Thursday 21 November 2024

Wheat

• Following the weaker move into last weekend, the market has firmed on the back of renewed tensions in the Black Sea region, as the escalation in activity has added ‘war premiums’ back into wheat prices.
• While the US market has seen renewed strength, current market fundamentals remain weak. Over the past few weeks exports have fallen below the pace required to achieve the current export projection. Additionally, recent rain across the US plains has alleviated the drought area and allowed crop conditions to rise slightly, now placed at 49% good/excellent, two points above ratings of a year earlier.
• EU prices have benefited from the euro’s decline, allowing some export trade to be concluded. However, non-EU soft wheat exports are still reported as being over 30% lower y/y, at 8.8mln t. Whilst the rise in tension will increase the talk of lower Russian/Ukrainian exports, it seems that the recent attacks were more industrial and energy infrastructure based, but with the trade already expecting both Russian and Ukrainian exports to slow, EU prices should remain supported on the potential of increased trade.
• UK physical prices have also firmed, as producer selling activity remains slow. The recent surge has also increased the reluctance to sell, with many believing prices will continue to firm. This has allowed delivery premiums to also firm, back to almost the highs that we saw earlier in the season. Supporting the supply squeeze, official data indicated that Q1 domestic usage (July–September 2024) remained at or slightly above last season’s levels, even with reduced total availability. However, wheat imports currently show no signs of slowing down, as September’s imports were reported as being 280kmt, bringing the season-to-date total to 887tkm, more than twice the figure of a year ago.
• In summary, the escalation in Black Sea tension has re-ignited the markets, fuelled with the rumours of NATO based missile being used to target Russia. How this plays out will be closely monitored, especially with the new US president starting in January, and his pledge to end the war as soon as possible to stop US money ‘being wasted’.

Malting Barley

• Malting barley markets remain quiet with slow demand from both brewing and distilling industries. Export markets meanwhile are not providing significant support for malting barley prices with plenty of barley available to maltsters in Europe.
• Like feed barley, farmers are holding onto their malting barley and not actively selling today.
• New crop market prospects may be more promising due to a larger-than-expected winter wheat area planted over the last few weeks. The resulting reduction in spring barley area is likely to tighten the balance sheet for malting barley heading into the 2025/26 season. Something to watch as we head into the spring.

Feed Barley

• Feed barley is seeing increased export demand, primarily into Ireland, which is driving buying interest from shippers.
• Feed barley is also still competitively priced in domestic feed rations, supporting ongoing demand and this pricing advantage is expected to continue into the new year.
• Farmer selling is expected to remain slow, with significant selling unlikely before January at the earliest. This slower pace of selling should help to provide continued support to barley prices, particularly if we do see some wholesale export demand start to go through.
• Overall, we expect that, particularly with a more supportive tone on futures, feed barley prices are likely to remain stable, as export demand, domestic feed demand, and slow farmer selling support the market going into 2025.

Rapeseed

• Markets have been mixed this week, with favourable weather in South America counterbalancing fresh risk premiums in the market following the weekend’s escalations between Russia and Ukraine. Soybeans have experienced some renewed demand from China, though this has slowed significantly, with the last purchase occurring 12 days ago for a relatively low volume, as China adopts a minimum-necessary approach to U.S. purchases. ANEC has forecasted November soy exports to remain at 2.8mln t, unchanged from prior estimates. EU soybean imports as of November 17th reached 4.75mln t, up from 4.36mln t last year, while meal imports rose to 7.08mln t compared to 5.76mln t in the previous year. Brazil’s soybean planting progress has now reached 80%, approximately 10% ahead of this time last year, with central regions in Mato Grosso 2% ahead of last year.
• Energy markets have also been mixed this week following the weekend’s news, with prices weighed down by concerns over Chinese demand after the release of another disappointing set of data. China’s refiners processed the equivalent of 14.02 million barrels per day in October, down from 14.2 million in September and 15.05 million a year ago. The IEA has projected that global oil output in 2025 will exceed demand, even if OPEC+ production cuts remain in place. Additionally, production at Norway’s Johan Sverdrup oilfield has been halted due to an onshore power outage.
• For veg oils, palm oil saw some support from reports that Malaysia’s crude palm oil export tax will be at a maximum of 10% in December when prices are above 4050 ringgit.
• Canola prices have been mostly lower this week, as Chinese demand seems to be slowing. Canola exports to Europe in August/September were just 19,800mt. Total canola exports to date ex Thunder Bay are just under 150,000mt.
• MATIF rapeseed prices have given back some recent gains, breaking the uptrend that had largely been in place since September. While this serves as a cautionary signal, all hope is not lost. The market still reflects a relatively tight supply situation. However, the MATIF/Canola spread has reached a level that could encourage further trading, though challenges related to GMO and sustainability concerns continue to complicate the landscape.

