Thursday 11 January 2024

Malting Barley

• Malting barley premiums for old crop are still looking attractive at around the £100/mt level, if growers have a surplus left on farm that is good quality, then this looks like a very attractive sell against a lack of demand in the market and beer sales on a downward trend.
• New crop demand is also lacking against a backdrop of a potential big spring barley area and relaxed buying demand. We do, however, have a variety of new crop malting contracts to offer.

Rapeseed

• Soybeans are lower this week as the trade continues to focus on favourable weather conditions in South America and the fact that we have seen a lack of any fresh export demand. The market hasn’t reported any new sales being announced since December 19th. CONAB released their new crop estimate this week at 155.3mln t down from 160mln t last month, though this is within the range of trade estimates following last month’s weather. The forecast for this month still looks favourable with the possibility of some dryness towards the second half which will assist with harvest. Argentinian weather is also still favourable with recent rains and an upcoming dry spell to let farmers finish off their plantings.
• This month’s USDA report is on Friday, the trade expects a reduction in Brazilian production of 4.74mln t down to 156.26mln t with a range of guesses from 151mln t to 161mln t. Argentina’s production is expected to stay unchanged to slightly higher. US ending stocks are estimated at 0.243 vs. 0.245 last month and world ending stocks were estimated at 111.58mln t vs. 114.21mln t last month. We have seen some position squaring ahead of Friday which has provided a choppy trade.
• Energy markets are lower this week with Crude staying within the recent range between $70 and $75. The main story this week was Saudi Arabia announcing that they will cut prices to Asian consumers to the lowest level in two years, which added some pressure. Oil and fuel tankers continue traffic in the Red Sea despite attacks as December movements seem stable. We saw a report from EIA predict that OPEC+ production will rise by 600,000 barrels per day this year as production restraint agreements phase out. EIA crude stocks rose 1.338 million barrels and now sit 7.204 million barrels below last year. Crude imports for this week are 6.241 million barrels vs. 6.895 last week. The refinery operating rate was 92.9%, down 0.6% from last week vs 88.5 five-year average. Veg oils were mixed with palm up 0.72%.
• Veg oils are mixed this week with soy oil following the soy complex lower, but Malaysian palm higher. Malaysian Dec palm oil supplies dropped 4.6% from November as production dropped 13.3% and exports dropped 5.1%.
• Canola is close to unchanged this week as we have found support at $611 from the low back in May last year. We did see some negativity from improved farmer selling, despite cash bids not sitting below $14/bushel alongside reduced export interest. Farmer selling still sits well behind the seasonal average. There is thought to have been some Chinese interest on Tuesday which fuelled positivity as Chinese domestic rape oil prices improved $20/mt, though we will need to see something more significant to continue to push prices higher.
• MATIF rapeseed has followed soybeans lower this week to break through recent $430 support for the first time since October and we see the next support level at $418 for now. MATIF rapeseed and canola are close to parity for the first time this year. The trade will likely await the outcome of the USDA report now to find any significant direction.
• Sterling/euro trades at 1.16200.

Pulses

Beans

• Another positive week of engagement which has been good to see, although volumes continue to be stunted. As with last week, farm gate levels have remained firm, however, markets often appear most bullish at the top. From a consumption point of view, what have we seen over the last 6 weeks in terms of price? Wheat, barley, soybean meal, rapeseed meal, and sunflower meal prices, amongst other commodities, have all come down. During the same time, beans have remained flat, to maybe even £1-2 firmer. This is something we have also seen replicated in the continental markets. We might not be there today, but it certainly feels like beans are on the cusp of cracking and having to head lower again to buy their way back into the ration, as beans will need to be more aggressive to maintain the demand.
• Australian beans continue to look great value for the most part, especially within the human consumption market. Geo-political instability continues in the Red Sea, with Houthi rebels increasing the intensity of their attacks against shipping, however, the presence of both US and Royal Navy vessels means these are being successfully intercepted and repelled, reducing the impact on shipping. Until we see a decline in these attacks though, it is unlikely we will see an increase in commercial traffic, meaning that on the nearby, at least, Australian beans may be a little less appetizing than they otherwise would be.
• Row, row, row your boat… Drilling again continues to make slow progress as significant portions of the growing area remain waterlogged. However, we are starting to see some clear days in the forecast, which is helping dry things out, and so if this continues, we should see machinery starting to be able to travel and drilling becoming more of a reality. We are still some way from this yet, as there is also some more rainfall forecast out there, so very much a region-by-region thing. With comparatively good availability for spring bean seed, pulses in general look like a good option, with the bonus of being comparatively self-sufficient in terms of inputs and putting some much-needed nitrogen back into the ground.

Peas

• Feed peas are in strong demand for Q1 & Q2 OF 2024 with on-farm values rising week on week to try to capture said demand. We are buyers of feed peas across any period for the next six months, please contact your farm trader for more information!
• Human consumption pea demand remains firm, particularly for large blue peas and marrowfats. With prices for large blues firming on the week due to shortages, it is a great opportunity to market your peas should you have any available. Many consumers are well covered for yellow peas with the current supply.
• Our 2024 buyback contracts are still seeing strong demand week-on-week, with the pre-Christmas 2024 movement now having very little availability indeed for large blues/marrowfats. Pre-Feb’25 movement slots are now starting to disappear too, as a result, so please do get in touch for that window before the opportunity closes.

Fertiliser

• Granular urea has seen over $15/t increase FOB Egypt in the last week.
• Further news from the Indian tender is still awaited, but participation in the shipments with Chinese urea is highly unlikely.
• UK urea prices are slowly digesting the news of high FOB pricing, but current weather conditions are keeping nitrogen demand muted.
• UK AN prices are under pressure from UK urea levels despite Egyptian FOB values rising. AN prices are at a significant premium to inhibited urea at present.
• MOP prices are relatively subdued, and some business is being done on MOP, TSP, and 0PK blends.
• NPK pricing is expected to rise on the back of DAP price increases that have been seen as the UK approaches reported replacement levels.

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.”

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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.