  • Sterling still trades close to 1.19500 after its recent rally.

Oats

  • Cereal markets were largely buoyant ahead of the festive break, however since the 24th December, prices have generally followed a negative trajectory, with London ICE May’22 wheat futures now trading (at the time of writing) at £218.50 (down £13.50 vs the close on 23rd Dec’21). Despite this fall in wheat futures, oats have generally not followed the same fall. The global supply remains tight with the following highlighted fundamentals:
    • North America are trying to ration demand with prices at record levels (Vancouver, Canada valued at £445 fob)
    • Oat supplies in major global oat exporters are down 20% vs the 5yr average thanks largely to poor production in Canada and Finland
    • Chile a continued concerned due to dryness with the potential for imports of 125-175kmt which is currently not included in the current global trade matrix.
  • The UK domestic oat millers remain largely withdrawn from the market with bids approximately £20-£30 below export parity. This is largely down to the DEFRA balance sheet showing a UK 2021/22 ending stock figure of 284kmt (up 137kmt vs last year = up 93% and up 229% on 5yr average) and their ability to use both spring and winter varieties with fallbacks to 47kg/hl. However, the demand into Western Europe remains strong and the UK is the cheapest supplier. This means logistics are the main factor affecting a large export program, but if merchants are able to get around this then we could see the export number increase significantly.
  • Feed oats are also becoming ever harder to find with farmers expected to be using more and more on farm given the large price disparity to feed barley.
  • Bottom line, UK buyers are trying to force oat prices lower, however a lack of sellers in Europe and the tight global balance sheet is keeping the oat market supported.

Pulses

  • The old crop feed bean market is trading unchanged from the levels that were trading prior to Christmas.
  • Domestic demand for feed beans remains lacklustre. However, with prices of soymeal and other proteins firmer over Christmas, we may start to see some more domestic demand in the future.
  • The harvest in Australia is now complete and yields are excellent, with trade estimates suggesting the crop is at least as big as last year and some estimates suggesting a crop up to 800kmt. Australia prices have fallen sharply over the last few weeks as shippers who were short for loading harvest vessels have now covered their requirements. This has put pressure on UK human consumption values.
  • New crop bean buybacks linked to LIFFE wheat futures are available and ADMs marketing pool for pulses is open. Pea buybacks for large blue peas and marrowfat peas are available for harvest 2022. Please contact your farm trader for further information.

Seed

Peas

  • ADM has marrowfat pea Kabuki and large blues Daytona & Bluetime seed available on our market leading buybacks.

Spring Barley

  • Spring barley availability is good, ADM have agronomically strong RGT Planet – the most widely grown cereal variety in the world, as well as dual purpose variety Laureate and high yielding Skyway.

Fertiliser

  • The UK fertiliser market remains relatively unchanged at present from pre-Christmas levels. Small increases have been seen on nitrogen, phosphates and potash products.
  • UK producer CF is yet to enter the market. UK natural gas futures values fell to levels seen in September – when CF originally closed prior to government support – and have since risen to levels seen in early November.
  • What CF does production-wise beyond January, when government support ends, will define direction in the markets and the level of product availability for the spring.
  • The UK remains down on imports and short of product with little news of new vessels arriving prior to the usage season, this is supportive of current levels.
  • Stability is expected through January and February, with potential to rise further depending on news from the CF production facility at Billingham.
  • The Financial Times reported on the issue on 2 January, summarising the difficulties experienced in autumn of 2021, and the potential demand destruction and difficulties of delivery in spring 2022 – read it here.
£/€ £/$ €/$
1.196 1.353 1.131
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan22 205-220 211-226 260-265 620-625
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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