ADM Agriculture Autumn 2020 Viewpoint

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ADM Agriculture Ltd

Autumn 2020

Viewpoint Inside this edition of Viewpoint Market outlook Pages 2 and 3

ADM Agriculture’s combinable crop traders examine the main events influencing key commodity markets and how these might shape the outlook for the coming months.

2020 - what a year The year 2020 was not meant to be like this.

that a vaccine may allow us to return to some

Yes, we knew the 2020 UK harvest would

sort of ‘new normal’ is certainly evident, but at

be much lower than normal, due to the wet

best this hope lies months away, but hopefully

Putting British pulses back on the menu

autumn of 2019, but this was meant to be

in the first half of 2021.

Pages 4 and 5

the year when the UK got Brexit done in a positive way, when Boris Johnson capitalised on his election victory by levelling up the UK, and it was meant to be the year of the Tokyo Olympics and the European Football Championships.

In times like these, stability and security are much sought after attributes. ADM has provided these in abundance over the past 10 months and continues to do so. Financial security, the application and adherence to safe working practices, the maintenance of

Hodmedod’s aim to create a business to help get British beans and peas back into British kitchens is paying off, helped by a close relationship with ADM.

Seed, fertiliser & feed reports

It was always going to be a year of political

food and fuel supply chains, and continuing to

turmoil in the US with a presidential election

supply the basics of life in a sustainable fashion

Pages 6 and 7

due, but I don’t think anyone expected quite

in these extraordinary times are the hallmarks

the level of turbulence we have seen on that

of what we do.

Reducing reliance on chemical seed treatments; improving nitrogen use efficiency; fertiliser market update; Chinese demand underpins feedstuffs bull market.


Unlocking nature and enriching life have never

A year ago, no one foresaw the sheer number

seemed more important. ADM Agriculture will

of lives lost, economic damage and ongoing

continue to do this as we emerge from a year

extraordinary disruption to billions of people’s

no one saw coming into a better, hopeful 2021,

lives that the coronavirus has delivered. Hope

and a return to a satisfactory harvest.

David Sheppard, Director

People, the key to ADM’s success Page 8

ADM puts great emphasis on people development to help staff make the most of the great career opportunities on offer. Three colleagues give us their views.


Market Outlook Autumn 2020

Oilseeds Outside markets continue to dominate the headlines. Increased Covid restrictions globally have put stock markets on edge, and the outcome of the US election and upcoming Brexit deadline remain key. In terms of agricultural markets, the US soybean harvest nears completion as prices hit four-year highs. Increased demand from China and other importers, as well as drought-delayed production in South America, has helped support prices. Veg oils markets remain firm, with strong demand from China and other key importers. However, Covid is affecting labour availability and is raising concerns over demand. In terms of rapeseed, poor weather during harvest 2020 produced lower-than-expected yields across much of

After months of recovery, Matif rapeseed touched season highs. Whilst prices would need to appreciate further to attract imports, a risk-off approach is quickly adopted on news of further Covid outbreaks. Looking ahead to new crop, plantings in Europe are largely unchanged on last season. Ukraine’s area is lower than expected, so the trade will look elsewhere to fill the old crop-new crop gap. UK prices are following EU levels higher. Sterling will continue to have a big influence on ex-farm values until Brexit and Covid are resolved.

Will Ringrose - head of oilseeds




Following the very wet winter and dry spring drilling conditions, it was unsurprising to see some reduced yields during harvest 2020.

Quality and yield have been issues this year, as with conventional feed grains. However, while conventional wheat and barley have commanded good prices due to shortages, the same cannot be said for organic.

However, quality has exceeded expectations, particularly with spring crops, so the UK appears to have ample supply of milling oats.

Wheat is again struggling to find a home against better quality imports and demand for barley is limited, creating a carry-over from last year.

Whilst an increase in bean and pea areas for harvest 2020 was expected, the respective 38% and 28% upturns suggested by the Defra June survey surprised most in the trade. However, these sharp rises were offset by a decline in yields, with beans down 33% and peas 20% year on year.

Major EU producers have reported healthy yields. Millers have been able to take good cover early on, so oat values have not replicated the upward trend seen with other grains. The initial AHDB oat area projection for 2021/2022 is +200,000ha. Assuming average yields, this could produce a 30% production increase compared with 2020/21. However, there are many factors between now and harvest that could change this figure.

Jeremy Pope, trader – oats and milling wheat


Europe. Supply in the nearby positions appears ample, thanks to availability from Ukraine and Baltic regions, but looks tight for the rest of the season.

Milling oats and milling wheat (with a decent protein) should find homes, although prices are down currently on last year. That should improve in the new year. Feed beans are once again commanding a good price and should have no difficulty in finding a home over the next few months. Even the weakness of sterling isn’t helping prices at the moment. However, we will have to see if Brexit changes the fortunes of UK organics.

