Thursday 5 December 2024

Wheat

• The global wheat market exhibited a mixed performance over the past week, reflecting a balance of bearish and bullish factors. In North America, CBOT wheat remained a game of two halves; closing marginally higher following the Thanksgiving holiday before coming under pressure to trade around contract lows later in the week. The March 2025 contract saw a weekly loss of 13¢, with weak US export competitiveness and abundant global supplies limiting any significant price recovery.
• In South America, favourable weather conditions continue to support strong wheat production prospects. Argentina’s crop has benefited from steady rains that improved soil moisture, ensuring robust yields. In Brazil, although localised excessive rainfall raised minor concerns about delays and quality, overall production remains on track. These favourable conditions in the region are likely to sustain competitive pressure on US wheat exports.
• European markets were relatively stable, buoyed by a weaker euro that improved export competitiveness. MATIF wheat futures settled at €224.75/t for March 2025, a weekly gain of €2.25. However, exports across the EU remain significantly lower than last year, reflecting stiff competition from Black Sea and Southern Hemisphere origins. In the UK, London wheat futures hit contract lows, with May 2025 closing at £184.35/t. Farmer selling remains limited, supported by tight cash market liquidity ahead of Christmas, while premiums are bolstered for the spot month into the new year we are seeing basis levels softening somewhat. Wheat’s improved competitiveness in feed rations could help reduce stocks into mid-2025.
• In the Black Sea region, Russia remains a focal point as it tightens export restrictions. Quotas are set at 11mln t for February to June 2025, a sharp drop from the 29mln t allowed during the same period last year. Export duties increased by 18% on December 4, though FOB prices remained steady at $226/t. Despite these measures, Russian exports have been strong. Concerns are growing over the next crop, as only 37% of winter wheat is rated in good condition, marking the worst ratings in a decade.
• Meanwhile, Ukraine’s wheat exports from July to November rose by 55% year-on-year to 8.96mln t, with Spain and Asian markets being key destinations. However, overall volumes remain below pre-war levels, highlighting the ongoing challenges faced by the war torn country.
• In the Southern Hemisphere, Australia is set to harvest a bumper wheat crop, with production estimates revised upward to 31.9mln t by ABARES and 30.9mln t by LSEG. This marks a 20% increase over the 10-year average. Despite strong yields, heavy rains in the southeast have led to quality downgrades, increasing feed-grade supplies by 2.5–5.5mln t.
• Overall, the wheat market remains finely balanced. Southern Hemisphere crops are adding significant supply weight, while Russia’s tightening export measures and poor winter wheat conditions offer some counterbalance. European exports may gain traction with the weaker Euro, but competition remains intense. Markets are expected to remain rangebound, with further price movement contingent on new supply disruptions or demand drivers.

Malting Barley

• Malting barley markets continue in their rut, with demand still proving the major issue. Reports from brewing and distilling industries are still proving bleak, doing little to change the fortunes of premiums, which sit at or near multi-year lows. With the demand outlook today, alongside the weight of supply available to the market, it is tricky to justify malting prices being much higher than feed as we head into the new year.
• New crop markets, although quiet, are proving a little more positive with the spring barley acreage set to decrease heading into crop-25.

Feed Barley

• Feed barley prices remain relatively supported on a recent wave of export demand, combined with the ever present slow pace of farmer selling.
• Despite weaker tone on futures barley is managing to remain stable, which is reducing the competitiveness of feed barley in domestic feed rations. Despite this, at current levels, inclusions should remain high going into 2025 unless spreads vs competition products narrow further.
• New crop continues to find support although on very little activity, with trade sellers wary of the larger than forecast winter wheat area which will no doubt limit spring barley production.

Rapeseed

• Markets have been mixed this week with the prospect of a record South American soybean crop looming over the soybean complex. Forecasts remain favourable and through the week we have seen numerous private estimates raising their production figure to record highs around the 170mln t mark. On the other side, we have seen improved demand prospects this week, with 991,000mt sold to unknown, giving us the largest one day sale since July 18^th. Export sales for last week came in at 2.49 million, a marketing year high, with the top feature being China. EU bean imports since July first have reached 5.46mln t, up from 4.86 last year with meal at 8.15mln t, above last year’s 6.34mln t.
• The Biden Administration has said that the EPA will not be issuing any policy updates until Trump starts his term, so policy uncertainty will continue into the new year unless Trump clarifies his plans.
• Crude has traded either side of unchanged through this week, with the trade positioning themselves ahead of today’s OPEC+ meeting, where they are anticipated to delay production cuts another month due to already low prices. Last week’s EIA report was mixed with crude stocks lower than expected with US implied gasoline demand higher. We did see some support over an improvement in China’s economic data over the weekend. China’s National Bureau of Statistics PMI data rose to a seven month high at 50.3.
• Canola prices have been mostly higher this week, supported by the wider veg oil complex as weather in Asia (mostly Indonesia) has dampened palm oil production prospects. Speculative shorts have increased to now represent 1/3 of the canola short open interest, with commercial buying taking the other side. Uncertainty surrounding US biofuel subsidies has brought some pressure to prices with 91% of Canada’s canola oil exports going to the US and for Jan-August 2024 this was 97%. That being said, India would be the likely destination behind the US with some competitive prices as their rapeseed crop looks poor and dry.
• In the EU, prices have started to recover from the low we saw on the back of announcements from the Trump Administration, following support from palm, as well as Strategie Grains most recent update increasing rapeseed inclusion due to a lower sunflower harvest. Ukrainian monthly exports are lower than previous years with the November figure at 291,000mt, a big reduction from Octobers 475,000mt. This brings the forecast for 24/25 to 3.30mln t vs. 3.70mln t previously. The Canola/MATIF spread is now at $140, though it’s been seen that a Bulgarian crusher has said it can be difficult to market the product. There is some tonnage on the books to come into the EU from Canada, but we are yet to see any further trades.

