WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- Agricultural markets are sharply lower as the weather premium gets washed out and the seven-day US forecasts give variable amounts of rain. Chicago wheat has lost almost $30/t since Monday’s rally on profit taking into the month/quarter end, despite continuing deterioration of US corn and soy crop ratings. USDA will issue an updated US acreage report tomorrow, which is expected to show a slight decline in planted corn area, but little change on wheat, from the March report.
- Several fundamentally bearish news stories are creeping into markets now. StatsCan reported Canadian all-wheat area at 26.9mln acres, which is a 22-year high and slightly above average trade guesses. Ukraine’s UGA has stated the 2023 crop could be well above previous estimates due to strong yields, but will the world be able to efficiently access this grain given the uncertainty over the extension of the Black Sea grain export initiative? US corn has given back all gains made over the last two weeks, as improved weather prospects are leading markets lower. Tempering of adverse growing conditions in parts of Europe and China is also fuelling selling – so it’s not just a US weather story.
- Domestically, the UK market is feeling heavy. Production is going to be around 16mln t, while cheap barley and corn continue to attract buyers at favourable discounts to wheat, reducing domestic demand. Ultimately, our quest to export will rely heavily on the willingness of UK farmers to release stocks, particularly at harvest. Currently, liquidity of supply remains an issue, but we would expect a pick-up in farm selling over the next few weeks. The market is trading a carry from July through to new crop which is indicative of a huge carry-out and we’re just starting to see the harvest discount widen out as the supply pressure starts to build.
- In summary, during the recent rally, markets traded dryness and falling crop ratings. On the way back down, markets have traded ‘forecasted rain’. It’s a lot about sentiment, but the wild swings we’re seeing in prices will remain until something fundamentally grips this market. Weather will continue to drive the markets over the short term, although the USDA data released tomorrow, and the global S&D update on 12 July may provide external support to the wheat complex, especially if the USDA slashes its yield projection for US corn.
Malting Barley
- Malting barley markets have bounced off the highs feeling pressure from a combination of lower futures, rains in northern Europe/Scandinavia and the onset of harvest in France.
- The French harvest so far is going well and yields are being reported at 10-15% over average with no quality issues so far.
- Farmer selling in crop 23 and 24 is still extremely slow, despite premiums looking excellent vs historical levels at around £70/t.
Feed Barley
- On the eve of harvest, feed barley markets are focussed on an available window, with plenty of growers expecting to make a start on winter barley in the next week and some very early starters underway already.
- The UK has written more export business over the last week, with demand continuing to come from the Irish market, although it is unclear how much more demand they will be able to show in the harvest window where the UK calculates.
- After picking up last week, farmer selling has ground to a halt with futures bouncing off the highs.
- All eyes remain on the coming harvest, although with the lack of volume export demand at current levels, we expect to see harvest pressure remain.
Rapeseed
- CBOT soybeans closed down this week despite the fall in crop conditions that were reported. Soybean crop ratings fell again this week – down 3% to 51% good/excellent from the 54% they fell to last week. Whilst five regions reported increases in crop conditions, 12 of the 18 reported a fall, with one being unchanged. Soybean exports to the EU were also viewed as disappointing, reported at 11% down to 25 June.
- Rain is now in the forecast for later in the week and over the weekend, but showers that fell across Illinois will have helped. That said, the trade will be closely watching how much rain falls in each area.
- ABIOVE raised its Brazilian soybean crop estimate up 1mln t to 156mln t. Exports out of Brazil for June are likely to reach a record 14.2mln t.
- Recession fears added to a slump in global demand in the last few weeks and has recently pressured crude oil prices, although these have started to recover towards the end of this week. Veg oil, however, bounced, with soy-oil taking back all losses from EPA mandate announcement. Veg oils were also supported by the EU clamping down on the use of used Chinese cooking oil in bio-fuel production.
- In Canada, Stats Can reported a 500,000-acre increase in spring plantings to 22.1 mln acres. This fell above current trade expectations.
