Thursday 14 December 2023

Malting Barley

• The paralysis in the old crop malting barley market continues, as competing supply and demand uncertainties are stifling trade, leaving values unchanged on the week. As feed barley markets drift, quality premiums continue to grow towards the £100/mt mark. Expectations for a large spring barley crop in Europe continue to hang over the market, and we see no appetite from consumers which adds to the bearish tone.
• It is all to play for though, and with increasingly unpredictable weather conditions, we cannot be certain about the dynamic of the new crop market until the crop is in the barn and quality is known. 

Rapeseed

• Ag markets have been mixed this week, pressured at the start of the week following on from Friday’s USDA report which was mostly in line with expectations but featured slightly lower corn stocks and Global soybean stocks slightly above expectations. US ending stocks were left unchanged from November at 245 million bushels, world ending stocks were changed but less than expected, down to 114.2 million tonnes from 114.51 mmt last month (112.76 million tonnes expected).
• In South America, Brazilian soybean production fell in line with expectations to 161 million tonnes. CONAB has also updated their Brazil production figure to 160.177 mmt, down over 2 million and Safras have their estimate at 158.23 mmt from 161.38 last month. Argentinian soybean production was left unchanged from Nov at 48 million tonnes.
• Following the report, the trade continued to focus on Brazilian weather forecasts this week. Risk premium coming in and out of prices following hot and dry temperatures for a few days this week but only to be reversed with scattered showers returning into next week’s forecast for Matto Grosso, and even more rains in the following week.
• USDA has announced a new soybean sale each day so far this week to both China and unknown, showing that demand is improving. This has given some support but not enough to outweigh Brazilian forecasts.
• Energy markets are lower this week as we have seen reports that Russia’s seaborne crude exports have been increasing. This week’s EIA stocks did give some support as we saw the year over year surplus nearly cut in half. Crude oil stocks stand 9.247 million barrels below the 5-year average. Imports for the week are at 6.517 million barrels vs. 7.508 last week. The refinery operating rate was 90.2%, 0.3% lower than last week and 2% below last year. Veg oils have followed this week as we have seen lower export figures this week, dropping 5.5%.
• Canola is close to unchanged this week and has been closely following soybeans as they have traded South American weather forecasts. Canadian cash bids are now well below $15/bushel which has slowed farmer selling.
• MATIF rapeseed has followed the wider complex lower this week. The market has reached oversold territory towards the bottom of the recent trading range.
• Sterling trades at 1.15800 giving support to UK prices.

Oats

• European oat markets remain in a challenging position with high freight rates from the Baltics and Scandinavia inflating feed and milling oat prices to levels that buyers are reluctant to pay.
• However, due to an overall lack of sellers, buyers could be forced to accept these higher prices if they have no alternative.
• The flow of Ukrainian product being transported to the Baltic states for export combined with early icing of some Baltic seaports is largely the cause for the elevated freight rates. But, it is expected that rates will ease once we get into the spring months.
• Scandinavian oat sellers continue to be reluctant due to the uncertainty of high mycotoxin levels and with Swedish exports forecast to fall by 50% this puts more pressure on Finland to cover the shortfalls.
• Spain remains a buyer of feed oats but buyers have been less evident over the last week, this could be due to the lack of offers available, or they may have found an alternative substitute. 
• Here in the UK, milling oats remain difficult to buy despite prices increasing week on week with consumers looking to cover nearby positions.
• Domestic feed oats continue to price themselves out of feed rations, but given the increased fallbacks by the millers much of the ‘feed grade’ is making its way into the human consumption market.
• Heavy rain continues to dampen the prospects of further winter oat plantings and this is putting extra pressure on the spring crop to deliver the supplies that are needed next season. But if conditions are good we could see an increase in supplies due to high plantings.
• Bottom line, oat prices continue to be supported by the lack of supplies and strong demand, but the question is: “are the oats there to buy in the EU or will we need to import from Canada?”.
• As for 2024, all eyes are on the weather.

Fertiliser

• Globally granular urea pricing is relatively soft with lacklustre global demand continuing to weigh on sales.
• In the UK, a stronger GBP through Nov/Dec has helped to lower urea prices although the inclement weather has muted demand as winter cropping areas are impacted.
• Once spring cropping is established, it is likely to bring demand in 1H 2024. Winter drainage is likely to be high and low SNS levels in soils could drive more demand for nitrogen products in the UK.
• Nitram remains available for March delivery. As well as inhibited urea for Feb/Mar delivery, ADM has SKW Piamon 33N 30SO3 available for Jan delivery also.
• Phosphates and Potash are range-bound trading within a £15/t spread over the last month.
• NPK(S) blend capacity is filling up for Jan & Feb. Those in need of NPK(S) should consider purchases to get product in a timely fashion.
• Alternative PK products are also available for spring delivery for those looking at alternatives to the straight-bagged products.
• Liquid UAN grades are also available for spring delivery at the buyers call through ADM.

NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.

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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.