WELCOME TO ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- Another week rolls on in the world of wheat with the banking crisis spill over and, once again, Russia shaping market narrative.
- The week opened subdued with rumours circulating that that managed money was pulling away from commodities and repositioning, in anticipation of lower prices triggered by news of an extension of the Black Sea grain corridor.
- Macroeconomics has played its part; we had seen a risk-off attitude in light of recent bank failures not seen since the heady days of 2008. This permeated a real sense of risk throughout the financial system, and commodities and the ag complex were not immune to this.
- This risk-off sentiment did not last too long as ag markets whipsawed back into life amid rumours that Russia would interrupt grain movements out of the Black Sea and plan for state grain purchasing to help bolster domestic stocks and prices.
- This seems to be speculation as nothing concrete has been confirmed, but the trade latched onto it, with widespread short covering sending prices higher. Given the Kremlin’s general attitude around mischief making, it could well be that this story comes to nothing; the fundamentals have not changed as the world is still well supplied when it comes to wheat, but geopolitical shocks spark a sharp reaction.
- European markets have perhaps been more exciting. We saw some lively activity on the Euronext on Tuesday, with a €14 trading range and a close up €7.50 on the most active contract. London followed this trajectory, trading in a £14 range and closed up £4.
- The remainder of the week saw Matif continue to trade firmer with London just coming off its intra-week highs to trade lower.
- The UK is still struggling to find a solution to the large old crop balance sheet. The May-Nov spread traded out to £15 last week, and although old crop UK wheat is cheap on paper, we are struggling to find enough Q2 demand to deal with the surplus.
- The UK remains some way from new crop export competitiveness, which is likely to compound the problem of large stocks.
Malting Barley
- Old crop malting barley prices continue to slide as once again consumers appear to be well covered through to the end of the season.
- New crop values have also found support following the turnaround in futures, although prices are still well down on the levels trading a few weeks ago, predominantly pressured by French farmer selling.
- The majority of the UK spring barley crop is in the ground; however, farmers still are not showing much interest in selling. Hopefully some warmer/drier weather will help to stimulate some interest as premiums over feed, albeit off the highs, still look extremely attractive.
Feed Barley
- Old crop prices have stabilised after falling over recent weeks, supported by the retracement in futures and a slow pace of origination.
- Once again however, demand is lacklustre in both domestic and export markets.
- New crop prices continue to track wheat futures, although sellers are starting to discount slightly in an attempt to stimulate demand. The harvest position in particular is starting to become more contested as sellers hunt for demand, despite a lack of farmer selling.
Rapeseed
- Outside markets remain on edge following the recent banking crisis though US stocks and oil markets have bounced from lows. The world is trying to work out Putin’s next move in Ukraine and the Taiwanese president’s visit to the U.S may create friction with China.
- CBOT soybeans have recovered from last week’s fund sell-off and the trade now awaits Friday’s USDA stocks and acreage report. Little change in the South American situation this week, with showers still spread across Argentina, but that will only help stabilise the crop, not improve it. Brazil looks drier which will favour those with soybeans left to finish harvest. AgRural estimates harvest progress at 70% now, vs 75% on average.
- Nothing purchased to officially report into China though there are rumours that Chinese buyers are looking to switch Argentinian soybean sales to the US.
- As for Friday’s USDA report, we would expect some amendments to stocks. A farm survey suggests farmer planting intentions in the US could be above the USDA outlook conference estimate (89.6 million acres vs 87.5 million from USDA).
- Energy markets rallied on renewed confidence that the banking crisis is now under control in the short-term, though the market took little note from the big drawdown in stocks reported yesterday. Veg oils equally have recovered from recent lows to trade back to nearby highs.
- After a thirteen session sell-off, Matif rapeseed and Canadian canola prices rallied back this week to now trade out of their oversold positions. Whilst prices are back at nearby highs, the market is still in search of further demand to help decrease the large balance sheet we have for the rest of this season. However, in the short-term the focus will be on Friday’s USDA report.
Oats
- Oat markets in Europe continue to have a negative tone with the volume of sellers from Scandinavia, Baltics and UK continuing to hunt for demand to avoid rolling stocks into new crop.
