WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- Down week for Chicago, with the market trading just under $6/t lower w/w. Bearish corn markets, improvements in winter crop ratings, and routine exports all weighed on prices. Yearly exports have now reached 10.99mln t, down 17% y/y and at 56% of the yearly projection, with just over four months of the marketing season remaining. Traders are also concerned over the lack of soft-red-winter exports, especially to China, and whether the purchases made recently will get shipped. Continued tension in the Black and Red Sea regions provides a soft underbelly of support to the market, which is currently more focused on the lack of demand for US supplies.
- EU prices have followed the weaker global trend, trading down €7/t w/w. Despite a slight pick-up in exports, now seen only down 5% y/y at 18.24mln t, EU supplies will remain pressured by continued shipment from the Black Sea region, and the arrival of Southern hemisphere supplies onto the global markets. On the weekly EU export report, it was reported that just under 1mln t of EU wheat had been shipped to China a/o Jan 29, and although we are aware of French wheat being traded, the market is questioning if the slow US demand is linked with the perceived increase from the EU and talk of further Chinese imports from Russia.
- EU farmers have started to demonstrate their frustrations, with many member states now complaining about Ukrainian imports threatening on-farm livelihoods. Spanish and Italian farmers are also joining protesting French farmers, and with the sheer political weight carried by the farming sector, this has led to the EU proposing measures to manage imports, before EU leaders meet in Brussels this week.
- UK market – well how low is it going? Old crop prices have fallen £7/t w/w, with the key May 2024 position now down just under £20/t since the turn of the year. The old crop market is well over-supplied, although we remain aware of the problems farmers have faced sowing for new crop, which will eventually reduce production and require a large carry-out. With the market projecting a higher carry-out this season, we continue to point out that for farmers also taking this marketing strategy, the market covers the cost of the carry into new crop and so looks attractive at this stage.
Malting Barley
- Old crop malting markets have started to feel greater pressure over the last week as feed/futures markets continue their freefall, and the lack of demand from the malting industry starts to bite. Meanwhile, quality is holding up for the UK crop.
- We see continued winter wheat plantings in better conditions, and spring barley drilling is underway. There is little market activity on new crop to comment on, only to say that consumer demand is still largely elusive and the market will now be closely watching the weather as the crop gets planted.
Feed Barley
- Feed barley markets continue to look weak for another week. The relentless downtrend in futures markets is further compounding the demand issue that feed barley faces, with domestic consumers holding good coverage over the next few months, and cheap corn awash across Europe. Meanwhile, the drop in process is motivating farmers to come into the market and sell. In the short term, we see no bullish argument to support feed barley prices.
- New crop markets have felt heavy pressure over the last few weeks and the spread vs wheat has widened out again to approx. £30/mt discount, a historically low level for this point in the year. Similarly to the gloomy old crop picture, new crop prices look vulnerable with increasing production forecast across the UK and Europe, meanwhile much-needed export demand continues to evade us as corn continues to push.
Rapeseed
- Soybeans trade marginally higher this week after hitting support at $11.92 on the March contract. Markets continue to focus on South American weather forecasts as precipitation in Argentina has been pushed back to late next week now. The arrival of rains will be critical to avoiding crop damage. This week Buenos Aires Grain Exchange has raised their Argentinian bean crop to 51mln t vs. the USDA’s 50mln t, however, they have said that current hot/dry conditions are beginning to take a toll as subsoil moisture declines. Basis in Brazil has stopped falling for now, which also lends support as US prices don’t need to play catch up. Harvest in Brazil is estimated at 11% complete vs. 5% last year and 7.6% average.
- Demand remains quiet as we are yet to see any USDA flash sales for soybeans this week with China yet to return to the market for any real volume.
- Energy markets have been mainly lower this week after crude oil’s $9 rally between 17th and 29th Jan. Global energy demand expectations continue to improve, although we do see oil continuing to travel through the Red Sea, with Russian oil practically uninterrupted by any attacks. Washington has reinstated oil sanctions on Venezuela, which will work to wind down any business between Venezuela and US entities. It is said that this will happen in April if President Nicolas Maduro’s administration does not stick to an agreement signed last year to accept conditions for a fair presidential election. Saudi national oil companies requested a reduction in their maximum oil output targeting, giving Saudi Arabian oil officials more control over their ability to build stocks.
- Veg oils have been mixed this week as palm oil has taken a breather from recent positivity, although the outlook for 2024 still looks very positive. Oil World raised global oilseed production by 3.1mmt to 626.2mmt and raised consumption by 2.4mmt. World veg oil consumption is expected to rise 7.5mln t with production only raising 3.3mln t. Malaysia’s palm oil exports have fallen 9.36% from last month to 1.227mln t. Indonesia set oil reference price at $806.40/mt for February compared to $774.93/mt previously.
- Canola is lower this week, finding its way back to contract lows, with March finding support at $606. North American crush margins are at the lowest they have been this crop year at $160/mt, down from over $200 at the start of the year. We have seen pressure from the Canadian farmer’s selling habits improving, although we still sit below the seasonal average of 56% at only 45% so far this year.
- MATIF rapeseed is lower this week, also returning to recent support at €420. This support looks strong, although the downtrend since November continues to make lower highs and lower lows. New crop prices also continue to decline as EU carryout looks to be the largest since 2018.
- Sterling trades at 1.17200 which has kept UK prices suppressed.