Tony Kenny, trader – organics

By contrast, higher production in the Baltics and sharply higher output prospects in Australia will result in a glut of human consumption beans globally. This is compounded by lower demand in North Africa due to Covid-19 and the resultant lockdowns. The small human consumption premiums we have seen this year are likely to remain, but potentially reduce when Australian supplies become available. Fortunately, the rally in global protein and cereal markets has prompted some domestic feed compounders to include beans in their winter rations.

Lewis Cottey, trader – pulses and IP maize

Brexit is posing the UK cereal supply industry an unprecedented challenge at a time when the production issues of last season have severely stressed the market’s ability to meet the requirements of domestic consumers. AHDB has highlighted the likely need for the UK to import an additional 1mln t or more in the second half of the current marketing campaign. The government’s inability to provide any comfort around a free trade agreement leaves UK consumers facing potentially significant food price inflation. At this time of uncertainty, working with a trading partner that has vertical integration throughout its business model is key. ADM Agriculture works closely with farmers, processors and end consumers whilst closely following legislative updates from government to ensure we can meet the long-term needs of the arable agri-food sector in this dynamic, seemingly ever-changing market place.

Jonathan Lane, head of grain trading

Feed Wheat Despite the projection of record global wheat stocks, wheat values have rallied to multi-year highs, buoyed by strong international demand and concerns over the effects of bad weather on new crop prospects. Whilst the Covid epidemic still clouds the global outlook for industrial, feed, and food demand, key international buyers have increased their activities to maintain sufficient strategic stocks. Additionally, if Russia and the Ukraine adopt export curbs to secure domestic requirements, the volume of exportable wheat may diminish over the latter months of the season, despite the expected rebound in Australian wheat production. The atrocious 2019/20 winter and spring conditions in the UK resulted in the lowest wheat crop for many years. This will leave the UK heavily dependent on wheat

Milling Wheat imports, despite reduced domestic usage. The bumper barley crop will help, but the expected rise in maize usage may be thwarted by lower EU and Ukrainian production. With the UK seen as a net importer this season, currency becomes a more important factor. Uncertainty over Brexit and our trading relationship with the EU will keep financial markets nervous, providing much currency volatility over the next few months. Turning to new crop, dryness across much of the US, Ukraine and Russia has resulted in growers sowing into unfavourable soil conditions, increasing the risk of poor crop establishment and development for the 2021 harvest. Recent rains may have helped, but it will be next spring before a better assessment of winter crops can be obtained.

David Woodland, trader – statistics and economics

The 2020/21 UK wheat harvest saw the lowest production figure in living memory due to a nightmare growing season followed by a stop-start harvest. Despite this, growers have been generally successful in producing a crop of usable milling quality. Regarding markets, it is clear that we have a heavy reliance on wheat imports to balance the books. German A wheat, which is equivalent to Group 1 13/76/250 specification, has been entering UK ports since July and will continue to do so for the rest of the marketing year. Premium direction is largely dependent on the Brexit trade deal. Should we get a deal, imports may become cheaper due to the rise in pound/ euro rate, which could see premiums fall. However, if no deal is agreed, large tariffs will be paid, which will push premiums up. That apart, current Group 1 premiums of £20-25/t look supported by the lack of overall supply. Soft wheat is in a similar position due to imports of Danish grain. But, with premiums now at £10-15/t, feed growers may want to lock in a percentage of their soft wheat crop.

James Forster, trader – northern milling wheat

Malting Barley Crop 2020 will go down as one of the worst malting barley harvests on record. Less than 25% of barley has passed as malting due to high nitrogen, very poor germination and weathering. It has also been a disastrous year for the brewing and distilling industry. Covid-19 saw UK beer sales fall by around 7% in the first quarter of 2020, with pub sales down over 15%. Malting barley demand was reduced by up to 20%. In addition, there is currently no export demand due to Brexit. Any future restrictions on the hospitality sector in 2021 will undoubtedly continue the negative impact on beer sales and malting barley demand.

Overall, crop 2021 looks much more bullish than bearish. The EU will have a much tighter supply and demand due to a big drop in the spring barley area, at a time when strong buying interest is expected from China. The UK spring barley area could be down by around 50%, while a positive Brexit could see the return of the export market. That said, there is a lot of weather to come, good and bad, and we can expect big currency swings due to Brexit. Currently there are plenty of attractive contract options available for Craft, Laureate, Planet, Diablo and Tungsten.

Stuart Shand, head of malting barley and projects


Putting British pulses back on the menu Nick Saltmarsh, co-founder and MD of Hodmedod Why don’t we eat more British-grown beans? In 2012 this simple question inspired the three founders of Hodmedod to create a business with the aim of getting British beans, peas and other pulses back into British kitchens. The question arose through research towards Transition Norwich’s vision for a more resilient city in the face of climate change and the urgent need to shift from dependency on fossil foils. If we are to feed ourselves more sustainably, then increasing the amount of vegetable protein in our diets is a big part of the answer. Pulses in particular require vastly less land, water and other inputs than animal proteins, with the unique benefit that the leguminous crops that produce them fix their own atmospheric nitrogen and so require little, if any, carbon-intensive fertiliser. And if our vegetable protein requirements can be more locally produced, then so much the better. Casting around for sources of vegetable protein that might be viably produced in the agricultural hinterland of Norwich, we were struck by the realisation that farmers grow large volumes of fava beans, also known as field or faba beans. The puzzle is that these beans are almost entirely absent from the British diet. At first we assumed that the beans must just


