Market Report

Thursday 7 May 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 prices are virtually unchanged on the week as contrasting weather patterns and external factors leaves markets trading sideways.
  • USDA’s National Agricultural Statistics Service showed US winter wheat crop ratings improving by 1% point, to 55% good/excellent, but still below the 64% at the same time last year.
  • US farmers are planting their spring crops as fast as possible to avoid the pitfall of late planting seen last year, with 51% and 23% of the intended corn and soy areas sown as of 3 May.
  • The International Grains Council trimmed its forecast for 2020/21 global wheat production by 4mln t to 764mln t, but this is still seen as a record, exceeding last season’s 762mln t.
  • Argentina’s soon to be planted 2020/21 wheat growing area is expected to increase 1.5% year on year to 6.7mln ha, mainly due to favourable weather. It is expected to produce a record 21mln t crop.
  • APK-Inform have revised down Ukraine’s 2020 grain crop forecast to 68.6mln t from 72.2mln t previously citing adverse conditions for the cut.
  • Ukraine’s government will agree an export cap with traders for the 2020/21 season in July, aiming for a balance between food security and foreign currency earnings.
  • The EU has increased its import duty for maize to €10.4/t. The new tariff, which took effect on 5 May, will also apply to rye and sorghum imports.
  • French soft wheat exports outside the EU reached a four-year high for April at 1.56mln t, as exporters continued to ship high volumes during the coronavirus pandemic.
  • The condition of the French soft wheat crop declined for the third week in succession, falling to 57% good/excellent in the week ending 27 April.
  • EU (Paris) new crop futures are about €3/t higher on the week, supported by a weaker euro.
  • UK (London) new crop futures are marginally higher on the week, supported by a fall in sterling and a slowdown in producer selling.
  • In summary, a sideward move for the markets this week, as improving EU and Black Sea weather forecasts provides some resistance to higher prices. In addition, the rapid pace of spring plantings in the US is also seen as a negative factor, along with the continued fall in demand due to the coronavirus epidemic.
  • However, reports of a colder weather system moving into the US mid-west this week may result in a slowdown of spring sowings and possible crop damage. This has provided some support to the US market over the past few trading sessions, although more favourable weather for crop development is projected for mid to late May.

Malting Barley

  • There is little change in market sentiment, with the industry continuing to forecast a drop in demand of 30-40% for the rest of 2020.
  • UK buyers are eagerly awaiting the news of when pubs can start to reopen.
  • In the meantime, malt and malting barley continues to be cancelled or rolled into the next month.
  • Good malting barley is still being sent for feed.
  • EU and UK spring barley crops are generally looking well after the recent rains.

Rapeseed

  • Outside markets saw some support this week, with rumours that some countries will now slowly start to relax lockdown restrictions and return to work. WTI crude oil reached close to $25 a barrel yesterday – that’s a 20% + rally in a day on the expectations that travel will increase soon. However, high stocks and lack of storage remains a concern which may cap prices.
  • China returned from the long Bank Holiday weekend yesterday. There remains concerns over the phase-one deal and whether China will meet its commitments. It appears there are still trade tensions between the US and China after comments by the Secretary of State, Pompeo, pointing to a downturn in US exports to China and possible additional tariffs.
  • In South America, Informa lowered Brazilian soybean crop estimates for 2019 to 124mln t from 126mln t and lowered the Argentinian 2019 soybean crop from 53mln t to 50mln t.
  • US weather remains non-threatening at present, with some colder temperatures and rain in the forecast. Planting expectations are currently ahead of the five-year average at 23% vs 11%.
  • Despite slightly firmer mineral oil markets, the veg oil market remains quiet, with most consumers waiting to see what happens with the EU lockdown before stepping back into the markets. Palm oil opened sharply lower (100 MYR) which weighed on soy oil prices.
  • Canadian canola futures have seen near-term support. Canola plantings continue with Statistics Canada planting estimates due out today. Earlier in the week Reuters estimated the 20/21 Canadian canola plantings at 21 mln acres, very slightly more than last season’s 20.95 mln acres.
  • Rains made their way across Western Australian, which helped replenish topsoil moisture, though other areas received less than expected. Plantings are still underway with approximately 20-30% left to go.
  • Matif rapeseed continues to trade within its recent range. Whilst the old crop supply and demand is likely to pressure prices as we head towards the end of the season, concerns remain over next season’s crop conditions and lower crop estimates.
  • Here in the UK, the end of the season is fast approaching. Sterling remains rangebound but will continue to have a large influence in price direction.

Pulses

  • With much of North Africa on lockdown throughout Ramadan, demand for old crop beans is weak. With shippers now covered against existing sales and domestic shorts being filled quickly, old crop prices are drifting lower.
  • New crop prices are stable on the week. With crops looking reasonable overall, we have seen increased farmer selling this week, with a feed bean base price of £200/t ex-farm available for many.
  • ADM’s marketing pool for peas and beans remains open.

Seed

Winter OSR

  • To gain the maximum security and risk mitigation when sowing OSR this autumn, ADM Agriculture has worked with Dekalb to bring DK Excited to the market. With market-leading traits including TuYV resistance, pod shatter resistance and excellent autumn vigour, DK Excited is also supported by a £100/pack credit on any crops that fail to establish. For more detail call your farm trader.

Over-yeared wheat

  • For early delivery on farm we have a selection of over-yeared winter wheat and barley seed available.

Small seeds

  • The game cover and cover crop seed market is still very active and delivery times are holding up with the increased demand on the parcel delivery services from COVID-19. Please click here to view the ADM Agriculture cover crops brochure.

Fertiliser

  • The Indian tender is to be closed tomorrow. Previously stated at around 750,000t it is now believed to be over 1mln t again.
  • The news from India’s MMTC tender tomorrow is expected to set some near-term price direction for granular urea at a time when Europe enters the buying season.
  • Current global cost and freight levels are around $230/t, which make Chinese export urea uncompetitive when looking at their domestic pricing.
  • North African and Middle Eastern urea are likely to play a part, helping to clear any current stock and add some support to current prices.
  • Natural gas prices have now risen to January levels, also encouraging some support for manufacturers.
  • The sterling/euro/dollar exchange rates are set to be volatile over the next few months and will have impacts on new season urea and ammonium nitrate (AN) prices, as new cargoes are bought to fill vacant port-side storage.
  • Current European 33.5% AN levels for June are reportedly too high for some inland markets but are attracting buyers in western Europe.
  • UK AN prices have remained stable for the 6th consecutive week on the back of higher than usual spring demand. These prices are not anticipated to change through May, as the after-cut market demand is supporting current prices.
£/€ £/$ €/$
1.145 1.236 1.079
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May20 122-132 145-155 235-240 307-312
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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