Oats

• European oat markets continue to see a lack of trade activity with buyers reportedly well covered for Q4 2024 and Q1 2025. Sellers also remain largely inactive. This is leading to a lack of price action.
• Bids from European millers are indicated in May-Jul’25, however, they are happy to wait as there is a sentiment for lower prices given the weight of supply.
• Conditions in Sweden over the last few weeks have been favourable for planting and this has encouraged farmers to plant more winter oats. Prospects of good levels of production remain good for harvest 2025, however, it will be the spring conditions which will ultimately determine the production potential.
• Feed oats have seen some activity in the last week, but in general, it is more a case of price discovery rather than actual trade. Spanish buyers are the most likely, however, a lack of offers is making them reluctant to trade, especially given they have comfortable stock levels.
• Here in the UK, good quality oats and relatively low prices are helping to support milling oat values. Millers are willing to build stocks, as lower hulling losses enhance efficiency and add value to the milling process.
• Wet and cold weather has been the topic for this week, and this could see an end to winter plantings. Consequentially, growers are likely to focus more on springs for the remaining unplanted areas. But given the problems with grass weed control, we forecast a further reduction in winter oat plantings and a great increase ratio of spings:winters.
• Feed oat demand remains hard. This is lending to a tightening of the feed to milling differential.
• Bottom line, European oat markets are in a state of inertia, with buyers and sellers currently not pushing for a trade, but this is likely to change in the new year.

Pulses

• This week has seen limited activity in the pulse market across the UK, with origination being particularly quiet. Growers are starting to steadily dry their beans down now, after a torrid end to the harvest, but the crisp, cold mornings will be helping to get some air through them. For those still with wet beans out there, please contact your farm trading representative, as we have drying options available. Interest continues for both human consumption and some feed in to the new year, and with quality through the lab still showing some promising signs, it is well worth getting your beans sampled. Imported feedstuffs continue to be more competitive than beans into domestic feed rations, with beans remaining relatively unchanged week on week, still needing to be c. £20-25/mt lower relative to other raw materials in order to buy some demand.
• Looking ahead, the weather across the UK is certainly a mixed bag, especially after the snow many of us received this week. Plenty of precipitation is forecast for the week ahead across the UK, especially in the west, whilst temperatures look to be a degree or two above the seasonal norm. This is a trend that extends across much of continental Europe. However, with the winter drilling campaign all but wrapped up for many people, this is of little concern.
• We are still actively purchasing across the UK, and can offer competitive origination markets, with the added opportunity to upgrade any crops meeting specifications for human consumption pulses for processing at one of the UK and Europe’s most advanced pulse processing plants, earning an additional premium for your crops. Please speak to your farm trading representative about what marketing options we have available for you, as well as the potential upgrade options.
• 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

• Winter has arrived in the UK, which has put a stop to drilling any further winter wheat crops and focus is starting to head towards the spring crop. We are pleased to be able to offer Laureate, RGT Asteroid, SY Tennyson, RGT Planet & CB Score – all are offered with buy back contracts direct with ADM Agriculture.
• Spring oat seed and spring beans have created interest over the past few weeks, with signs of short supply beginning to appear. If either of these products are part of your planned rotation, please speak to your farm trader to secure any requirements.
• We are keen to discuss any requirements you may have for spring peas. We have numerous buy-back opportunities available and are potentially looking for growers interested in producing large blue varieties for seed. Please get in touch if this is of interest to you.

