Market Report

Thursday 8 October 2020

Sampling – Harvest 2020

Knowing the quality of crops is especially important this year so if you have not already done so, please contact your farm trader to arrange for sample bags to be sent to you. Once you have samples ready, we will collect them and the results will be available via our online portal, ADM 365, or from your ADM farm trader.

Wheat

  • Weather concerns across many major wheat-producing regions prompted increased buying activity in the markets this week.
  • US wheat prices rallied just over $11/t as unease increased over the effect of dry conditions on new crop prospects in the US Southern Plains and Russia, as well as the upcoming harvest in Argentina.
  • That said, increased ending stocks for the current marketing season expected in tomorrow’s USDA report, particularly due to increased supplies in Russia and perhaps Australia and Canada, are likely to offset any Argentinean shortfall.
  • However, the market is more focused on the US maize balance sheet and is waiting to see how USDA manages the numbers for last season and whether it increases exports for the current season, particularly to China.
  • In more detail, Russian agro-consultant IKAR has raised its forecast for Russia’s 2020/21 wheat crop to 83mln t, up slightly on its previous forecast of 82.8mln t.
  • SovEcon forecasts the country will export 38.9mln t of that total. It also raised total grain exports to 49.1mln t, up 2.5mln t on its previous forecast.
  • However, Russia’s agriculture ministry is expected to provide details later this month on a possible grain export quota for the first half (January-June) of 2021.
  • This season’s forecasted output of 82-83mln t would suggest scope for a very loose quota. However, with record domestic prices and a concerns over 2021 crop prospects, the ministry may decide otherwise. The debate will be closely watched.
  • Recent rain across much of the Ukraine has improved conditions for winter grain sowing, reducing some concerns about the 2021 harvest after a severe drought.
  • Ukraine’s grain exports for 2020 are running almost 15% lower on the year at 12.3mln t, mainly due to lower maize exports. Wheat imports are reported at being 8.7mln t, just under half of the agreed yearly export total of 17.5mln t.
  • Morocco’s wheat imports for 2020/21 are estimated at 6.2mln t, 35% higher year on year, due to lower domestic production and the suspension of wheat import duties.
  • However, Algeria’s government recently reported the establishment of an upper limit of 4mln t of bread wheat imports will be required during the current season. Usually it imports 6mln t.
  • French non-EU soft wheat shipments in September fell to their lowest level in over a decade to 166,000t as activity continues to ease after a poor harvest.
  • In the UK, DEFRA’s first estimate of 2020 wheat output is 10.13mln t, down more than 37% on last year. Domestic prices have followed the international trend, trading back up to the contract highs. Whilst the demand side of the equation remains clouded, especially with further Covid-19 restrictions likely to be adopted next week, the supply side remains difficult, with farmers seemingly keener on conditioning harvest crops or preparing fieldwork for sowing, rather than marketing.

Malting Barley

  • The EU malting markets remain very quiet.
  • Most of the talk is around reducing demand due to tighter restrictions in the hospitality sector.
  • We have just seen Scotland announce new restrictions for pubs and the reports are that this may happen in certain parts of England shortly.
  • The knock-on effect is a reducing demand for beer, malt and malting barley.
  • Our advice is that growers should move their malting barley as soon as possible.
  • There is better news for crop 2021, and we have various types of buyback contracts available. Fixed price, premium over, min/max and pool to name a few.
  • Please contact your ADM Agriculture farm trader for details.

 

Feed Barley

  • Barley markets have been fairly quiet over the last week, with values largely unchanged.
  • There is still good underlying demand into UK ports from shippers, keeping the market supported. Origination remains sluggish as growers in the UK focus on drilling where the weather permits.
  • Firming wheat values have once again pushed global markets higher, also helping to keep the UK in the frame for export business.
  • Domestic demand is once again tricky to come by in any volume, with low liquidity in the forward positions. As a result we have seen the discount to wheat widen further.

Rapeseed

  • US weather is forecast to remain largely dry for the next 6-10 days in the Midwest. Harvest continues at a fast pace and at the start of the week was reported to be at 38% complete vs 20% last week (28% average). Crop conditions remain unchanged at 64% good/excellent.
  • The next USDA report will be released on Friday. It will be interesting to see if any changes are made as a result of last week’s surprisingly bullish report.
  • Managed funds continue to increase their long position, yesterday buying another 8,000 contracts to bring the total close to 284,000 contracts. Soybean open interest has hit a record 1 million contracts!
  • In Brazil there is still no rain, but it is forecast from 10 October. Delayed plantings have already put the availability of South American beans back to late Feb, so the market will be closely watching weather developments. Brazil’s AgRural estimates soybean plantings at 1.6% vs the five-year average of 4.5%.
  • Despite China being on holiday until today, the country still came into the market to buy US beans along with further sales to unknown destinations.
  • In Canada, harvest conditions have been ideal, but rain and colder temperatures will hit a number of areas today and over the weekend. Harvest is estimated to be 72% complete.
  • In Australia, harvest has just started but only a few loads have been received so far. Weather looks favorable across Western Australia, which should allow decent progress.
  • Palm oil firms on production concerns in Malaysia. Recent wet weather and Covid-19 fears help support prices.
  • Matif rapeseed is firmer on the week, getting back close to season highs. Oil markets also firmed, which helped support prices along with ongoing planting and crop concerns in the Ukraine.
  • UK prices remain largely stable following EU levels higher. Sterling remains rangebound, but is still one to watch as we get closer to knowing if we do or do not have a deal with the EU.

Pulses

  • Shippers who were short for October bean vessels are gradually getting covered and prices have been relatively stable on the week as a result. The rally in the cereal and protein markets has prompted some demand domestically for feed beans on the week, and we are starting to see a few more enquiries on the export market, which should add support to the market.
  • Human consumption demand remains subdued. UK origin beans continue to be outpriced into Egypt and need to fall circa £20/t to compete against Baltic and Australian offers. However, we continue to pick off business to Sudan and smaller North African destinations. Basis the current demand profile, it seems unlikely that the premium will firm from the current £10/t.
  • Pea prices in the UK remain relatively stable. The Defra June survey for the crop areas in England on the 1 June suggested at 28% increase in the pea area for harvest 2020 and therefore, despite the lower yields, the UK should have ample supply. Pea buybacks are available for harvest 2021. Please contact our farm trader for further information.

Seed

  • Winter wheat – we have very limited availability of Group 1s, with a very small amount of Skyfall and KWS Zyatt to offer. We have a better position on feed wheat seed including short, stiff KWS Parkin and high yielding RGT Saki.
  • Winter barley – seed is very limited, but we do still have availability of conventional variety KWS Gimlet and hybrid variety SY Baracooda.
  • Please get in touch with your farm trader as soon as possible to cover any outstanding seed requirements.

Fertiliser

  • Granular urea prices have stabilised $10/t above last week’s lows following India’s tender announcement that closes tomorrow.
  • Strong anticipated demand from Europe (specifically France), North America and India over the next 3-6 months, coupled with firm prices show a supported market through the rest of 2020.
  • CF terms have not yet been released. Import replacement values are higher and a large market is appearing ahead of us with drilling progressing.
  • UAN prices have been released for autumn and spring fill. Prices echo the stable-to-firm urea and AN market.
  • Phosphate values have stabilised and MOP values remain unchanged week on week at historically low prices.
  • ADM now has inhibited products available in both granular urea and UAN/UAN + sulphur products, offering options to reduce ammonia emissions for all nitrogen fertiliser systems.
£/€ £/$ €/$
1.0985 1.2925 1.1765
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Nov20 139-144 178-188 208-213 344-349
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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