Oats

• European oat markets remain quiet, with a general lack of trade being reported.
• A shortage of farmer selling in Scandinavia is encouraging sellers to sustain high offer prices, however, given many consumers are reporting to have high levels of cover, we could see prices fall cone sellers come to the market.
• Feed demand remains very quiet with buyers remaining scarce.
• Here in the UK, farmer selling remains quiet, but consumer demand also remains slow.
• Milling buyers are reported to be covered Dec/Jan, but space remains in deferred positions.
• Export pace from the UK remains slow with 4kmt moved year to date, this is down 93% vs last year. However, the pace is expected to increase following sales to EU buyers.
• Bottom line, the oat prices remain supported whilst there is a lack of farmer selling.

Pulses

• The last week proved to be a relatively quiet week for pulse trading, with limited engagement from growers or consumers alike. Wet beans still pop up, although growers seem to be getting these in checked for the most part. For those that can’t dry, please contact your farm trading representative, as we have drying options available, although these crisp winter days should at least allow some cool air to be blown through the heaps.
• Egypt continues to be a buyer of human consumption beans. Australian new crop is now afloat and on its way, so the window for being able to supply UK beans is starting to close. Domestic feed demand remains muted, with beans still c. £20-25/mt away from competing compared to import feedstuffs, which is blocking their wide-spread usage in many diets.
• Looking to the week ahead, the forecast is showing plenty of precipitation, especially for Northern England, whilst temperatures are more or less in line with the seasonal norm. These slightly warmer, damp conditions should help early establishment of the crop and leave it in good stead for winter dormancy.
• As we mentioned last week, if you haven’t already, now is the time to review your unsold stock and explore the best ways to market it. High-quality beans suitable for human consumption are becoming available, and with Australian beans making inroads into North Africa, it’s the perfect moment to act.
• Contact your farm trading representative to arrange sending samples to our lab for testing. If your beans meet the required standards, you could secure an upgrade premium—just in time for Christmas!
• We’re still actively purchasing across the UK and can offer competitive origination markets. There’s also the potential to upgrade crops that meet human consumption specifications, with processing available at one of the most advanced pulse processing plants in the UK and Europe. This provides an excellent opportunity to earn an additional premium on your crops.
• Speak to your farm trading representative today to discuss your marketing options and discover potential upgrade opportunities. 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

• With the festive season fast approaching and spring planting just around the corner, now is the perfect time to explore the options available with ADM Agriculture Ltd. From spring barley, wheat, beans, and peas to maize and SFI & cover crop mixtures, we’ve got you covered. Many of these options also come with buyback contracts, providing added security for your farm. Reach out to your ADM Agriculture farm trader today to discuss your requirements!