Fertiliser

• Market Overview: The European fertiliser market is facing mounting challenges as natural gas prices surpass €48 per megawatt-hour, a level not seen since November 2023. This has driven up production costs and left European fertiliser producers under significant pressure. Between July and September 2024, UK urea imports dropped 30% year-on-year, leaving substantial demand unmet as the spring application window looms. A weakening pound has further exacerbated import costs, adding £16.60/tonne to the cost of imported urea since September.
• While global urea prices remain stable, supported by Indian tenders, UK demand has been subdued, with slow retail activity across nitrogen products. Potash markets have been steady but are expected to strengthen as seasonal demand picks up in December and into January. Phosphate prices remain under pressure from poor affordability, but tight global availability continues to provide support.
• Natural Gas: European natural gas futures climbed above €48 per megawatt-hour, exceeding November 2023 levels and adding significant strain to fertiliser production costs. An Arctic air mass is forecasted to bring severe winter storms and below-average temperatures, increasing heating and electricity demand.
• Geopolitical concerns are further intensifying market uncertainty. Ukraine has confirmed it will not renew the gas transit deal with Russia, set to expire on December 31, 2024, though Russian flows through Ukraine remain stable. Gazprom has pledged to cut supplies to Austria over a contractual dispute. Meanwhile, at least five shipments of liquefied natural gas (LNG) have been redirected from Asia to Europe in response to higher prices, underlining the region’s growing reliance on LNG.
• European gas reserves have fallen below 90% capacity since withdrawals began on November 3, emphasising the tight balance between supply security and rising winter demand.
• Urea: Global urea prices remained steady, supported by India’s latest tenders. IPL recently issued Letters of Intent for 1.028Mt of urea for December delivery following its November 11 tender. India is expected to return to the market in mid-to-late December, with Q1 2025 shipments likely to boost demand ahead of the Rabi season.
• In the UK, granular urea prices ranged between $390-410/t CIF bulk earlier this month but saw no buyer interest as of November 20. Retail prices are currently £360-370/t bagged delivered, with subdued interest reflecting the weaker nitrogen market. UK urea imports from July to September 2024 were down 30% year-on-year. With AN deliveries also falling, significant nitrogen demand remains unmet ahead of Q1 2025.
• Ammonia: The ammonia spot market remains quiet as current CFR values deter buyers. FOB prices from Algeria are in the $570s/t range, while Egyptian tonnes are reported at $550-560/t FOB, translating to CFR offers of at least $620/t in Europe. Poor downstream margins and high raw material costs are keeping buying interest low.
• In the UK, 15,000 tonnes of Turkish spot ammonia arrived in Teesside on November 7. While prices require upward adjustments to cover heightened costs, limited buyer appetite and throughput agreements have capped significant price increases.
• Potash: Global MOP spot prices remain stable and are forecast to firm in Q1 2025 as spring application demand builds. Prices held steady this week, with standard MOP assessed at €300-330/t CIF and granular MOP at €330-350/t CIF. In the UK, limited potash activity saw prices range between £320-330/t.
• Southern Europe is showing early signs of seasonal buying interest, while northwest Europe remains slow, with piecemeal purchases expected to pick up in December.
• Phosphates: DAP spot prices remained mostly steady, with tight availability offsetting affordability challenges. Recent declines over the past three weeks ended a five-month upward trend, during which prices rose 26% from May to early October.
• In the UK, phosphate demand remains muted, mirroring subdued buying across the wider fertiliser market. Globally, Ethiopia and Bangladesh have eased some supply pressure with increased import activity. Ethiopia’s switch from NPS to DAP added over 1Mt of demand this year, while Bangladesh closed another 200,000-tonne tender on November 18. Limited availability from China, constrained by export quotas, continues to support prices in some regions.

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.