WELCOME TO THE ADM AGRICULTURE WEEKLY MARKET REPORT
Wheat
- After trading at a 2-year low last week, US market has stabilised, trading up 2cents/bushel on the week. Declining US crop ratings, firmer oil prices on proposed Saudi and Russian production cuts, and recent releases projecting lower Canadian and Australian wheat crop, have supported the move off the recent market low. Additionally, renewed drone attacks on Ukraine’s agricultural infrastructure have traders again looking to price in ‘war premiums’ into price quotations.
- European prices have traded down just over €1/t w/w, as a sluggish start to the EU campaign, and confirmation of a private trade deal between Russian and Egypt for just under half a million tonnes of wheat weighs on values. Non-EU exports were reported at just over 5mln t a/o 3 September, down 32% y/y, with France accountable for less than a 1/5th of the total volume shipped. The Russian trade with Egypt, threw uncertainty over the recent announcement of a $270/t Fob ‘export floor’ , as the reported price worked out lower. However, this was counted by comments stating that private, and government-to-government deals are not included, and only serves as a level for normal day-to-day export quotations. With internal talk that the Russian wheat crop is getting bigger (now seen by most over 90mln t) and exports are being projected at around the 50mln t level, the Egyptian trade is based on, one set of rules for one, another set of rules for the others.
- UK prices have traded down £1.50 w/w, albeit the spot squeeze on supplies has kept the spot premiums in place across much of the north, and west of the country. While the UK has become a bit more competitive, we are still some ways away from being export competitive, especially in the deferred positions. The squeeze on supplies should be short-lived, and while they offer growers good value, the increased availability of supplies for the 2nd quarter of 2023/24 (OND) should erode any remaining premiums. The fundamental outlook for the UK remains unchanged, with a top-heavy balance sheet, and lacklustre demand, from both domestic and international buyers.
Malting Barley
- Malting barley premiums have drifted over the last week, as the lack of consumer interest starts to bite.
- Domestic and European maltsters have adequate cover for the coming months and are not seeing additional demand from the brewing industry to stimulate another round of purchasing. Meanwhile, farmers continue to sell into strong premiums after the arrival of what is a very usable crop overall in the UK.
Feed Barley
- The feed barley market continues to get squeezed by the lack of origination, a seasonal trend that we usually see at this time of year as growers focus on other tasks.
- Barley maintains good value in domestic feed markets which is supporting inclusion rates, as a result we are seeing the spread between wheat and barley start to narrow as the market attempts to ration demand.
- The export market is very quiet, as cheap EU origin feed wheat is outcompeting UK feed barley in most nearby destinations.
Rapeseed
- It has been a quiet week with US markets closed on Monday for Labour Day, we lacked any significant news to push prices in either direction. An increase in attacks from Russia in Odessa and Kyiv lent some support, along with several fires reported around agricultural port facilities near Izmail.
- Soybeans are unchanged so far on the week following continued elevated temperatures in the Midwest. This is expected to give way to some decent rains next week which hopefully will not come too late to help the crop before harvest. Crop conditions dropped an expected 5% this week to 53% good excellent though rain prospects capped any gains.
- The USDA has announced further sales of beans, all to unknown buyers.
- CONAB kept their Brazilian soybean crop unchanged at 154.6mmt vs the 156mmt that the USDA reported.
- Energy markets have continued to edge higher despite rumours of weaker demand as Saudi Arabia and Russia have both extended their production cuts. Veg oils have taken back any gains made last week though India’s veg oil demand is expected to increase 18% 22/23 to 16.5mmt with the majority being palm oil.
- Canadian markets are also down on the week as harvest progresses in Saskatchewan to around 40% following weakness from oils. The spread between Canola and Soybeans had been widening for some time which eventually came in slightly during this week.
- Matif Rapeseed has had a negative week now edging back towards the €440 support level that we saw last month. Nearby sellers are still trying to find a home which caps any significant uplift in prices though overall farmer selling is very quiet at these prices.
- Sterling trades at 1.16400 down from a high of 1.17300, lending some support to UK prices.
Oats
- Milling oat markets remain well supported following the tight balance sheets reported in Canada and Australia over the last 2 weeks.
- Buyers in Spain continue to show demand for feed oats with more cargos trading over the last week for Sept/Oct positions.
- Milling buyers in the EU are still yet to show their hand, however reluctant sellers from Scandinavia could increase markets in the coming weeks.
- Here in the UK, millers continue to be buyers for the nearby positions, however farmer selling remains poor. Good weather this week should see a large amount of remaining oats harvested, but a further week will be required to assess the quality.
- Domestic feed demand remains light, however with some samples testing sub 40kg/hl we may need to force some tonnes into the UK market.