- The weight of oat sellers has meant prices have resisted the recent rally in wheat futures markets and this has caused a widening of the differential of oats to wheat futures.
- Feed oat offers in the Baltics have fallen approximately €25 in the last week in an attempt to find some demand.
- A sale was reported into North Spain, but this was at a level below current offer level.
- Overall, the oat milling sector in West Europe remains absent from the market and we could expect this to continue until May/June time.
- Here in the UK the balance sheet looks increasingly heavy, with feed compounders confirming the switch to wheat and barley as a relatively cheaper alternative to oats.
- Oat millers are reported to be covered through until June/July and this could push prices lower in the weeks to come as farmers look to sell old crop balances to get sheds cleared ahead of new crop.
- Bottom line, the oat market could become increasingly detached from the wheat markets as it attempts to deal with the surplus being offered.
Pulses
- Feed bean demand for export remains relatively thin. Some demand has emerged from Africa, but Australia and the Baltics still look cheap against UK beans, despite a recent drop in prices.
- Human consumption demand on old crop beans is non-existent both domestically and for export. We have seen some new crop demand appearing in the market, although it has not yet come to fruition.
- The feed pea market remains quite stagnant at the moment as prices have dropped back week on week. This tends to be quite a seasonal trend and we do expect to see some form of bounce-back this week or next.
- Human consumption demand for export and domestic markets continues, mainly for large blue peas and marrowfats – we are keen buyers of any old crop parcels left on farm.
- Human consumption pea buybacks are readily available, with historically high prices for large blue peas and the possibility to drill into April – if you are planning to pull your rapeseed up and replace with another crop, peas are the perfect solution! Our Long Sutton facility has stock ready to go, please contact your farm trader if interested.
Seed
- Autumn seed availability is currently good across our main portfolio.
- KWS Dawsum is bound to be a popular choice again on farm this year, with its incredible grain quality combined with exceptional disease resistance and high yields.
- We expect an increase of interest in BYDV tolerant winter barley KWS Feeris, after the SFI announcement of rewarding land without the use of insecticide. Not only does KWS Feeris give growers confidence against BYDV, but it is also a wide variety, with great all-round agronomics.
- For OSR drilling this year, it is fair to say LG Attica has one of the best overall packages on the market. It is a hybrid variety that offers all the usual traits we have come to expect from Limagrain’s portfolio. This variety is also very stiff and joined the 23/24 recommended list as the second-highest yielding variety for the UK.
- Game maize blends are a great option of game cover, providing cover as well as feed for birds. It contains a mix of different maturing varieties and has great standing ability.
- Cover crops can offer a range of benefits to the land and environment, ADM has an amazing portfolio of cover crop straights and mixes available along with the option of bespoke mixtures. Speak to your farm trader to find out more information.
Fertiliser
- Granular urea pricing remains supported in the nearby positions. Forward values for Jul-Sept and Oct-Dec are available at a good discount and should perhaps be considered for your 2023/24 requirements.
- UK ammonium nitrate remains available for April delivery only. UK natural gas prices remain just off the month’s lows for April, whilst winter 2023 contract trades at a £0.27/MMBtu premium.
- Offers for CAN in Germany for May/Jun are available, and AN pricing is now also available in France. To date no UK AN levels have been posted but an early start to the next campaign looks likely.
- The usage of inhibited urea continues to increase and will be seen as a sensible option by some for their new-season nitrogen requirements.
- ADM have NS compound Piamon 33N 30SO3 available in Q3 and Q4 delivery windows. Securing nitrogen sulphur products for 2023/24 could be more difficult than previous years given reduced manufacturing capacity in Europe.
- DAP, TSP and MOP levels have all seen small corrections in the UK at the beginning of this week following lower demand year on year and further Indian business at circa $20/t FOB lower than previous trades.
- ADM can offer ENhance Pro ATS for milling wheat growers looking to increase grain proteins. Please speak to your farm trader for more information.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.13 | 1.23 | 1.09 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Mar 2023 | 185-195 | 195-209 | 230-235 | 415-430 |
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.