- MATIF rapeseed traded sharply down from recent highs, as the US weather premiums got eroded. EU harvest has just started in some countries and the trade will be eagerly watching any crop updates.
- This Friday we have the USDA WASDE, out live at 5pm.
- Prices have dropped back from highs, although sterling falling to 1.1580 lent support to UK prices.
Oats
- European oat markets remain nervous over production concerns following the hot dry weather which affected large areas of the Baltic states and Scandinavia.
- Sellers in Scandinavia and the Baltics continue to be hesitant about offering new crop given the unknown quality of the crop.
- Spain remains hungry for oats in Jul-Sept’23 positions, with bids for feed oats a significant premium over feed barley.
- Widespread rains last week in the key growing areas of Finland, Sweden, the Baltics, and the UK, brought some relief for developing spring crops, and may have tempered the fall in production prospects. However, more rain is needed to finish the crop as it goes through its grain fill period.
- Here in the UK, heavy showers across large areas of the country last week benefited developing crops. However, yields and quality will likely be down on last year given the late drilling dates of large amounts of spring crops and the dry weather experienced in May/June.
- Buyers of feed oats look to bid at levels at typical discounts to feed barley, although export bids are currently at a big premium to UK domestic feed oat markets.
- Milling oats are trading in small volumes for Jul’23 as growers and merchants look to tidy up old crop balances ahead of new crop, but new crop offers are hard to come by.
- Bottom line, markets are trying to find their feet in what could be a tighter EU market than we have seen in previous years. The unknown quality is also adding in a risk premium which could come down once the combines start rolling.
Pulses
Peas
- Old crop is complete. We remain buyers of any straggling open market options, however market demand for feed, in particular, is non-existent until new crop.
- New crop peas look in strong demand across the three main pea types for Q3 & Q4 of 2023. We expect some major European buyers to come into the market should Canada’s crop quality and production drop as reported. UK peas are a good alternative and are expecting a total production increase of around 2% year on year.
- With heavy scattered showers across the UK, many pea crops got the rain they needed, helping to accelerate the growth period for the stem of the crop, pushing it away from the ground.
- Most marrowfat crops are varying between well-podded and going out of flower.
Seed
- With the OSR drilling campaign just around the corner, we have a great portfolio of varieties to offer with various offerings across our key varieties of delayed payment, establishment schemes, and sale or return. We also have limited stocks of over-yeared seed available for early delivery. Please enquire for more information.
- Companion cropping is a great way of helping aid establishment of oilseed rape by deterring and protecting against flea beetle and helping improve the soil health.
- Stubble turnips are a very popular choice of autumn forage. They are fast-growing and palatable for livestock. Contact your farm trader today to find out more.
Fertiliser
- Granular urea has traded up a further $27/t week on week FOB Egypt. Over the past two weeks rises over $50/t FOB have now been seen on urea.
- Traders have moved to cover short positions. A variety of factors have driven them into the market including strength in European gas markets, ammonia and urea tariff reimpositions in Europe, and some movement in global grain price over the week.
- The UK market has been relatively slow to respond, but levels are now starting to move higher and reflect the new replacement levels.
- At present UK AN markets remain unchanged, but offer the potential support for granular urea prices at levels of circa £410/t.
- NitraSol Liquid UAN and UAN + ATS prices remain available from ADM. Markets are active for summer and spring tank fills, although current prices could be withdrawn in the coming weeks given movement in nitrate and urea markets globally.
- TSP and MOP prices are still stable to weak. UK farmer buying for fertilisers is still relatively subdued as we head towards harvest.
- ADM continues to offer alternative PK prices which, on a £/t basis, offer a discount to traditional bagged TSP and MOP products. Secondary and trace elements are also in the products that are applied on stubble after harvest.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1575 | 1.2655 | 1.0935 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Jul 2023 | 140-150 as available | 170-180 | 250-255 | 335-345 as available |
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.
