Thursday 3 October 2024

Wheat

• US prices have firmed at $9.50/t w/w, as Middle Eastern tensions, talk of lower global production, and the possibility of Russian export curbs support.
• US wheat exports continue their strong recent trend, now seen at 8.235mln t, up 35% y/y and 36.7% of the yearly projection. It is envisaged that in next month’s WASDE report US exports will be hiked up, tightening US supplies further.
• Quarterly US wheat stocks (Sept 1^st) were in line with estimates, albeit US production was lowered slightly, mainly due to a lower harvested acreage.
• Production in Australia is decreasing, particularly in Western Australia, because of dry conditions and frosts. The Grain Union of Russia is urging restrictions on grain exports, anticipated to reach 17mln t during the first quarter of the 2024/25 marketing season.
• EU prices have followed the firmer global trend, moving up €13.25/t w/w. However, unlike other key exporters, traders are still reporting slow demand for EU supplies, with wheat exports a/o 29^th Sept reported as being 6.138mln t, down 26% y/y.
• This will not be helped by reports that Russia has agreed to source over 3mln t of wheat from Black Sea origins (most likely Russian) between Nov 24 and Apr 25, but it was unlikely that any deal would have included EU supplies, especially French wheat.
• UK prices have also moved higher, up £8.15/t w/w, providing firmer ex-farm prices for growers. However, selling remains slow, and with UK farmers more interested in fieldwork, and trying to get winter crops sown, available supplies are not flush.
• In summary, with all the above news, it is hard to argue against a continuation of the current upward trend.

Malting Barley

• For another week there isn’t much to say about malting barley. Physical prices are stable and continue to trade in a narrow range with little help from supply or demand. Quality premiums are drifting further as feed markets feel the support from futures.
• Unless we see a major resurgence of demand, it is difficult to paint a friendly picture for malting values as we head later into the season.

Feed Barley

• Feed barley markets are firmer on the week, although struggling to keep pace with the rally in futures as physical demand remains slow.
• For another week, export demand is a distant prospect, and other origins still provide better value to overseas buyers, although a weaker sterling and supported MATIF/EU basis are helping to close the gap.
• We maintain the view that with a healthy surplus in the UK, domestic prices look like a good sell for growers who have old crop stocks to market, particularly with this week’s firmer prices.

Rapeseed

• A very volatile week for outside markets this week, as we head into the final stretch to the 2024 U.S. election added to potential cuts to interest rates, and firmed the dollar. All of which was overshadowed by the escalation of conflict in the Middle East, rumours yesterday of planned missile attacks were confirmed shortly after EU markets closed last night. Energy shorts pulled back in their positions which pushed energy sharply higher.
• Looking at the U.S., the weather looks favourable for the next 7 days apart from rain in the northeast. Harvest progress should ramp up over the weekend. A few concerns over lower-than-expected yields may see the USDA cut its forecast in the next report. U.S. harvest reported at 26% complete whilst crop conditions remain unchanged week-on-week. Hurricane Helene caused damage across the Southeast, but it is not yet known.
• This week’s USDA Stocks and Acreage report fell within expectations. Soybean stocks were slightly lower than the average trade estimates at 342 million bushels vs. 347 million bushels expected and soybean production for 23/24 within trade estimates but was lowered due to a slightly less harvested area (82.3 million acres).
• Rain in the forecast for South America added some price pressure. The USDA announced several bean sales this week, but with China out of the market until Monday, the trade does not expect any further sales.
• The big news for U.S. and E.U. markets was the decision to postpone the implementation of EUDR for a year, which certainly played its part in yesterday’s price action. 
• Energy markets rallied significantly on the escalation of conflict in the Middle East but ran out of steam yesterday in the afternoon session. OPEC members met yesterday to discuss lowering quotas which would lead to a production increase. Veg oil markets rallied this week in sympathy with increased crude oil values.
• Canadian Canola and EU rapeseed prices appreciated to nearby highs this week following the sharp fall in the euro/dollar and rise in oil values. Funds again enter the market to take off short positions. 
• EUDR announcement will be a topic of conversation for the next few days.
• Sterling fell against the euro today lending support to farm gate prices here in the UK.

Oats

• European oat markets have seen strong trade over the last two weeks with many cargoes being traded into the EU from Scandinavian countries.
• Prices for milling oats have rallied over the last week thanks to this wave of demand coinciding with the rally in wheat prices.
• Feed oat demand remains very challenging with buyers not interested given the supplies of other cheaper substitutes and good local supplies.
• Here in the UK, prices for milling oats continue to fall with sellers looking to secure logistical demand.
• Feed oats also remain a hard product to market with very little buying demand.
• Bottom line, European prices may have reached a level of support, however fresh demand for UK milling oats will be needed to stem the negative tide.

