Thursday 7 November 2024

Wheat

• US prices are unchanged w/w, basis old crop Dec 24, but down $1.84/t basis new crop Dec 25.
• As markets adjust to the re-election of Donald Trump as President and its implications for the U.S. and the global landscape, U.S. prices have remained fairly subdued over the past week. Winter wheat crop conditions showed a slight improvement this week, albeit despite the further expansion of the drought area, now seen at 62% of the total area. With corn and soybeans drought area also expanding, it will be of interest if WASDE amend yield projections in tomorrow’s report.
• The EU market has fallen $2.75/t w/w, as soft-wheat exports continue the slow pace, reported as being 7.759mln t a/o Nov 3^rd, down 32% y/y. However, at the recent Algerian tender, most of the trade was Romanian, Bulgarian, and Ukrainian based, as Russian exporters stuck to the ‘export floor price’ and missed out on the tender. Reports that Ukraine will launch a minimum grain export price scheme from December, prompts the possibility of a slowdown in export pace, although unlike their Russian counterparts, the exact details on how this will operate, and be monitored, remain unknown.
• In the UK, prices have remained rangebound, with old crop November prices edging down by only 25p. Dry weather is expected to help with fieldwork but may reduce the inflow of new supplies to the market. While the recent drop in futures has firmed delivery premiums, a slightly stronger pound could pressure farm-gate prices by making imports cheaper and reducing UK export competitiveness.

Barley

• Another subdued week for feed barley with the market dominated by merchant-to-merchant business amongst slow farmer selling and soft end user demand.
• Export interest remains limited with Irish bids not quite lining up against offers from shippers into the new year despite the UK still having a surplus to market.
• With winter barley planting largely complete and winter drilling still continuing subject to weather, we expect to see improved liquidity on farm come January.
• New season activity remains limited with barley pricing a nominal discount to wheat/corn with no strong story to follow except a potentially large carry out.
• Malting markets are similarly quiet with new year premiums still available but maltsters reticent to step back into the market until consumer demand emerges.

Rapeseed

• This week has very much been led by outside markets so far, with the US Presidential Election being the main news. Since Donald Trump’s election as U.S. President, the U.S. dollar has reached new highs, along with the S&P 500 and the Dow, as stock markets received a boost. The sharp move in the dollar supported European ags and generally pressured the US. The key focus for soybeans in relation to the election now will be on any actions Trump takes regarding U.S. trade flows and U.S.-China relations. Apart from that, the next focus is this week’s USDA WASDE report, which will give us the first picture of U.S. production now that harvest is mostly complete. Most expectations are looking for a slight reduction in yield and therefore production in the U.S., bringing in ending stocks as well. In South America, expectations are for a reduction in Brazilian crop, but a larger increase in the crop from Argentina.
• Energy markets have mostly come higher this week following an announcement from OPEC+ confirming that they will delay a planned December oil output increase by one month. Reuters estimates that OPEC production reached 26.33 million barrels per day in October, 195,000 higher than September. For crude, we will need to see how Trump approaches tariffs. If his actions align with his previous statements, this could weaken the Chinese economy and reduce crude demand. There is also speculation that a Trump win could lead to increased U.S. production, though it is already at an all-time high.
• Veg oils have been supported this week, with palm reaching two-year highs following the EIA release stating that usage in August for domestic biofuel production rose 7% from July and is on pace to exceed the current USDA forecast. October Malaysian palm oil stocks expected to drop by 4.6%.
• Canola prices have stalled this week, as fund short covering seems to be done with the majority of their exposure covered. Commercial money is not interested in buying at these levels, meaning that most interest for now is coming from farmer selling. Weekly crush rate dropped 10,000mt last week, but remains positive at 237,000mt, with the crop year crush to date at a record 2.823mln t. China is notably absent from the market currently, despite margins looking positive, as they are already committed to importing 3-3.3mln t of Canadian canola.
• MATIF rapeseed prices have largely followed canola this week, struggling to climb back to recent highs. The large currency moves following the election provided some strong support for prices. In Australia, harvest is progressing well, with quality so far looking good—slightly better than expected. Given the strong flat price, farmer selling has been positive.

Oats

• Oat markets have seen some trade activity in the last week, but in general, it has eased on previous weeks. This is largely down to reduced buying and selling appetite from both parties of the supply chain.
• Farmer selling in Scandinavia is slow and merchants are siting this as the reason for a lack of offers into the export market.
• Baltic milling oats are also now making their way to the market with some better-quality parcels being identified. 
• Feed oats have seen some sales out of Scandinavia into Spain over recent weeks, however, bids remain few and far between.
• Here in the UK, demand for Q4’24 is largely all covered, with buyers of milling oats now focusing on Q1 & Q4 of 2025.
• Farmer selling has also dropped with growers focusing on new crop drillings.
• Exports have been slow year to date, however, we could expect things to pick up in the new year, but a large program is needed to dent the expected surplus.
• Bottom line, markets are generally balanced by a lack of strong direction, but surpluses could weigh on the market in the coming months, unless there is a problem with new crop production prospects.

