Market Report

Thursday 9 January 2020

Wheat

  • US prices are up $2-3/t since our last report, as confirmation by Beijing that phase one of the US/China trade deal will be signed next week continues to support.
  • USDA’s latest report is due out tomorrow at 5pm, with the trade expecting to see small declines in both US and global wheat stocks. US winter wheat seedings are also expected to decline y/y to their lowest level in 110 years, but this has been widely reported already.
  • Although wildfires continue to move across most of the south west region of Australia, farmers have managed to harvest the 2019 wheat crop, apart from small areas in Victoria.
  • Argentina’s new government, in a gesture of goodwill, have suspended the planned implementation of the tax on wheat exports from 12% to the new proposed level of 15%.
  • Chinese officials confirm that the country’s TRQ on wheat imports will remained unchanged at 9.4mln t, despite the US/China trade deal, and will continue to run for the calendar year, and include all prospective origins.
  • Egypt’s state buyer GASC purchased 300,000t (120 Russian, 120 Romanian and 60 Ukrainian) of wheat for 19-29 Feb shipment in its latest tender. Prices paid reflected a $7-8/t increase on the previous purchase on 10 December.
  • EU prices are up €3-4/t since our last report, supported by a weaker euro, the continued strong line-up of export vessels and a general lack of producer selling.
  • France exported 1mln t of soft wheat outside the EU in November, the highest month so far this marketing year, bringing the season-to-date figure to 4mln t, up 14% y/y.
  • UK prices are up £1.50-2.0/t since our last report, supported by the general global price increase and slow producer selling after the festive break.
  • Some planting progress has been made in the UK over recent weeks, but the amount varies by region and is very dependent on soil type. Given the recent dry weather and a generally benign forecast it can be expected that winter wheat planting will continue through until March. This makes estimating the final UK planted area very difficult.
  • Imported maize is now competitive with new crop wheat into some parts of the UK. The price at which this can be imported will be a key driver for the 2020 UK wheat price.
  • In summary, with the USDA out tomorrow with final 2019 corn and soybean numbers, quarterly stocks figures and 2020 winter wheat seedings, all of which are expected to be lower than previously forecasted, it remains hard to find an argument for much lower prices.

Malting Barley

  • The new year has started quietly throughout the EU with no consumer buyers in the market.
  • In the UK, there are a few enquiries for small tonnages for Jan to June delivery, but no real trade to speak of.
  • EU crop 2020 spring barley plantings are still expected to be above average, especially in France and the UK.
  • Overall the malting barley market for crop 2019 and crop 2020 remains bearish.

Rapeseed

  • CBOT soybeans started the week trying to recover the losses sustained at the start of the year. This week Middle East tensions capped soybean gains before prices were able to recover in yesterday’s session.
  • China and the US will meet next week to sign the proposed phase one deal. President Trump will be present in Washington for the signing, though China’s Ministry of Commerce has confirmed that Premier Liu will be making the trip in place of President Xi. Without any sign of a written agreement being made available for public viewing, there remains some apprehension of further delays to the signing, although it is said that a summary of the report is to be released post signing, but it will not be a detailed report.
  • Thankfully African Swine Fever in China seems to be slowing. Reports now suggest that China’s sow herd rose 2.2% from November to December, which makes it approximately 7% higher from September. China are keen buyers of soybeans, but with no mechanism in place to bridge the gap between US and South American prices, buyers still favour cheaper suppliers out of Brazil. It is rumoured that six cargoes traded in the last few days.
  • South American weather remains favourable for the next few weeks, which gives confidence for the trade to increase crop production estimates to record levels. Yesterday Brazil’s food stats agency CONAB estimated the country’s 2020 soybean crop at 122.2mln t (previously 121.0mln t), whilst Informa estimates Brazilian soybean production at 125.6mln t and Argentinian soybean production at 54mln t vs the current USDA estimates of 123mln t & 53mln t respectively. Harvest in Brazil is slightly delayed. Official estimates report that only 2% of soybeans in Brazil’s key agricultural state of Parana are mature, although harvest has started. On 7 Jan last year harvest progress in Parana was 5% complete.
  • Despite the recent rally in oil and gold markets, both were subject to profit taking in yesterday’s session. Brent crude prices fell sharply from recent highs.
  • That said, whilst veg oil markets saw slight consolidation, palm and soyoil markets continue to be well supported. This gives strength to the EU rapeseed market which continued to make contract highs this week, now over 12% firmer up since the lows seen in October.
  • Here in the UK, sterling remains rangebound, but could become volatile as we edge closer to Brexit at the end of January. Farm gate prices have seen a significant move since the end of last year, making season highs.

Oats

  • The oat market has seen little fresh invigoration since coming back from the festive break. Farmer selling remains lacklustre, notably on feed oats, where there is continued export demand.
  • The next 3-4 weeks will be crucial for winter drilling. If weather conditions are favourable, we could see a significant amount of winter oats drilled which will aid overall acreage. Pre-Christmas expectations were that the UK winter oat acreage was at 60%-70% of potential.

Pulses

  • The Australian faba bean harvest is now complete and yields have been lower than expected pre-harvest, producing a crop around 300,000t. This, combined with increased feed demand, has resulted in the Australian market rallying as shippers at origin look to cover in shorts against existing commitments. The importers in North Africa are therefore looking to buy UK beans. Both feed and human consumption prices have firmed as a result.
  • New crop pea buybacks remain available for marrowfats, large blue peas and yellow peas. Please contact your ADM Agriculture farm trader for further information.

Seed

  • Since our last report, ground conditions have improved, and some winter wheat drilling progress has been made in the first part of January.
  • We have floor stock of winter wheat varieties suitable for late drilling ready for immediate dispatch to grab an opportunity in these catchy conditions.
  • Spring seed ordering has been ongoing since the return after the new year. A brief summary of stocks as per below:
    • Spring wheat: domestic product sold out, imported product still available.
    • Spring barley: stocks limited of RGT Planet and Laureate, good stocks of LG Diablo for feed.
    • Spring beans: sold out until further notice.
    • Peas: Daytona large blues and Kabuki marrowfats are available for our buyback contracts.
    • Spring OSR: good stocks currently, however demand has picked up rapidly since the new year.
    • Maize: stocks are good, however limited Mesurol-treated seed is available.

Fertiliser

  • The global urea market over Christmas firmed following the completion of the Indian tender. Offers FOB Egypt are now $250/t. Trade flows appear to be changing due to reduced Chinese exportable surplus, with only around one-third of the Indian tender being supplied by Chinese producers.
  • China’s domestic demand has increased. The yen has strengthened against the dollar and pollution regulations have limited Chinese urea production until March, offering support to both Chinese urea on export and domestic markets. Chinese urea is often seen as the floor for global urea prices and indications of a firming market in China could support global levels.
  • Multiple factors that have constrained buying confidence in Western Europe have begun to ease. Key issues such as weather/ground conditions as well as an uncertain political climate have eased in time for the peak period for fertiliser demand in the year. Today’s UK replacement values are between £252-7/t at the farm gate. Although urea is currently trading below these levels, drilled winter cropping areas are increasing, and with it, nitrogen fertiliser demand which is needed on farm in a short space of time. The potential for a rally in the market is evident when it gets running.
  • New CF terms are focused towards January delivery, whilst N and N/S prices have been reduced to reflect levels in Europe. NPK values have been reduced following weaker prices in the blend market.
£/€ £/$ €/$
1.174 1.3045 1.111
Feed Barley £ Wheat £ Beans £ Oilseed Rape £
Jan20 122-130 142-154 180-190 345-350
May20 127-135 146-158 185-195 347-352
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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