Thursday 4 January 2024

Malting Barley

• We start the year with excellent malting barley premiums around £100/mt, which for growers who have the quality looks like a very attractive level.
• Trade is once again very slow, as origination remains close to non-existent, meanwhile, demand forecasts are gloomy with beer sales continuing to lag.
• New crop demand is tricky to find as the market is very relaxed ahead of the big spring barley area.

Rapeseed

• CBOT soybean prices have continued to trade the Brazilian weather changes this week, as we head into the two wettest months of the year. Forecasts indicate rain for the first two weeks of January, which will help improve conditions of later planted crops, although is likely too late for those planted first. The longer-term forecast for the second half of the month shows potential for some dryness. Due to improved prospects for South American crops soybeans are sharply lower, although crop estimates continue to reduce on early yield reports that are very poor. Most estimates sit between 150-155mln t. Matto Grosso saw the earliest start to harvest on record, in the week ending Friday 22 December, where bean prices closed down 14.8% for 2023 – the first time since 2018 that beans have been down year on year. Weekly export inspections were in line with expectations.
• Energy markets were lower last week, but have taken back most of the losses, as supply fears continue to linger due to unfortunate escalations in Red Sea attacks. The trade also expects a decline in EIA crude stocks this week, with initial polls indicating a 2-million-barrel decline, while the latest poll predicts a 3.7-million-barrel decline. Last week’s EIA report featured a much larger than expected decline in US crude stocks, which came in 7.114 million barrels lower vs the expected 2.6-million-barrel drop. This is 17.161 million barrels below last year and 8.397 below the 5-year average. Crude oil imports for the week were 474,000 lower than last week. The refinery operating rate was 93.3%, up 0.9% from last week, and 3.3% higher than last year.
• Veg oils are mixed this week, with soy oil following crude higher, but palm lower. Malaysia’s December palm oil exports are at 1,353,828 mt vs. November at 1,382,883. India’s Dec palm oil imports hit a 4-month high due to competitive sun oil prices. Dec imports rose 1.9% to 886,000mt. India’s total edible oil imports are 13.3% higher at 1.3mln t.
• Canola has followed soybeans lower this week, breaking through $650 support and continuing to head to new lows at levels we have not seen since June.
• MATIF rapeseed is also lower, still in the recent €430-€450 range, as we have not seen any significant news to push the market out either way so far.
• Sterling trades at 1.16000 pressuring UK prices.

Pulses

Beans

• Welcome back and a happy new year from the bean desk! The market is starting to wake up following the festive period, although we are just 2.5 trading days into the new year, and many market participants are still absent, there are certainly signs of a pickup in interest. Farm gate levels remain firm, although as we progress to later in Q1, we will likely see levels start to crack in the face of more aggressive competing mid-proteins within the feed sphere and beans must compete more aggressively for domestic demand.
• The Australian harvest is now all but done and offers from the market appear to be suggesting that the Australians are keen sellers, with human consumption beans offered at a discount to UK/Baltic/EU origins. However, with the ongoing issues surrounding shipping in the Red Sea, with Houthi rebel attacks showing no signs of slowing down, and a UN Security Council meeting calling for their immediate stop last night, we will likely see a firming of Australian values into North Africa, as more carriers avoid the Suez, instead opting to take the longer route around the Cape. It remains to be seen whether this is just a short-term blip or will develop into a longer-term trend. The former is more likely, as tensions in the Red Sea will probably lead to an increased Western (primarily US) presence in the region, which is counter to Iran’s long-term ambitions.                     
• There is the potential for a short-term blip in Australian values, but expect them to remain broadly competitive until we reach European new crop.
• A broadly soggy festive period around the UK has resulted in little progress to the winter bean area for the coming crop, however with the forecast showing the potential of reduced rainfall, and maybe even some sunshine and winds for the optimists out there, we could see some drilling over the coming weeks. Machinery continues to struggle to travel on most of the growing area, so we will likely see a swing to a larger spring area.
• Seed availability is still comparatively good for beans, with the seed desk having spring seed ready and eager to go! ‘But what will I do with all those beans once I’ve grown them?’ I hear you cry – well, we still have some availability for our CY24 futures-related bean contracts, so please speak to your farm reps for more information.

Peas

• As 2024 kicks off, Long Sutton aims to start the year strongly by processing marrowfats through line 6 before moving on to large blue peas in the upcoming weeks.
• Some growers are still considering options for their spring cropping ahead of the 2024 season – our large blue & marrowfat pea buybacks compete with alternatives available on gross margins across the board and provide residual nitrogen for the following wheat crop. Please get in touch with your farm trader for the full details of our buybacks, as well as preferential movement periods, which are being booked up swiftly.
• Market-wise, feed peas are still in strong demand nationally, with several homes enquiring about product weekly. Given the quality of the overall crop, values have remained firm through the Christmas period, and we are keen buyers of any open-market feed peas out there.
• From a human consumption perspective, large blue peas and marrowfat pea values are unchanged from the pre-Christmas report. Demand is high both domestically and in Europe for processed quality peas – under 10% for either commodity provides the best value.

Fertiliser

• India tendered for what is anticipated to be circa 500kmt of urea. The tender closes on 4 Jan.
• Direction on global urea markets may take some inspiration from deals concluded, but potential geo-political impacts on shipping routes from North Africa to India could adjust supply chain dynamics yet again.
• European demand is relatively muted and so is nitrogen demand in the UK. Weather conditions for UK farmers could be a driver of this as they have experienced 11% more rainfall than average this winter according to the Met Office.
• Despite continued reports of production curtailments in Europe, AN markets look soft today, given current UK urea values and corrections in global ammonia prices and gas prices.
• Potash prices remain relatively flat in the UK. Alongside TSP, alternative renewable PK fertilisers are available for spring delivery also from ADM.
• Global demand increases through the Christmas period on DAP, and pricing in the UK has followed replacement values despite minimal activity on the 18N 46P product.  
• UAN pricing is likely to follow urea/AN movements through spring in the UK. Deliveries of UAN and UAN+ATS can arguably be the most reliable and efficient of the three nitrogen sources given supply chain dynamics in spring with a 48-hour call-off guarantee. Speak to your farm trader for information on our liquid offering.

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.