Pulses

• The UK bean harvest is now all but done, and moisture levels are starting to come a bit more under control. However, for those without drying capabilities, please contact your farm trading representative, as we have drying options available. Quality is not at the fore of people’s minds currently, as they battle to get the beans dry enough to start. However, early results for the northern crop were encouraging, so we remain positive towards there being more Human Consumption beans out there! Turning to the feed markets, with the high proportion of beans that have lost their spec during the drying process, the UK feed bean heap is getting bigger. Coupled with the more competitive pricing we are seeing on imported feedstuffs; it is likely we will see feed bean prices remain under pressure into the new year.
• Looking ahead, the UK is forecast to see a dry week, with the exception of the very top of Aberdeenshire, where some very light rain is forecast. Temperatures are again expected to be 2-3°C above the seasonal average, so another good week for the drilling campaign should be on the cards. France and Iberia, as well as very Eastern Europe, look to be following the trend of being slightly above average for the time of year, whilst the rest of the continent experiences more normal temperatures for this time of year. Little meaningful rainfall is forecast across most of Europe, although heavier rain is forecast in Southwestern France.
• The main threat to the quality of the UK bean crop continues to be the moisture levels at harvest, although growers are starting to gain control as harvest wraps up. Beans are being dried promptly, which should help preserve their quality. However, it remains to be seen if staining and bruchid levels will be low enough for the beans to meet Human Consumption grade. For beans that are fit for this grade, premiums are still available for high-quality beans, but buyers are becoming fewer. It’s essential to stay in touch with your farm trader and submit promising samples. If quality specifications are met, the beans may be eligible for an additional premium, while this option remains available.
• Feed beans have remained relatively unchanged week-on-week and continue to be uncompetitive compared to imported feedstuffs. Currently, they need to offer approximately £15-20 per metric ton less than other commodities to generate interest within compound rations. With a relatively heavy supply and demand situation, thanks to better-than-expected production following last year’s poor drilling campaign, and their lack of financial competitiveness for feed compounders, feed beans appear likely to move in only one direction.
• Last week saw the release of Labour’s budget, whilst yesterday saw the US Presidential Election being declared, with an historic victory for the Trump campaign and Vice President Harris conceding. This resulted in a round of USD strength, with the EUR being a big loser in the immediate aftermath amid concerns of what a Trump Presidency will mean for the EU. Currency is recovering slightly this morning following yesterday’s sell off. However, as those who remember the previous Trump Presidency, expect an increase in USD volatility in the coming months.
• With the recent good weather, drilling is continuing apace across the UK, even in the previously flooded areas of Northamptonshire and Bedfordshire. Your farm trading representative is ready to advise you on available contracts for the newly drilled crops. With robust marketing options, various seed stocks on hand, and a portfolio of cost-effective inputs—including Polysulphates, P’s + K’s, P-Grow, and FibroPhos to enhance yield potential—they are prepared to support you. We purchase from a broad range of regions nationally and offer competitive origination markets, with the added opportunity to upgrade any crops meeting specifications for human consumption pulses for processing at one of the UK and Europe’s most advanced pulse processing plants, earning an additional premium for your crops.
• 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

• As autumn drilling continues across lots of the UK, we are pleased to offer several varieties for urgent delivery including Dawsum, Beowulf, KWS Palladium and KWS Ultimatum. Alongside this, we have other quantities of varieties available with additional dressings. Speak to your farm trader to find out more.
• If you are looking towards spring drilling, we currently have tonnages of KWS Ladum and KWS Alicium available. KWS Alicium is the highest yielding Group 2 spring wheat on the current recommended list with a good disease package including orange wheat blossom midge resistance.
• For spring peas, we have multiple varieties available too including LG Adder, Kabuki, Daytona, Butterfly, and Concerto. We are also pleased to offer buybacks alongside these varieties. Please speak to your ADM farm trader for more information.

