Welcome to the final ADM Agriculture market report of 2023 – returning on Thursday 4 January 2024.
Another year of significant variability, which now seems to be the norm, with global supply chains again being tested in ways that are proving to be testing for both origination and destination alike. We thank you for your engagement across this calendar year and look forward to a prosperous 2024.
We wish you all a very happy Christmas and holiday season.
Wheat
- US wheat has traded up just under $2/t w/w in another ‘up and down’ week. After the recent flurry of US sales, the market seems to have consolidated around the $6/bushel mark waiting for the next directional move. US corn prices are testing recent lows, and with the absence of any bullish stories plus improving weather conditions in South America, the market may well move sidewards over the next few weeks.
- European prices have traded €4/t lower w/w, as the confirmation of continued shipments from the Black Sea region weighs on export prospects and prices. The latest wheat tender results for Algeria and Egypt are reported to be Black Sea-based, and with Ukraine’s and Russia’s crops being talked higher, this will continue to impact upon the competitiveness of EU supplies. EU soft-wheat exports were reported as being down 16% y/y through December 17th at 14mln t, with Morocco, Nigeria, and Egypt as the top destinations.
- The seasonal lull seems to have started early this year in the UK, as market liquidity declines with the arrival of the festive period. DEFRA released their initial 2023 wheat production number at 13.98mln t, a total derived from an area of 1.72mln ha and an average yield of just over 8.1t/ha. While this was much in line with trade expectations, the perceived outlook for a season of high imports, and minimum exports, will keep supplies adequate as we move towards the ‘lower weather-driven’ crop expected from the 2024 harvest.
Malting Barley
- For another week, malting quality premiums are supported at historically high levels of almost £100/mt.
- Trade is very slow, as origination remains close to non-existent, meanwhile, demand is difficult to pin down as we head towards Christmas.
- New crop remains an attractive sell for growers and premiums over feed look strong considering the expectation of a plentiful spring barley S&D.
Feed Barley
- Feed barley has found good demand from domestic buyers over the last week, as it continues to trade at an attractive level vs competing products. Farmers are not selling feed barley today, which is keeping the market tight and has helped to support prices over the last week.
- Export pace is still sluggish at best, and the UK has only just surpassed the 300Kmt mark on old crop shipments. There is some way to go to our expected volume, and for now, at least, the UK does not calculate into any significant demand.
- If we see any meaningful farmer selling in the new year, then we expect we’ll need to hunt for more demand.
Rapeseed
- This week soybeans are lower as we saw pressure early in the week due to little to no rain being received in Brazil. We have now started to see rain bringing needed relief to crops, although it may be too late to see any real improvements. Rain is expected to last for at least the remainder of this week and likely next. AgRural’s most recent report says that plantings in Brazil are 94% complete. Safras and Mercado say that Matto Grosso bean production is estimated at 39.2mln t vs. 45.6mln t in the previous estimate. ITAU BBA dropped their crop estimate from 158mln t to 153mln t, compared to USDA’s 161mln t.
- In the US we have seen the streak of USDA sales continue with further sales announced to both China and an unknown most days this week. Export inspections gave the market some support at a three-week high of 984,410mt. Cumulative inspections year to date are 19,741,363mt which is 41.3% of the USDA’s forecast for 23/24 vs a five-year average of 39%.
- Energy markets are higher this week as crude has seen some support from Red Sea cargo strikes. It is estimated that 12-15% of all global traffic passes through the Suez Canal and that around 1% of all global trade has already been diverted or stopped. The US saw record oil production last week with output at 14.3 million barrels per day. EIA crude stocks rose 2.909 million barrels, 25.448 million barrels above last year, and 3.299 million barrels below the five-year average. Crude oil imports were slightly higher at 6.75 million barrels per day vs. 6.517 last week. We also saw lower Saudi production in October and a Reuters poll projecting a 2.2-million-barrel decline in crude stocks. Russia said on Sunday that it will increase oil export cuts in December by potentially 50,000 barrels per day or more.
- Veg oils are also higher this week, following energy, as well as Brazil’s energy policy council raising the mandatory biodiesel mix from 12% to 14%, starting in March, and increasing to 15% in 2025. This has led to demand for biodiesel in Brazil, now expected to grow to 8.9 billion litres in 2024 from 7.3 billion litres this year. Malaysia’s Nov exports fell 5.9% despite being expected to decline 5.3% and imports in November grew 1.7% from last year. India November imports of veg oil rose to 1.16mln t in November from 1.03mln t in October, and palm oil rose from 695,076mt to 863,492mt.
- Canadian canola is close to unchanged on the week and remains in a strong downtrend since early September, keeping cash bids in Canada below farmer expectations.