Oats
- EU oat markets have emerged from the final week of January with some fresh new crop milling oat trades being reported out of Scandinavia.
- Old crop milling oat markets remain a challenge with a lack of bids and offers.
- Feed oats remain exceptionally overpriced versus other commodities and yet buying interest remains into Scandinavia and Spain.
- Here in the UK, millers remain buyers of nearby positions, and with the AHDB’s latest S&D release, it will be interesting to see whether the proposed 83kmt carryout will be enough or whether we will see greater imports than the 25kmt which is currently estimated.
- Wet and unsettled weather remains an issue for UK farmers looking to drill new crop oats, and with the optimal deadline only two weeks away, we will need to see some windy, warm, and dry conditions to achieve this.
- Bottom line, milling oat prices in Europe have been easing for new crop over the last week with traders looking to lock into forward positions, however, the old crop market remains tight plus new crop is all to play for with very little spring oats planted year to date.
Pulses
Beans
- Beans continue to try and limit their competitiveness as pricing remains stubbornly static in the face of falling Ag commodity prices all around. In a trend that has been building for several weeks now, beans are steadily being formulated out of the ration, especially for ruminant consumers, due to their high relative values compared to other competing commodities such as wheat and rapeseed meal. We have been saying this for some weeks now, yet the market continues to remain at these prices, but levels are ripe for coming lower, with a balance sheet that is telling us beans need to find a home. With the continued march lower of ICE London Feed Wheat Futures, we are seeing record premiums being made on the old crop, and maintain that whether it be for nearby or deferred movement, beans are looking a great sell at the moment, especially compared to the values being touted for other arable grains and oilseeds.
- Financial instability continues in Egypt, one of the world’s largest consumers of faba beans, with reports that the Central Bank of Egypt (CBE) has implemented further, more stringent, currency control measures, limiting the amount individuals can withdraw daily in an attempt to reduce the number of black market exchanges into USD. The CBE has issued an official denial of these rumours, however, the economic situation remains tense. There is a meeting of the CBE’s Monetary Policy Committee (MPC) today, although it is unclear what decisions will be made, and what knock-on effect this will have on their buying-power for beans going forward.
- The weather has continued to improve over the last week, with reports of drills being seen out in the wild! The focus primarily remains on winter wheat, however we are also hearing reports of other crops going in. As we approach the start of spring drilling, there are some sickly-looking winter crops out there that have previously been flooded out – for those wondering what to do with them, you can always follow the advice from Queen’s Stomping 1984 record and Tear It Up, ready to redrill spring beans – just remember that pulses are a great alternative, especially in the case of failed OSR, and particularly if Kerb has been applied. Not sure how to market your newly drilled beans? Great news – there is still space to add them to the CY24 ADM bean pool, and there are still active buy-back contracts on offer, so talk to your reps and they will be more than happy to help.
Peas
- Feed peas demand has ramped up again as we begin the month of February. Consumers are looking for cover across the next two quarters before new crop peas arrive on the market. Due to the good overall quality of the 2023 crop and low yield, feed-grade peas are few and far between – we are keen buyers of feed to assist our customers nationally and will provide a competitive bid if there is any open market feed on farm.
- Human consumption wise, the market continues to be supported by the situation in India relating to import duty and their need to bring in large bulks of peas, pushing imported values consistently higher and therefore providing the UK with some opportunities to fill gaps in Europe. Supply is an issue in the UK due to poor yields from last season’s crop, which means prices on farm for any open-market peas are at a strong level in the current market. Please get in touch with your farm buyer for more information relating to price and movement.
- Our 2024/25 buybacks continue to be booked up consistently week on week. With seed supply now becoming shorter across different varieties, it is important to strike while the iron is hot, so to speak, to avoid missing out on a great gross margin opportunity for your spring cropping. As written in the bean report, pulses are a great opportunity in the case of failed OSR, especially if Kerb has been applied. Peas provide a great first wheat yield after growing peas. Please get in touch with your farm trader for more information.
Seed
- We have a vast portfolio of Sustainable Farming Incentive and Countryside Stewardship mixes available. There is also the option to make these mixes bespoke by taking out or adding in different components.
- Our selection of maize seed varieties remains good. We have different maturing varieties to pick from with high dry matter and starch content depending on the end uses.
- It’s not too early to start thinking about seed requirements for drilling autumn 2024. Due to the poor weather conditions causing issues with both drilling and establishment of seed crops, we would expect seed supply to be limited for the autumn across all varieties and commodities.
Fertiliser
- Granular urea has continued to trade higher on the Egyptian FOB market. Last trades were reported $10/t higher than the end of the previous week.
- UK granular urea markets have moved slightly higher but are still shy of true replacement values while business remains slow.
- Nitram is still available for April delivery, with 1-15 and 16-30 delivery options available at a discount to imported AN.
- Imported AN prices remain firm for spot movement, being the only AN available they can command a premium at present.
- MOP prices continue to be the weakest performer of the fertiliser nutrients with prices edging circa £5/t lower week-on-week.
- TSP remains stable, whilst DAP is beginning to see some softness in the UK market. Whether this is a longer-term trend is yet to be seen, however.
- Liquid UAN prices remain available for spring delivery as well as liquid N18 foliar for milling wheats.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1715 | 1.2670 | 1.0815 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Feb 2024 | 135-140 | 169-179 | 240-250 | 350-355 |
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.