Fertiliser

• Market Overview: Amid global market volatility, the market for key fertilisers faces mixed signals with shifting demand and evolving geopolitical factors. Just as UK importers remain cautious, recent weather impacts and fluctuating energy markets have influenced domestic buying trends. Both natural gas and ammonia markets continue to respond to Trump’s recent election, with uncertainty around potential U.S. policy changes, particularly on energy exports and import tariffs.
• High inventory levels and expanded supply opportunities are shaping market dynamics as the year-end approaches. European demand remains subdued, with recent adverse weather impacting planting schedules and limiting near-term purchasing. Low demand for potash and phosphate contrasts with the growing availability of ammonia, as improved supply from regions like Trinidad and the U.S. Gulf has stabilised prices. India’s ongoing need for urea imports and potential off-season phosphate demand may provide some support in regions facing a generally bearish outlook.
• FX: The U.S. dollar experienced its most significant one-day rise since March 2020 yesterday as Donald Trump secured his presidential victory. Following this surge, FX markets are now focusing on central bank policy meetings in the U.S., U.K., Sweden, Norway, and the Czech Republic, with rate cuts anticipated in all but one of these sessions. After the recent gains, the U.S. dollar is expected to enter a period of consolidation.
• Natural Gas: European natural gas futures rose to above €40.5 per megawatt-hour, as investors were analysing how the Trump victory might impact the natural gas market and assessed potential disruptions to US production from Hurricane Rafael. Trump has expressed support for increased fossil fuel production and the construction of LNG facilities, but he may also consider limiting exports to lower domestic prices. Additionally, investors were uncertain about how a Trump presidency could affect the Russia-Ukraine transit agreement, which is set to expire by year-end. If Ukraine is compelled to cede some of its territory to Russia, it might facilitate concluding these negotiations and maintaining the current situation. Meanwhile, Hurricane Rafael strengthened to a Category 1 storm with winds up to 90 mph has already led to some platform evacuations.
• Urea: Despite a generally bearish sentiment in the global urea market, India’s recent tender through RCF, aiming to purchase at least 1 million tonnes, has limited significant price declines. In the Middle East, producers are maintaining offers, awaiting the outcome of the Indian tender before engaging in further negotiations. China’s daily urea production has declined, yet their domestic market remains oversupplied, with inventories exceeding 1.27 million tonnes due to ongoing export restrictions. These restrictions are expected to lift by Q2; however, the Republican Party’s recent Senate victory and potential control of the House raise concerns about possible U.S. import tariffs on Chinese goods, which could impact China’s export strategies. In the U.S., the NOLA market showed no clear trend, with November trades fluctuating between $311/st FOB and $318/st FOB amid weak demand. Brazil’s market remains illiquid, with approximately 1.4 million tonnes of urea either berthed or en-route, pressuring granular urea prices as buyers receive multiple offers but show limited interest. In the UK, sales were reported at $395-400/t CIF, down from $425/t CIF last week, indicating cautious buying behaviour as the market awaits the Indian tender results for clearer direction.
• Ammonia: Last week saw a rollover at $560/t CFR for November shipments into Tampa, reinforcing the view that the ammonia market west of Suez may be approaching its peak. Increased availability from Trinidad and the U.S. Gulf has strengthened the supply outlook, even as production outages at Algeria’s Sorfert and Fertial supported prices through October and into early November. In northwest Europe, buyers are resisting prices above $600/t CFR for spot material, despite bullish traders insisting that importers may eventually have to pay these levels.
• European demand remains limited, with downstream players constrained by weak margins and rising raw material costs. Without major upside expected for the rest of the year, buyers anticipate a softening of supplier offers by the end of Q4. Further declines could follow in 2025 as new capacity from the Black Sea and U.S. Gulf comes online by mid-to-late Q1. Potential demand from India for ammonia in DAP/MAP production may emerge, contingent on phosphoric acid contract settlements and downstream phosphate margins. Additionally, China’s anticipated economic stimulus package could boost ammonia demand within its industrial sector.
• In the UK, AN import offers have seen small declines. CF Industries’ December offer was changed to a January/February delivery window to reflect limited pre-Christmas demand however the level remains firm. Despite lower prices, demand has been minimal, likely still ‘dampened’ by September’s wet weather. Furthermore, urea continues to offer better value per unit of nitrogen, making it the more attractive option. However, given current ammonia and gas costs, AN prices are not expected to mirror the declines seen in urea.
• Reflecting industry perspectives on future ammonia production, CF Industries recently signed a joint development agreement with Mitsui to explore a 1Mt/year blue ammonia complex in the U.S. Gulf, with Mitsui set to take a 48% equity stake. In addition, CF entered an agreement with Japanese utility Jera for a 48% stake in the 1.4Mt/year Blue Point Complex in Louisiana, scheduled to come online in 2028.
• Potash: The potash market has experienced a notable increase in supply due to rising volumes from Laos, recovering exports from Russia and Belarus, and higher MOP exports from Canada. Despite this, robust demand and favourable affordability have helped balance the supply growth. Estimations suggest that MOP demand is nearing record levels in 2024. However, as imports surpass consumption, elevated inventories may exert downward pressure on potash prices in the coming year.
• Recent indications from Belarus about potential MOP production cuts, in coordination with Russia, of up to 11%, have positively influenced potash-related fertiliser stocks and market sentiment. Given that Belarus and Russia collectively account for approximately 35% of global MOP production, such output reductions could offer prices support in the short term.
• Phosphates: Prices have started to decline from recent peaks, with further drops expected in the near term, though tight supply should limit downside. Prices may stabilise or slightly recover by mid-to-late Q1. In India, DAP prices are down as the Rabi season window closes, following a 26% rise from May to October. Low stocks and possible off-season demand could support prices, but buyers are likely to restrict purchases due to negative import margins.
• Brazil’s MAP demand remains low, with stable prices at $635/t CFR, pressured by affordability and credit issues. TSP prices in Brazil have also softened as demand remains limited. In the US demand for the fall season is keeping prices supported, while production losses from recent storms have further tightened an already-tight market.

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.