Pulses

• The bean harvest continues to stumble along across the northern half of the UK, and there is still even the odd field of standing beans in the Midlands. Samples continue to steadily run through the lab, and the trend continues that, on the whole, beans have a lower visible pest than normal, as well as better colour and staining than normal. Markets have seen some domestic interest this week across the compounding industry, although little has traded, as well as human consumption interest coming on the export front. By and large, the pressure remains on the front end, keeping prices suppressed. As further northern tonnage comes online, it is likely to keep prices suppressed. Further Baltic vessels have arrived in Egypt, with the earlier quality concerns around the origin seemingly starting to dissipate as the suppliers get a better handle on the crop.
• In the week ahead, the UK is forecast to see continued rainfall, albeit after a couple of days of reprieve this weekend. Temperatures are more or less normal for this time of year. Turning to the rest of Europe, everyone is set for reasonable amounts of rainfall, especially in France, which will likely hamper drilling across the continent on most crops. The wetter, cooler temperatures that we are seeing in the UK are not harming the remaining standing crop too much, although it remains to be seen how much of a hindrance it becomes for the ripening of late drilled springs, with some appearing to be refusing to turn, and more and more people looking to desiccate.
• UK beans remain upbeat in terms of quality, but as with most years, the Baltic continues to have the edge. Despite this, additional premiums are available for growers with good-quality beans, so it is worth regularly talking to your farm trader and pushing samples across if they look like they have potential, as we may be able to upgrade them for you and pay an additional premium if they hit spec. Feed beans are still the wrong side of the equation for general compound use for the most part, with them needing to come c. £10/mt relative to other commodities. As we have written in previous reports, with all this factored in, feed is only likely to come under further pressure and be squeezed lower.
• Turning to the currency markets, a choppy week for GBPUSD, having traded up to 1.34 and almost touching 1.31 this morning. The short-term outlook for GBPUSD suggests continued volatility primarily driven by UK inflation concerns and U.S. Federal Reserve policy expectations. GBPEUR may remain range-bound, influenced by the UK’s economic data and European Central Bank decisions, with both pairs reacting to broader geopolitical and economic developments. Traders are cautious amid uncertain global growth prospects. Remember, crudely, strong GBP = cheaper imports, but weaker exports/weak GBP = weaker imports, but more aggressive exports.
• The last week has seen plenty of weather, and we have received multiple comments from growers who have received well in excess of 200mm of rainfall over the last week. Despite this, many are still positive that they can get out and complete some land work over the coming week if the weather remains kind. If we are lining up for a variable winter drilling campaign again, it is worth making time to talk to your farm trading representative during the weather stoppages, as they will be more than happy to advise you on what contracts we have available. With a combination of great marketing options, various seed stocks ready to go, and a portfolio of cost-effective inputs, such as P-Grow and FibroPhos that can help push your yield potential, they are ready and happy to help. We are buyers across a wide spread of homes nationally and can offer you competitive origination markets, plus the opportunity to upgrade any crops that may be fit to human consumption pulses to be processed in one of the most advanced pulse processing plants in the UK and Europe, all whilst earning an additional premium for your crops.
• 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

• In a few areas across the UK (if the forecast can be believed) the opportunity for drilling crops is starting to appear. With this in mind, we are pleased to offer a limited amount of Group 1 varieties for delivery along with KWS Extase, KWS Ultimatum, RGT Goldfinch with BYDV resistance, and KWS Palladium in the Group 2 sector. Limited amounts of Bamford in the Group 3’s and a range of Group 4’s, including Champion, KWS Dawsum, Graham, and RGT Grouse in the BYDV sector.
• Winter barley is again appearing on many people’s radar, and we are pleased to offer LG Capitol, LG Caravelle, Craft, and Buccaneer.
• If you have any requirements for seed, please contact your local farm trader for details, and remember that we are still offering buy-back contracts for most products both on wheat and barley.
• Looking ahead, there is early interest in spring barley. We are excited to offer varieties such as Laureate, Tennyson, RGT Planet, RGT Asteroid, and a limited supply of Belter. For more details on these varieties and available buyback options, please reach out to your farm trader. Don’t forget to watch our latest YouTube video, ‘Exploring Spring Barley with Dave Cooper’.
• Will you be sowing SFI this autumn? At ADM we have a range of mixes available, plus the option of bespoke mixtures. Contact the team today for more information!

Fertiliser

• UK Natural Gas futures recently rose close to £1/therm, reaching seven-week highs, and continue to test highest levels since DEC 23. European gas storage levels remain robust at present, however, escalations in the Middle East are acting as a catalyst for this market response. Should European concerns remain directed at Suez, we can anticipate increases, albeit of increasingly unknown scale, in European urea and AN price levels.
• Urea markets report cargoes out of Egypt north of $390/mt, up 16% on last month. Globally buyers are concerned about threats to Iranian urea which represents circa 25% of the Middle East’s urea exports. India has tendered today for shipment in mid-November for which they have received 2.57Mt in offers from 21 participants. If they are unable to secure their required volumes at desired levels a further tender will be required. This will place further price pressure into late Q4 compounding the upside risk.
• Ammonia markets are behaving similarly with strong bullish sentiment. European production remains curtailed to between 70-80% and further maintenance has been planned well into Q4.
• Potash markets remain stagnant with global demand remaining limited. Prices have remained almost unchanged since June as subdued demand persists. There is an expectation that appetite will return on the back of weakening prices assuming the current market sentiment remains the same.
• Phosphate prices are unchanged this week. Whilst global supply remains tight it continues to outstrip limited demand. Should supply perform any worse than currently forecast prices could see some support later into Q4. Whilst growers’ attention is understandably directed to weather pressures limiting drilling campaigns, it is wise to note how swiftly global fertiliser markets in particular Nitrogen, can respond to unstable macroeconomic conditions.

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.