Fertiliser

• The fertiliser markets this week are shaped by tight supply conditions, rising energy costs, and a gradual return of demand in some areas. In the UK, farmers are returning to the market to secure nitrogen stocks amid concerns over supply and cost increases in Q1 2025. CF Fertilisers’ withdrawal of its January offer on December 6th highlights tightening domestic availability for that month and the broader Spring season.
• India’s next urea tender is now expected to be announced by December 9th for January 2025 shipments, aligning with forecasts from last week’s report. Egyptian FOB values have risen, with granular urea sold at $371/t FOB, signalling a more bullish market. Buyers in Europe remain cautious, with some importers stepping back due to elevated prices.
• Ammonia markets west of Suez are stabilising as Fertial restarts one of its plants in Algeria, which could alleviate supply constraints. Benchmarks in NW Europe are projected to soften into the $500s/t CFR through Q1 2025.
• Potash prices remain stable, with piecemeal purchasing continuing across Northwest Europe.
• Phosphate prices have declined moderately over the past month, though tight supply continues to limit significant price decreases.
• Across markets, tighter supply and rising costs dominate the outlook, with the focus shifting to securing availability ahead of the spring application season.
• Natural Gas: European natural gas futures at the time of writing are at €47.6/MWh, retreating from a recent 13-month high of €49 as forecasts predict warmer and windier weather across northwest Europe. Wind speeds are expected to rise above seasonal norms from December 5-9, reducing demand for gas-fired power generation.
• Supply flows remain stable, supported by deliveries from Norway and Russia, but EU gas storage is now at 84.7%, down from 94.2% at this time last year. The EU is raising its storage targets for February to secure supply ahead of winter 2025, while concerns persist over the expiration of the Russia-Ukraine gas transit deal, which could disrupt flows from January 2025.
• Ammonia: Ammonia prices are beginning to ease east of Suez, although December’s Tampa contract sees a $10/t increase, with Yara and Mosaic settling at $560/t CFR. This increase follows supply constraints in Algeria, which have supported prices west of Suez throughout Q4.
• Reports indicate Fertial may have restarted one of its two 330,000 t/year plants at Arzew, potentially alleviating some of the pressure on west of Suez prices. Benchmarks in NW Europe are expected to trend downward into the New Year, with projections suggesting prices will slip into the $500s/t CFR range in Q1 and further into the mid-to-high $400s/t CFR by mid-2025.
• Tampa and Caribbean indexes are expected to follow similar patterns, with steady supply from the US Gulf and Trinidad helping to drive prices into the low-$400s/t CFR range by May 2025.
• East of Suez, prices are also anticipated to decline further, supported by strong supply levels such as Ma’aden’s planned export of 200,000 tonnes in December. FOB values in the Middle East, last recorded at $430/t, are unlikely to hold as suppliers lower price targets moving into 2025. Spot benchmarks are projected to drop into the low-$300s/t FOB by mid-to-late 2025.
• Ammonium Nitrate: In Europe, a major producer announced curtailments in urea, CAN, and NPK production at its Linz facility, citing high natural gas prices and uncertain demand for straight nitrogen products. While the plant will continue reduced operations through the end of 2024, full production is not expected to resume until demand improves and gas prices stabilise. This follows the producer’s earlier withdrawal from the German market due to rising gas costs, returning only with higher Q1 offers a week later.
• The price of front-month gas at the Dutch TTF hub reached contract highs on December 2, the highest recorded this year, adding further cost pressures to European nitrogen production.
• In the UK, rising production costs are now driving farmers to secure AN tonnes at pre-replacement levels. However, these supplies are rapidly dwindling, and a price adjustment upwards is anticipated for Q1 2025. CF Fertilisers has also announced the withdrawal of its January offer effective December 6th, tightening domestic supply further.
• Urea: The global urea market, which has struggled with prolonged illiquidity, has seen a notable return of demand. As forecast in the report last week, India is set to return to the market this December, with NFL expected to hold the next tender for January 2025 shipment. While some reported the tender may be floated on December the 4^th this has turned out to be incorrect, and we expect to see confirmation from NFL by December 9^th.
• In Egypt, FOB prices showed bullish momentum. On December 4^th, Abu Qir sold 5,000 tonnes of granular urea at $371/t FOB for December loading. Earlier sales included 12,000 tonnes at $360/t and 6,000 tonnes at $363.50/t FOB. Mopco achieved $370/t FOB for a January loading on December 3rd, marking the highest price since November, when contract lows of $351.50/t FOB were recorded in the first week.
• In the UK, granular urea retail prices remained around £365/t bagged delivered to farm, maintaining a competitive position against AN 34.5% at £330/t delivered. However, no fresh CFR bulk business was reported, as importers began stepping back from offerings amidst bullish Egyptian FOB values.
• European producers are facing rising natural gas costs and elevated ammonia CFR prices, suggesting higher nitrate prices in the weeks ahead. As buyers look to secure granular urea before the holiday break, demand continues to show improvement.
• Potash: Prices for MOP remain steady this week across northwest Europe and the global market, with limited activity reported as buyers continue purchasing on a piecemeal basis. Standard MOP is assessed at €300-330/t CIF, while granular potash holds firm at €330-350/t CIF. Both benchmarks have declined by 12% over the year, but have stabilised in recent weeks.
• Customary restocking is yet to materialise in notable volume, as most purchases focus on immediate production or blending needs. However, a modest price uptick is anticipated in Q1 2025 as demand in Europe is expected to increase ahead of the spring application season.
• Phosphates: Granular phosphate prices have declined moderately over the past month, though the decreases have been less severe than previously anticipated. Slight further reductions are expected in the coming weeks, but tight supply continues to limit significant price downside. Prices are projected to stabilise and may recover slightly from mid-to-late Q1 2025.
• In India, DAP prices have inched down as the window for Rabi arrivals narrows. While CFR spot prices rose by 26% between May and October, they have declined only 1% since. Stocks remain relatively low, leaving room for off-season demand to provide support. However, buyers are likely to remain cautious, with import margins heavily negative under current prices and subsidies.
• In the US, November saw phosphate prices decrease, but supply remains tight, supporting the market. Downward pressure persists due to crop price volatility and demand uncertainty, though overall fundamentals remain firm.

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.