- Sample analysis of UK oats processed through ADM’s lab are showing an average of 50.7kg/hl and 50.9kg/hl for winters and springs respectively, however we continue to anticipate the springs average to deteriorate in coming weeks once the later drilled crops are harvested.
- Bottom line, a tighter global oat balance sheet could see oat prices supported in the coming weeks and the spread between milling and feed could widen.
Pulses
- Peas
- The pea harvest is all but done, a handful of growers still have the crop in the field which are expected to be cleared up by the beginning of next week. Yields for large blues and Marrowfat peas are down strongly year on year with an average of below 1t/acre on marrowfats and just over that for large blues. Yellows have had strong yield performance; however, most growers have seen an increase in yields YoY and are in line with the 5-year average.
- Quality overall on the crop starting with Marrowfats still looks strong, bleaching figures at an average of 8% bodes well for those who booked onto our marrowfat buyback with no bleaching claims and a bonus for under 10% bleached. To quantify that, as of today over 84% of our contracted growers who we have in-took at Long Sutton thus far have received a bonus. Cracked seed coats and insect damage remain low on average and we have not seen any issues regarding quality in the plant to this point. Moistures at the farm sample stage appeared high but we have partners who can dry before reaching site as well as growers having options to dry on farm.
- Price direction wise, Marrowfats remain in demand and therefore prices on farm have held at a high level, growers currently appear to be in a standoffish position given the low yields overall making them reluctant to sell despite levels of between £550 – £600/t ex being available to them. Green peas are also in high demand particularly for sub 10% bleached peas, prices having risen by over 15% on farm in the last month as the quality green peas seem few and far between. Please contact your farm trader for a competitive bid.
- We continue to produce marrowfat peas at Long Sutton for the remainder of this week, Large blue peas will be next on the list to produce before doing any yellow peas. Please ensure samples are into our lab with ample time, we will not bring in any product for which we have not seen sample results.
- Beans
- U.K Bean harvest is still incomplete, at around 90% completion as we await some of the final crops to be cut, current yield average of around 2.9 t/ha is down YoY.
- Despite the low yields we are still expecting an overall crop size of just over 600,000 tonnes, on paper this leaves the U.K with an exportable surplus of over 200,000 tonnes– the majority of which will be feed.
- Quality is poor in comparison to last few seasons, human consumption quality is difficult to find with staining levels and high insect damage, this does not mean there will not be opportunities for those who have met HC grade, be that at Long Sutton or export at one of our ports. Please ensure you get your samples into our labs as efficiently as possible to get your results.
- Slow farmer selling and a general lack of demand has seen the market remain neutral week on week which little price movement to get farmers appetites up.
- U.K beans at 10 euros more expensive than the Baltics coupled with the cheap value of Russian Peas as a protein source is making bean bids few and far between export wise, although we do see potential demand coming into the market from Africa over Q4.
Seed
- Autumn seed processing is well under way, with seed making its way on to farm. KWS Dawsum is proving to be extremely popular, with great on farm yield results and maintaining a high specific weight.
- Winter barley seed is now extremely limited across the trade. However, we do still have availability of LG Caravelle, the highest yielding two row feed barley on the AHDB RL.
- The AHDB harvest results are showing great promise for Group 3 soft wheat Bamford and Group 4 feed wheat LG Beowulf, both of which will have seed commercially available for drilling autumn 2024.
- Cover cropping is a fantastic way of improving soil health by increasing organic matter, reducing compaction, and preventing soil erosion. Our overwinter cover crop mixtures include a range of species that will provide benefits to the land ahead of the spring and are a great fit for the new SFI scheme. We can also offer bespoke mixtures upon request and cover crops straights.
- As well as cover cropping, herbal leys are a big topic of conversation now. Our herbal ley contains a range of grasses, herbs, and legumes to help maintain the soil structure and improve water infiltration.
Fertiliser
- Granular urea activity FOB Egypt increased significantly at the beginning of this week. This followed the news that Chinese urea exports have seen a reduction of new export inspection certificates, so reducing all export volumes.
- India also has reportedly tendered again for no specified tonnage to be shipped by 14th November.
- Factors this week impacting GBP/USD have also driven imported urea prices higher alongside higher trades FOB Egypt.
- Terms for UK AN, Nitram 34.5 had been withdrawn at the start of the week as European prices followed other nitrogen sources higher through the week.
- Phosphate and Potash prices have also risen in the UK on the back of anticipated demand.
- Sales on PKs have been limited in the UK and concerns of P and K Indices on farm is beginning to grow. As good practice, ADM encourage regular soil analysis to ensure good nutrient management.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1650 | 1.2465 | 1.0700 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Sep 2023 | 155-165 | 176-186 | 210-220 | 355-365 |
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.
