Market Report

Thursday 9 April 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.

Red Tractor have asked us to urge farmers to use the Red Tractor pdf grain passport which is being rolled out currently.

To date, the grain supply chain is working close to normality. All parts of the industry are working well together. 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 and wish everyone a happy Easter at this difficult time.

Wheat

  • US prices are marginally lower on the week as weak export shipments and long-term concerns over global demand continue to provide resistance for higher prices.
  • Much reduced demand for corn (maize) in the bioethanol market will push tonnage into the export market and could pressurise wheat markets.
  • US NASS reported the US winter wheat crop as being 62% good/excellent condition in its initial 2020 release, up from 52% when the crop entered dormancy at the end of November last year.
  • USDA report it will re-survey farmers in Michigan, Minnesota, South Dakota and Wisconsin, who reported unharvested 2019 corn and soybean acreage, publishing adjustments in the May production report if warranted
  • Brazilian flour mills are turning to wheat suppliers outside Argentina to avoid shortages during the coronavirus epidemic. They are pressing the government to lift sanitary restrictions on Russian wheat, and temporarily remove the 10% import tariff on wheat outside of the Mercosur trade bloc.
  • Russia will sell up to 83% of grain from its state stockpiles onto the domestic market, which is around 1.5mln t and mostly in Siberia, to ease supply to the milling and feed industries.
  • Russia’s Ag Ministry says 94% of winter grains are in satisfactory condition, and the 2020 grain crop is seen at least at the 2019 level.
  • France’s farm ministry lowered this season’s soft wheat crop rating 1% to 62%, a 9-year low and well below the 84% this time last year.
  • The ministry also puts France’s 2020 soft wheat area at 4.6mln ha, 7.5% lower y/y and a 17-year low.
  • EU (Paris) futures are up €1/ton the week, supported by a slightly weaker euro.
  • UK (London) futures are up £2-3/t on both old and new crops, despite a firmer UK£, although delivery premiums are showing signs of eroding as demand wanes, especially in the deferred positions. Continuing dry weather is a concern both for poorly established winter crops and the large area of spring wheat drilled this season.
  • In summary, another week of coronavirus-driven markets, although not at the scale of volatility seen in previous weeks. Food security remains a key factor, with some countries operating under export restrictions in an effort to maintain domestic supply. This should keep some commodity markets underpinned.
  • However, the question is ‘how long will this continue, and on what scale?’ At present it is impossible to know but, after the initial surge in demand, especially within the UK, we are now seeing signs of milling and feed demand reducing. This may start to exert some downward pressure onto domestic prices, notwithstanding the impact of dry weather.

Malting Barley

  • Breweries around the world are either being forced to shut by governments or reducing capacity.
  • Distilleries in the UK are also affected and reducing production.
  • Maltsters have stopped or reduced weekly barley intake.
  • Domestic and export buyers are not in the market.
  • EU spring barley plantings are nearly complete, and rain is now needed just about everywhere.

Rapeseed

  • Despite potential lockdown extensions across the globe, it is hoped that the virus may peak soon. Outside markets have also rallied as Bernie Sanders drops out of the presidential race. The DOW reacted by jumping 800 points, the S&P up 3.4% and Nasdaq 2.6%.
  • Today (Thursday) the USDA will release its WASDE update.  With US and world ending stocks to be near-unchanged, it has given the market a somewhat neutral tone.
  • CBOT soybean futures closed last night 4c lower than last Thursday, with rumours of Chinese demand evaporating.
  • In South America, the soybean harvest is nearing conclusion, with Brazil at 83% complete, according to Agrural. In Argentina, BAGE estimates that harvest is 16% complete, meaning both are in line with the average for this time of year.
  • Shipments from Brazil have slowed in the last few weeks due to logistics bottlenecks, only 3mln t sailed from Brazil in the last week vs. 7mln t the week before. With the Brazilian real at record lows, there is significant pressure from growers looking to sell more.
  • Despite last week’s announcement that China will once again accept Canadian canola imports, this was not the case for everyone. Two major exporters, Viterra and JC Richardson’s, have been excluded from this ruling. As the COVID-19 situation seems to be easing in China, the risk of hold ups at Chinese ports is becoming less of a risk. Chinese buyers are willing to pay large premiums for shipments with less than 1% admixture. Domestic rape meal prices remain supportive and rape oil demand remains firm for the food service sector.
  • News last week that Russia and Saudi will come to an agreement on oil production gave crude oil support, rallying 40% on the back of this. There is a virtual meeting today between the world’s top oil producers to attempt to form a cohesive cut in world oil production, as storage capacity around the world is beginning to run short, with prices at 18-year lows prior to last week’s news. A rally in crude oil would help support energy markets.
  • In Europe, although biofuel demand is falling sharply, MATIF rapeseed prices have continued to firm. News of renewed Chinese interest and frost concerns across the EU is in part responsible. The recent 2.5% rally in palm also gave some short-term underlying support to the oilseeds complex in the last few days.
  • However, the outcome of the virtual meeting between the world’s largest oil producers will be key. Biodiesel a key complementary good to crude oil, accounting for around 70% of rapeseed usage on the continent. With the food service sector in complete lockdown for the foreseeable future and oil stocks growing, rapeseed prices will be more dependent on crude oil demand and supply than ever.

Pulses

Beans

  • Old crop beans are limited in supply and limited in demand June new crop. Export demand is tentative.
  • New crop beans see some demand, but limited sellers, as beans have only just started to emerge from the ground.
  • A high percentage of spring beans in UK deemed to have been planted later than average which may have an effect on yield.
  • Good rains in Australia means soil conditions are considered to be good.
  • Pool still open.

Peas

  • Old crop pretty much done and dusted.
  • Any old crop parcels should be brought to the market.
  • Weather conditions for drilling are absolutely ideal.
  • The majority of seed is now on farm and probably in the ground.

Seed

  • Ground conditions have changed massively over the past couple of weeks. One issue the dry weather has highlighted is how vulnerable low soil organic matter (SOM) soils are to these rapid changes. It is very important to increase SOM through the use of rotational cover and catch crops, grazing, temporary grass leys, stewardship mixes etc. Tthese all help in the slow but vital process to raise SOM levels and help mitigate the weather extremes we have witnessed over the past six months.
  • ADM has a full portfolio of cover crops, grass and environmental seed options. Please talk to your farm trader with requirements and see more info on cover crops in the following link cover crops brochure.
  • Early order incentives for autumn OSR are still in place across our portfolio of varieties. Please contact your farm trader for more details.

Fertiliser

  • It has been confirmed that 747,000t was bought through the Indian tender this week for arrival late April/May, working on netbacks valuing Egyptian urea at ~$245/t FOB.
  • With perfect weather conditions, India will need more, and another 750,000t is estimated to be tendered for in the latter half of this month.
  • US granular urea prices traded up again this week to a 12-month high, as near-term supply remains tight.
  • The UK market has seen an increase in demand for fertiliser over the past two weeks, as drilling has been able to progress with good weather and requirements being altered or increased.
  • Short-term volatility in currency and commodities have had little impact so far on the UK fertiliser market. Instead the fertiliser market has found stability from the recent upturn in demand.
  • CF has announced it is reviewing terms over the bank holiday weekend.
  • Delivery on full load orders are still operating on normal lead times for ADM and CF products at this time of year, although COVID-19 government guidelines have forced some to adjust delivery time scales.
£/€ £/$ €/$
1.143 1.2435 1.088
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
May20 128-138 152-162 245-250 311-316
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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