Thursday 2 January 2025

Happy New Year! Welcome back to the first market report of 2025.

Wheat

• Since our last report, Chicago prices have firmed $3.86 per tonne.
• Despite US exports still slipping behind the required pace to achieve the current yearly projection, market saw some support over the Christmas period, albeit on thin trade. Weather concerns in South America leant some support to corn and bean markets, spilling over into the wheat complex. Talk of colder weather entering the US plains over the next week also was deemed as supportive, although forecasts indicate that snow will accompany the cold snap which should provide crop insulation against the colder air temperatures.
• European prices have also firmed over the period, with May MATIF up €4.00 per tonne. If correct, rumours of the new Egyptian buying agency purchasing Russian wheat through to June 2025, would significantly reduce their import demand. Russia confirmed its mid-Feb to June wheat export quota at 10.6mln/t, slightly lower than the 11mln/t indicated a few weeks ago, but down 63% from the 29mln/t last season. The cut is part of measures to improve domestic supply and fight domestic inflation, currently running at 9.5%. Unlike the perceived crop production and export rebound in 2025 expected for the EU, lower acreage and current poor crop conditions are already seen pushing Russian production, and export capacity lower year on year.
• UK prices have also firmed, up £2.65 per tonne basis May London. Price action has been supported by consumers extending coverage, against a lack of fresh producer supplies, allowing delivered premiums to rise. However, with producer selling seen behind consumers’ cover, it is envisaged that we should see more producer selling over the next few weeks, especially with the fact prices indicate no incentive for producers to carry grain into the new season.
• As the markets get back ‘up and running’ after the festive break, the transition from Black Sea exports to Southern hemisphere supplies, will provide opportunities for global players. The expected drop-off in exports from Ukraine and Russia, will be offset by higher exports from Argentina and Australia, keeping the near-term supply chains intact. As crops emerge from dormancy, and better assessment of their potential can be obtained, this will then provide the market with a better outlook for the medium, to longer-term supply scenarios.

Barley

• Both feed and malting barley markets have been extremely quiet over the Christmas break, with very little news to report in either market.
• Feed barley continues to find some support on recent export business concluded through December, in combination with a firmer tone on futures markets and a generally steady pace of farmer selling.
• Malting barley markets are still seemingly devoid of any demand, which is keeping prices and premiums under pressure, particularly as feed barley finds support. Traders are focussing on New Crop contracting looking ahead into a tighter spring barley season. Our recently launched barley ‘fund’ product remains open and provides an excellent, low risk price management tool for growers.

Rapeseed

• Agriculture markets have been unsurprisingly quiet in respect to volume over the festive period, with the prospect of drier than usual forecasts in Argentina helping US agriculture markets find a post Christmas rally. For now, the forecast for the next two weeks shows drier than average precipitation, we will need to see the rains pick back up in January to avoid crop stress. Brazilian forecasts still look good with Dr Cordonnier raising his Brazil bean production 1 mmt to 171mmt vs. USDA at 169. In recent weeks we have seen news of buying interest from Sinograin, though apart from this there has been little fresh interest. Fund short covering has also helped, with their position moving from record 350,000 contract short to 160,000 long.
• Crude oil prices have seen some positive momentum recently following optimism surrounding the Chinese economy. The World Bank raised its forecast for China’s economic growth in 2024 and 2025 from 4.8% to 4.9% and 4.1% to 4.5% respectively. They did also warn that subdued household and business confidence would keep weighing on Growth potential. The latest PMI number also helped this despite being lower than November at 50.1, but marks the third month in a row that is higher than 50. China’s crude imports for January to November fell 18% vs. the previous year, if this continued through December it would mark the first annual drop in over 20 years.
• So far canola has taken back any gains that we have seen as the physical market has been quiet from both crusher buying interest and farmer selling with nearby needs all covered. The MATIF/Canola spread has seen some profit taking and has fallen through trendline support, though still trades at a relatively high premium. Board margins have also dropped off which will further suppress the appetite of crushers.
• Rapeseed prices have fallen back to longer term support with little activity in the market. We have seen the Feb/May Spread come in as nearby coverage is ample and the reaction from news on the Moselle has corrected. Major rapeseed growing regions in India and Pakistan still looking dry, this will trouble the establishment of the winter crop. India have been in to buy numerous palm cargoes as well as cheaper Soyoil.