- MATIF rapeseed has remained at the bottom of the recent trading range this week, finding support at €425. Australian crop is thought to have increased, now to over 6mln t.
- Sterling trades at 1.15300 supporting UK prices.
Oats
- Oat markets have been exceptionally quiet this week, with the majority of participants happy to get into the festive cheer and put off further trade until the new year.
- Reports from key exporting EU nations are that supplies remain tight and that we may need to see further imports from areas outside of the EU to satisfy milling oat demands.
- Feed oats are offered in some parts of Scandinavia, but at DON levels that are very close, and in some cases, higher than the max recommendations of 7500ppb. Aside from this, sellers are few and far between.
- Here in the UK, millers continue to have demand for nearby positions with logistical challenges for some exacerbating tight supply issues.
- Farmer selling is non-existent, and this begs the question; how much more is to be sold from farm?
- Bottom line, the oat market outlook appears to be tight, but only time will tell as to whether the UK will need to import oats at some point or whether we can make do with the supplies we have.
Pulses
Peas
- As we wind down for the Christmas period, the Long Sutton facility will be closed from Friday the 22nd, re-opening on the 2nd of January to process marrowfat peas on line six to kick start 2024.
- Our 2024/25 buyback contracts are continuing to be booked strongly, with no space remaining on the Christmas 24 movement for marrowfats. Please book now for pre-Feb movement.
- Feed peas remain in strong demand for Q1 & Q2. With many homes willing to pay a premium for larger quantities it is a great time to become a seller.
- As for human consumption peas, the developing situation in India regarding import duty has large exporters of peas prepared to shift their supply into India. This could open the door for UK HC peas into destinations across Europe, which is helping support the market at current price levels. Please get in touch with your farm trader for a competitive offer on large blue, marrowfat, and yellow peas.
Beans
- The market has settled even further into its festive slumber ahead of Christmas next week, with little origination to speak of. The focus has been very much built around logistics and execution over the last week, as feed mills continue to run and produce feed throughout the festive period. The little engagement that has been seen for early 24 has resulted in good farm gate levels for growers, whilst the market remains supported, as with the pricing of the competing mid-proteins in the compound ration still looking better value in the new year. We remain of the opinion that levels will depreciate in the new year to compete for domestic demand.
- Despite the rain and flooding, we’re sure you have all seen on the news in areas of Australia, that the bean harvest continues to progress, approaching over 80% complete now. Quality questions remain, with staining certainly on many buyers’ radars following the considerable rainfall seen throughout the harvest. Offers are starting to make their way into the market for mid-24 Q1 onwards, and initial indications are suggesting that levels are aggressive, further adding to our opinion that UK domestic values will need to come lower to remain competitive.
- Another quiet drilling week this week, with little progress being made with the wet conditions. If the dry and windy conditions we are currently seeing continue, we may see some drilling pre-Christmas, however, the focus will likely be on winter wheat. The little activity that we have heard about this week has only been on the lightest of land, with reports that machinery is struggling to travel on the heavier areas. We have futures-related bean contracts available for CY24, so please speak to your farm reps for more information.
- Merry Christmas and a Happy New Year from the Bean Desk – we look forward to speaking to you all in 2024!
Seed
- Spring seed is extremely limited across the board with all key cereal varieties sold out. However, we still have pea seed available alongside our market-leading buybacks for marrowfats and large blues.
- We also have a wide portfolio of maize seed available, including varieties best suited to forage, grain, and AD. The varieties also have a range of maturities, ultra early to late, meaning there is something to suit everyone.
Fertiliser
- Red Sea shipping issues could potentially impact urea exports from Egypt, as 20% of exports travel through the Suez Canal.
- Shipments from the Baltics traveling through the Suez are now a concern, with India having just announced a further urea tender to close on January 4th.
- Meanwhile, urea in the UK remains relatively flat, as we head into the Christmas break with most buyers now happy to sit it out until Q1.
- Urea arguably is trading in the UK at extreme discounts to AN at present. We have urea (granular & prilled) as well as urea-sulphur compound, Piamon 33N 30SO3, available for Q1 delivery 2024.
- European gas pricing has been weak, with levels seen only twice before in 2023 for a short period (May/Jul), and before that, not seen since July 2021.
- AN prices are carrying a significant premium against urea as we approach the new year and spring. A further AN plant shutdown has been announced this week though in Europe.
- Phosphate prices are static, with TSP and DAP remaining unchanged, bar some regional differences for the last four weeks.
- Potash is slightly weaker with some discounts available to prices two weeks ago dependent on region.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.1540 | 1.2670 | 1.0980 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Jan 24 | 155-170 | 180-195 | 240-250 | 355-360 |
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.