Thursday 29 August 2024

Wheat

• The US market has fallen $0.92/t w/w as markets have consolidated after Chicago prices hit a 4-year low.
• Signs of renewed buying have taken the market off the recent lows as the spring wheat harvest continues; but while crop ratings for corn and beans have slipped slightly, the projection for record yields remains. Support came from a lower crop estimate out of Canada at 34.3 mln t, and although this was above last year’s 32.0 mln t, it was below the 35.1 mln t expected by the trade.
• EU prices have traded higher w/w, up €1.50/t. Earlier concerns regarding the size and quality of this season’s crop have been justified, with the German Ag Ministry projecting their wheat crop at 18.8 mln t, down almost 13% y/y. In France, test results show that only 43% of the crop has a protein content above 11.5% (export quality) compared with the 5-year average of 76%. While this will dampen export opportunities for ‘quality’ wheat, it will increase the feed share for domestic, and export demand.
• The EU’s crop monitoring unit (MARS) continues to downgrade this season’s crop yields, projecting both corn and wheat below the 5-year average. Wheat yield is placed at 5.68t/ha, and corn at 7.03t/ha, as almost all crops have been impacted due to exceptionally hot conditions in the south, and excessive rainfall in the north.
• UK prices have fallen £3.10/t w/w, as the market adjusts to the soaring UK£ / US$ exchange rate. Despite harvest progressing well in most northern and western areas, available supplies are still limited, with old crop supplies in firm hands, and growers showing a real reluctance to sell new crop. Overall, market activity remains quiet on both sides, although the consumption side continues to evaluate more competitive domestic grains against imported corn values.

Barley

• Feed barley markets remain illiquid in the UK as the farmer-seller continues to hold back making origination challenging.
• End user demand however remains firm with most buyers extending winter cover which has squeezed basis in as a result.
• Export programs remain light with most merchants covered in the spot and not looking to chase the deferred positions.
• Bottom line, until we see farmer selling improve and consumer interest cooling barley will continue to hold its value against wheat/corn.
• Harvest results continue to look good with high pass rates, nitrogen levels are trending slightly higher than last week at 1.49% average.
• Results coming in from the Danish crop show higher nitrogen than those in England, with an average of 1.62%.
• With another week of slow to non-existent demand from the consumer and a heavy supply, we see further pressure on malting premiums.

Rapeseed

• Ag markets have been higher this week, despite the results from last week’s Pro Farmer Tour reporting US soybean yields even higher than USDA’s record-high figure. Based on the data released from the Pro Farmer tour, reports peg the US soybean yield at 54.9 bushels per acre, 1.7 higher than the last USDA report. This puts production at 4.740 billion bushels. In Brazil, COFCO has estimated that bean production will grow at the slowest rate for 10 years, rising to 47 million hectares from 46 million last year. Brazil’s weather service has predicted dry conditions until October in central, western, and southeastern crop areas. This is not unusual considering it is the dry season, however, the current dry season started early in April, and we need to see some moisture in the ground as we approach the planting window. StatsCan has pegged Canadian soybean production at 7.150mt vs estimates of 7.208 and last year’s 9.981.
• Energy markets have been mixed, with crude prices recovering back towards trendline resistance, as Libya’s eastern-based government announced the closure of all oil fields, halting production and exports. They currently produce one million barrels per day. We also saw news of Israel launching ‘pre-emptive’ strikes in Lebanon. India has surpassed China to become Russia’s top oil buyer in July as Chinese refiner margins are lower. Crude supplies have fallen for seven out of the past eight weeks and are 2% below last year and 5% below the 5-year average. API Crude stocks were 3.407 million barrels lower vs expectations for 2.3 million barrels lower.
• Indonesia has said they plan to increase the mandated biodiesel blend from B35 to B40 beginning in January and then B50 next year. The Argentine oilseed workers strike could start again this week if the two sides cannot reach an agreement.
• Canola prices have been higher this week, as improved crude prices and improved RD margins have helped support. This week we have seen StatsCan release their first production estimate for the coming year which did not stray far from trade expectations. Their figure was 19.50 mln t vs 19.22 mln t expected. The main difference between the trade and the report was the Alberta yield. StatsCan increased this despite the region being void of moisture through mid-June to early August.
• MATIF rapeseed has largely followed suit to come higher so far this week, in line with what we would expect this time of year. The EU commission’s latest update on EU harvest features a 1.3 mln t fall in production. We have seen MATIF rapeseed extend its premium to milling wheat as domestic origination in the EU becomes a challenge. Prices for now remain range-bound between €449-€465, though there are a few technical targets to hit lower.

Oats

• European oat markets have fallen further this week as buyers continue to bid the markets lower. This is largely down to milling oats being relatively expensive following last year’s record prices, but also due to the large bounce in supply that is expected to come to the market from Scandinavia.
• Baltic oat growers are reporting poor quality following adverse weather over the last few weeks, this will see a greater proportion of the Lithuanian and Latvian crop needing to find a feed home.
• Here in the UK, millers continue to cover positions and bidding the market lower.
• Supplies have so far been good, but farmers are now reluctant to sell given how far prices have fallen.
• The UK market is now priced for exports and should buying demand arise we will be well placed to make sales.
• Bottom line, the market has fallen a long way, and this could soon encourage some buying demand from the end consumers.