Oats

• European oat markets have been very quiet since our last report and this is not surprising given the majority of market participants have been enjoying the festive break.
• General market sentiment is that there is a surplus of milling oat sellers from Scandinavia and Baltics looking for buyers, however demand is reported to well covered right up through until Q2.
• Feed oats have seen little activity for some time and with Spain having a much bigger crop than last year, it is hard to see where any strong demand will come from.
• Here in the UK it has all been about logistics over the last week, with homes needing oats over the festive break, however given we are now into the New Year, farmers are expected to return to the market to start selling some of their surplus stocks.
• Feed oats remain hard to trade given the general lack of supply and demand.
• Bottom Line, oat markets continue to feel the pressure of an over supplied balance sheet in Europe but if we see any issues with the spring drilling campaign in Scandinavia/UK the market dynamic could soon change.

Pulses

• Unsurprisingly, the market has been quiet for the last couple of weeks here in the UK with most players away for the Christmas break. From an origination front January and February are fairly well committed, so it is worth looking further forward on your marketing options and capturing some additional value – keep talking to your Farm Trading representatives and they’ll advise you of the different marketing options.
• Australian Human Consumption New Crop has started arriving in Egypt, and the quality is looking good. These will start to weigh on Human Consumption premiums, so if you have good looking beans still in the shed but yet to be sampled, it is worth sending a sample in sooner rather than later. Limited domestic demand will still remain, however premiums could well have started to come under pressure by then, if there is a late flurry of decent beans coming forward.
• Domestic feed demand remains slow, with pricing remaining a steady c. £20-25/mt away from competing compared to imported feedstuffs. Feed beans need to come under downward pressure to start to compete and buy some demand.
• Looking to the week ahead, the UK is in for a cold, wet week this week, especially in the Southern half of the UK. Temperatures are skirting around freezing the next few days, but don’t look low enough to cause too much winter-kill at this stage.
• Meanwhile the UK pea market still remains subdued as we start the year. Nearby consumer coverage is ample with the market being pressured by cheaper Canadian offers. Hopefully demand will pick back up in the upcoming weeks.
• Consumers are now starting to look at coverage the 2025/26 season. There is still buyback contract availability for large blue peas, please contact your Farm Trading representative for further details.
• Finally, a reminder for those eligible for PGRO membership, if you’re not already on the PGRO mailing list, sign up here, where levy payers can access a wealth of free advice and support, drawing from PGRO’s extensive knowledge on pulses.

Seed

• Looking for some spring seed? Well, look no further, at ADM we have several market leading varieties available including Laureate and some brilliant pea varieties including Kabuki and Adder Marrowfats, Daytona and Butterfly Large Blues and Concerto Yellow. We can also offer some great buybacks alongside the seed.
• On the pulses, we have a demand for large blue peas for both Human consumption and seed production, we are able to offer various options to suit, if you have an interest in growing peas or beans please contact your Farm Trading representative to explore what we can offer.
• If you will be planting maize, grass or SFI seed this spring, we have a wide portfolio of options available, including maize suitable for grain, AD, forage and game cover, short and long term grass leys, plus a selection of SFI mixes. 

Fertiliser

Market Overview

• As we head into 2025, global nitrogen markets remain the centre of attention, driven by India’s NFL tender for 1.5 million tonnes of urea. This tender has propelled global urea prices upward, with Egyptian FOB values surpassing $410/t and Baltic netbacks climbing to $325-$330/t. NFL’s limited success in securing just 187,000 tonnes against its 1.5 Mt requirement highlights persistent supply constraints and traders’ confidence in achieving higher values in alternative regions.
• In the UK, ammonium nitrate (AN) markets are experiencing price recalibrations. CF Fertilisers has returned to the market with a February offer reflecting a £10/t premium, as rising replacement costs and tightening availability create upward pressure. Global AN prices are also firming, with Brazil and the Baltics seeing $5-$10/t increases since mid-December, driven by a bullish urea market.
• European ammonia markets remain subdued, with prices largely unchanged over the holiday period. However, Tampa’s January settlement saw a sharp $32/t drop, reflecting some softness in an otherwise high-cost market and a potential direction for the wider global market.
• Potash markets are stable, with Brazil leading pre-holiday price increases, signalling a cautiously bullish outlook for 2025. Demand is expected to rise in January as preparations for the spring application season pick up.
• Phosphate prices continue to hold firm, supported by tight supply despite subdued spot activity. India’s recent DAP tender could offer fresh pricing clarity, though immediate downside appears limited.

