Market Report

Thursday 7 January 2021

Wheat

  • Grain prices have moved considerably higher since our last report, with the US market up $18/t, Matif up €10/t, and London up just over £10/t on March 21 positions.
  • Talk of diminishing export availability from the Black Sea, continued buying interest from China and concerns over South American corn and soybean production due to dryness supported the recent rally. Trade talk suggests reduced South American output could push additional export demand into the US, helping to support global prices.
  • Argentina will suspend sales of corn for exports until 28 February. The surprising move is part of the government’s effort to ensure ample domestic food supplies.
  • Russian agency SovEcon has downgraded its estimate for Russia’s 2020/21 wheat exports to 36.3mln t, from 40.8mln t previously, due to an upcoming export tax aimed at stabilising domestic food prices.
  • Conversely, Ukraine’s trade union has reported government assurances that no additional grain export limits will be imposed for the 2020/21 season.
  • China’s government will take action to ensure the country’s total grain output remains above 650mln t in the coming year. It has also vowed to maintain its sown area above 116.67mln ha.
  • Egypt’s supply minister reports the country has strategic wheat reserves sufficient for 5.5 months.
  • However, Morocco has extended its suspension of import duties on soft wheat until 31 May to ensure regular supply amid low domestic output.
  • DEFRA released an update on its 2020 UK crop estimates, pegging wheat production at 9.658mln t (down 40% y/y). This figure came from a 24% drop in area (1.387mln ha) and an average yield of just below 7t/ha.
  • The announcement of the trade deal agreed prior to the UK’s departure from the EU at the end of 2020 at least clarifies the UK-EU trade relationship regarding movement of goods between the two parties.
  • With no tariffs or quotas to be applied, grain movements (imports and exports) can continue freely. This is seen as a positive move for the UK, given its increasing dependency on imports for this season due to the lower crop forecast. There have been and will be hiccups but in practice imports and exports should continue.
  • In addition, the above agreement will also aid UK growers when looking to market their 2021 wheat crop. The expected rebound in production will return the UK to being a net exporter, but tariff-free exports to the EU will avoid the need for the UK to have to chase Third country trade, which would have affected farm prices.

Malting Barley

  • The malting market remains very quiet.
  • EU buyers remain reluctant to buy anything for now due to the ongoing lockdowns.
  • The good news is that we have a trade agreement with the EU which means that we have an export market to sell into.
  • The return of the export market should tighten the 2021 crop supply and demand and is supportive for prices and premiums.

Feed Barley

  • After weeks of gridlock in the barley market, we now have a trade deal with the EU which has allowed trade to continue.
  • The market has returned after Christmas to good demand from the Netherlands in particular, where barley is in high demand and the UK looks well priced for this business.
  • The UK is also well priced against other Northern European origins into North Africa, although competition from the Black Sea remains strong.
  • We also see good demand from the UK feed sector, with barley remaining extremely good value at c. £50 under feed wheat.
  • A shift to colder weather could see an increase in demand from the ruminant sector over the coming weeks.
  • Barley values are higher as a result and look set to remain supported over the coming weeks.

Rapeseed

  • It’s been an interesting start to the new year with CBOT soybeans making new highs in every session. Soybean prices shot though the $13 target at the end of 2020, to trade over $13.50 in the first few days back.
  • South American weather again sparked off fund buying. A lack of rain in Argentina persists and, while parts of Brazil will get some showers, the long-range forecast is dry and for above normal temps. La Nina is expected to continue into the new year and will be closely watched.
  • Next week USDA will release its January report. It’s expected that South American production will be reduced from the December report and private forecasters are now amending their estimates. The US agricultural attaché and Informa both estimate the Argentinian crop at 50mln t (51.5mln t Dec), the same as USDA in December. Informa also reduced its Brazilian estimate to 131.5mln t.
  • Despite the sharp rally, the only available supply of soybeans is out of the US. Price appreciation should ration demand, but given that rumours circulated yesterday of China purchasing another two or three cargoes of US soybeans, that hasn’t happened yet. China is still striving for better food security and stockpiling will continue.
  • Veg oil markets also continue to make new contract highs. Chinese oil demand is strong. Palm oil hit 10-year highs at the start of the week and Malaysian palm oil did the same yesterday. Concerns remain over lower production, with stocks in Malaysia estimated to be at a 13-year low. Demand also remains firm despite renewed Covid19 cases and lockdowns. Yesterday India returned to the market, which lent further support.
  • Matif rapeseed started the year by trading at contract highs and has continued to do so for the past four sessions. Canadian canola also traded higher for the sixth straight session in a row yesterday.
  • Here in the UK rapeseed prices hit season highs. Investors turned attentions from the EU/UK trade deal and focused on the escalating Covid19 cases and renewed lockdowns. Sterling fell back from the highs against the euro, which lent support to UK prices.

Oats

  • The trade deal achieved on Christmas Eve has seen UK attention shift towards the European market, as sellers look for export opportunities. Indicated export levels do give some upside to current domestic ex-farm prices. However, there have been no firm bids as yet, and demand is being pushed into the tail end of the marketing season.
  • Wet weather over the past few weeks has reportedly had minimal effect on winter-planted oats. The balance now hangs in the spring acreage if we are to see an increase in area and production in 2021/22.

Pulses

  • There remains no markets available for old crop human consumption beans. Fortunately, demand for feed remains relatively strong as soybean meal and other proteins continue to rally significantly.
  • News of the Brexit deal is also supportive as UK bean exports to the EU will not face 3.2% import duty. As a result feed bean prices are grinding higher.
  • New crop bean values were stable over Christmas as buyers did not follow the wheat market higher and the premium over wheat narrowed.
  • New crop pea buybacks and bean buybacks linked to LIFFE wheat futures are available. Please contact your farm trader for further information.

Seed

  • ADM’s spring barley position currently looks good. We have RGT Planet, Laureate and LG Diablo stock on the floor ready for immediate dispatch. Spring wheat and spring bean availability is very limited.
  • We have marrowfat and large blue peas available on ADM’s market-leading buybacks. Pea seed availability is good, but is in high demand. Contact your farm trader for more information.
  • We have a small amount of KWS Cranium winter wheat in stock. KWS Cranium is a new addition to the 2021/22 Recommended List, with a great all-round disease package and outstanding late drilled performance.

Fertiliser

  • Granular urea has traded up over $20/t since mid-December to $300/t FOB Egypt.
  • Late European buying, a lack of product availability in North Africa and the likelihood of a further India tender soon are all helping to support the market heading into spring.
  • UK urea values have firmed, reflecting the new higher replacement values and tracking higher European CAN and AN levels.
  • UK AN terms are yet to be released, although expectations are for firmer values, as other nitrogen products have increased in value and UK gas prices have increased significantly since the beginning of December.
  • Prices are firm across most commodities with a large spring ahead combined with limited execution time for deliveries.
  • The UK has avoided tariffs on most products from the EU. However, in some countries of origin outside the EU, such as Algeria, we have reverted to WTO terms, which limits buying options for importers on some products.
£/€ £/$ €/$
1.1075 1.3575 1.2255
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan21 152-157 199-209 213-218 380-385
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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