Pulses

• Another week of reasonable weather and good harvest progress across much of the southern half of the UK for pulses, helped by a comparatively dry bank holiday weekend for many. Spring beans are still 2-4 weeks away from being ready across much of the UK, but the winter crop is progressing well. Initial early reports of better-than-expected yields continue to be received across most of the harvested area. New crop markets have remained limited over the past week, in part due to the approaching end of the summer holidays and a bank holiday weekend prompting people to take some time away. Human consumption export markets remain quiet, no doubt hindered by buyers’ trying to hold off as long as possible ahead of the Baltic new crop being ready, which is reportedly looking good in terms of quality, and expected to be ready slightly earlier than normal. With Egypt receiving the last of their Australian old crop imports this month, there is less time pressure on the world’s largest bean buyer to have to jump in and buy beans in a rush.
• The standing crops look good on beans, with both winters and springs in the north reportedly a good height with strong podding the whole way up the plant. A frequent comment from growers so far has been how well beans have combined in terms of quality, with very low levels of admix being reported. The weather for the week ahead looks relatively ok for the progressing harvest, with little rain forecast, aside from 5-10mm in the southeast and average temperatures for this time of year.
• We have not seen a huge amount of price evolution on beans this week, with premiums vs London wheat futures MoL unchanged, flat prices have slid lower, although this is due to the depreciation in the underlying. Relatively speaking, beans still remain c. £10-15/mt too expensive to be buying meaningful demand into domestic compound rations, although they are certainly starting to be watched a little more closely as they steadily move towards being more competitive.
• Quickly casting our gaze to the currency markets, in the short term, GBPUSD may face downward pressure due to UK economic challenges and stronger USD driven by Fed rate expectations, which could see some of cable’s recent gains given back. GBPEUR could see slight fluctuations, with EUR supported by ECB policies. Volatility is likely, influenced by inflation data and central bank decisions. Crudely, strong GBP = cheaper imports/weak GBP = more aggressive exports. With the Egyptian pound remaining under pressure at the moment, and given the GBP’s recent firmness against USD, there are certainly going to be some challenges around any potential export campaigns.
• Get ready to drill! With the approaching planting season almost upon us for pulses, now is a good time to talk to your farm trading representative about all things pulses! With a combination of some great marketing options, various seed stocks ready to go, and a portfolio of cost-effective inputs, such as PGrow and FibroPhos, that can help really push your yield potential, they are ready and happy to help. We have a wide spread of homes nationally, so can offer competitive origination markets, plus the opportunity to upgrade human consumption pulses to be processed in one of the most advanced pulse processing plants in the UK and Europe.
• Finally, the ever-present PGRO plug to those eligible to be members. If you are not already signed up to the PGRO mailing list, you can sign up here where levy payers can access all sorts of advice and support, tapping into their extensive knowledge bank on all things pulses for free! The PGRO is a unique organisation within the UK, and if you are paying for it, you may as well use it!!

Seed

• We continue to see interest in the oilseed rape market with new orders being confirmed on a daily basis. We have both hybrid & conventional varieties in several locations across the UK for urgent collections and floor stock ready for despatch to your requirements.
• The wheat market continues with the sales directed again toward both Group 1 & Group 2 types for those wanting milling contracts, but variety choice is becoming very limited and the popular varieties sell out. We are receiving great interest in the Group 3 variety Bamford following a strong performance in this year’s AHDB trials, along with Champion in the Group 4, which has topped the trials for 2024.
• If you are using a winter cover this year, for grazing or soil health, speak to your ADM farm trader to find the mix best suited to you. We can also offer bespoke mixtures available upon request.
• There is a lot of demand for SFI mixes at present as we begin to enter the autumn sowing window, from Autumn Bumblebird to Herbal Ley.
• If you have any requirements for seed, barley, wheat, oilseed rape, and SFI mixtures, please contact your ADM farm trader who will be delighted to talk through the options available.

Fertiliser

• After a very quiet couple of weeks for urea, the second Indian urea tender of the year is set to close today. This should set price direction in the global urea market as we go into the post-harvest period in the Northern Hemisphere.
• DAP remains supported with Chinese export limitations still in place and an unclear export policy going forward, while demand from India remains strong. This in turn, is supporting TSP prices too.
• In response to the global trend in phosphate prices, in the UK, many farmers are switching to renewable sources of phosphates and potassium such as Fibrophos and ash-based products sold by ADM in a bid to cut input costs and reduce carbon emissions.
• The Tampa ammonia contract price which is the benchmark price used as a reference across the world was revised up $55/t on Monday. This was in part due to the production outages that have been experienced west of Suez throughout Q3.
• EU natural gas front month futures are up over 8% since Monday and have been steadily rising as a general trend since February.

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.