Natural Gas

• European natural gas futures spiked to €51 per megawatt-hour, their highest level since October 2023, before settling at €50. The market remains tense as freezing temperatures grip the region amidst the loss of Russian gas flows via Ukraine, which ceased on New Year’s Day following the expiration of a key transit deal.
• The absence of a replacement for this route has heightened concerns over storage levels, which are now depleting at their fastest pace since 2021. Sub-zero temperatures across parts of Europe are further increasing heating demand. While current inventories are sufficient for this winter, the challenge lies in refilling reserves for the next season, which is expected to be significantly more expensive.
• The region’s growing reliance on LNG adds to the pressure, particularly for landlocked nations, as competition with Asia for summer shipments is expected to intensify. The balance of Europe’s energy market now hinges on weather patterns, alternative supply routes, and price dynamics in the global LNG trade.

Ammonia

• The European ammonia market remains subdued, with prices largely unchanged through the holiday period and continuing to exhibit minimal movement this week. Despite ongoing high price levels, market sentiment indicates sustained downward pressure.
• Notably, the Tampa market saw a significant adjustment, with January settlements dropping by $32 per tonne compared to December levels.

Ammonium Nitrate (AN)

• Demand for ammonium nitrate (AN) has remained subdued over the holiday period, though buyers are remaining cautious of volatility linked to movements in the European gas market. Limited liquidity globally has made it challenging to determine a clear market value, but indications suggest that AN prices are edging higher for the third consecutive week.
• Key markets, such as Brazil and the Baltics, have seen upward price adjustments of $5-$10 per tonne since mid-December, adding to the strengthening sentiment in global nitrogen markets. A heavily bullish urea market is also contributing to this trend, providing no relief for AN prices despite some weakening in ammonia values.
• In the UK, CF Fertilisers has withdrawn its current offer for 34.5% AN and returned to the market with a revised February offer at a £10 per tonne premium, reflecting rising replacement costs and tighter supply conditions.

Urea

• India’s NFL tender remains a pivotal force in shaping the immediate direction of the global urea market, driving persistent upward momentum. Despite issuing counters to participants following its 19 December tender for 1.5 Mt of urea, acceptances have been minimal.
• NFL’s counters, initially set to close on 24 December, were extended twice – to 27 December and then again to 31 December. This is clearly highlighting the cautious approach from traders and producers. As of yesterday, NFL has secured just 187,000 tonnes against its stated 1.5 Mt requirement for shipment by 10 February. This underscores the confidence traders and producers have in the current bullish market trajectory, resisting counters in favour of higher values achievable in other regions.
• For example, netbacks in the Baltic region have climbed to the $325 to $330 per tonne range, providing a $5-$12 per tonne premium over NFL’s counteroffers. Similarly, Egyptian FOB values continue their bullish climb, now entering the early $410s per tonne range, while Iranian producers have raised their values by $16 per tonne since last week.

Potash:

• Brazil has took the lead in MOP price increases heading into the holiday season, while other key markets have remained largely stable amid subdued buying activity. After a year characterised by steady-to-bearish pricing, the potash market approaches 2025 with a cautiously bullish outlook.
• Favourable affordability has driven demand throughout 2024, but ample supply has kept prices in check despite strong interest. As a result, most MOP prices have experienced significant declines since the start of the year.
• In the UK and the rest of North West Europe limited liquidity has shaped the market in recent weeks, with seasonal demand remaining sluggish. However, January is expected to bring increased demand for the spring application season, providing potential domestic price support.

Phosphates:

• Global spot prices for DAP and MAP remain through the holiday period despite minimal spot activity, with tight availability continuing to counterbalance subdued demand and affordability challenges. Prices remain elevated compared to other nutrients and downstream agricultural products, reflecting ongoing supply constraints.
• Expectations among market participants for a decline in DAP prices have not materialized, as prices have held steady since mid-October. This stability follows a 26% climb between late May and early October, peaking at $640-645/t CFR. While prices have inched down slightly since October, the lack of available offers has made it challenging for buyers to secure lower prices.
• The market awaits clarity from fresh business, including India’s 28 December tender through RCF for 50,000 t DAP, which could provide a clearer indication of achievable price levels. Tight supply conditions suggest limited immediate downside.

NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.

Although ADM Agriculture takes 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.