not taste too good. But, as any Egyptian will tell you, fava beans are truly delicious, whether cooked whole in dishes like ful medames, the spicy slow-cooked bean stew that’s the national dish of Egypt, or used as split beans to make ta’amia or falafel. And, while Egypt is the largest market for the best quality British beans, fava beans are widely appreciated across North Africa, Southern Europe and the Middle East. Fava beans used to be an important part of the British diet too. Introduced to Britain by the first Bronze Age farmers they were among the earliest farmed crops alongside wheat, barley, oats and peas. Harvested dry and readily stored, the beans and peas provided an excellent and reliable year-round source of protein. For centuries, these pulses would have been the main source of protein in British diets, eaten daily in dishes like pottage, the British equivalent of ful medames. But, as Britain later industrialised, increasing wealth and agricultural development meant that meat and dairy foods were available to more people more of the time. Only the poorest in society still relied on beans for their protein and so the beans fell completely out of fashion, stigmatised as the food of the poor. As a beneficial break crop and nitrogen-fixing legume, beans remained appealing to farmers. Their high protein content was attractive as feed for livestock and as a valuable export crop.

The British later embraced pulses from further afield – lentils, chickpeas, American Phaseolus beans – that didn’t carry the historic sigma of our own traditional beans As a nation we developed a taste for baked beans, a food of war-time rationing made entirely with imported navy beans, and the exotic delights of dal, hummus, falafels and other pulse dishes from around the world. But even where these dishes might be cooked with beans or peas from UK farms we typically turn to imported pulses instead.

“Together, we are increasing the potential diversity of UK farming and the range of foods we can produce domestically.”

ADM has worked with Hodmedod since its original inception as a company. Working closely with trader Franek Smith, Hodmedod has grown the business alongside ADM; starting first of all with Back in 2012, we thought surely the time

British fava beans into independent UK

was ripe to get over the historic stigma and

retailers, we’ve seen an extraordinary growth

start eating British-grown fava beans again?

in awareness of the issues that prompted

Before launching Hodmedod we carried out a

us to found Hodmedod. There’s now wide

small trial project, providing split fava beans

recognition of the impact of the food we eat

and recipe ideas in return for feedback. The

on climate change, biodiversity, and our health,

response was clear: barely anyone had tried

driving a dramatic increase in more plant-

them, almost everyone was astonished to learn

based diets and food products. Pulses have

that this crop widely grown in the UK, and

shed their unjust reputation as worthy but

there was an overwhelming appetite for more

dull ingredients to shine as the delicious and

British beans.

nourishing basis for exciting dishes from every

Introducing an unfamiliar product to the market is always a challenging task. To encourage and inspire cooks to try whole and split fava beans – Hodmedod’s first products – as well as the different varieties of Britishgrown peas we soon added to our range, we’ve

cuisine. 2016 saw global recognition of beans, peas, lentils, chickpeas and more through the United Nations International Year of Pulses,

“It has been a pleasure and delight to work with Nick, Josiah and their team to build a successful, wholesome and UK grown product range that allows British people to have access to British products,” said Franek. “Hodmedod is growing over 20% year on year as a business, which is great news for our growers, who take pride in growing British food that is available to the British public.”

Dal Festival as a national celebration of pulses.

relationship with ADM has helped the company grow its network of farmers and

We’ve been delighted by this growing interest British-grown beans and peas. Bean and pea

carne and chestnut and fava casserole.

snacks have quickly established a firm place in the market and more manufacturers are using ingredients like fava bean or pea flour.

processing multiplies their potential uses. As a

Eight years ago we struggled to persuade the

canned ready-cooked bean, the whole beans

press to feature fava beans as publications saw

are quicker and easier to use. They mill well

pulses as a niche interest and were especially

to produce a naturally gluten-free flour that’s

reluctant to publish recipes for hard-to-find

superb for batters, sauces, pastry and pasta,

ingredients. It’s encouraging to now see our

and even acts as a flour improver when used

traditional British beans and peas, along

with wheatflour to bake bread. Inspired by

with pulses of all kinds, celebrated by chefs

Spanish habas fritas, we started roasting fava

including Jamie Oliver and Hugh Fearnley-

beans to create a healthier yet deliciously

Whittingstall and regularly featuring in recipes

moreish snack. We’re also now working with

across the mainstream media.

a producer of miso and tamari to produce a


Nick Saltmarsh said: “Hodmedod’s close

from simple soups and hummus to chilli non

from dry, but we quickly realised that further

it into a wide portfolio over a number of

while in the UK we’ve helped launch the British

developed and published well over 100 recipes, in pulses in general and in particular the use of

Fava beans are excellent and versatile cooked

just a small product range, and expanding

fermented fava bean umami paste.

We hope and expect to see even more British

In the eight years since we first launched

kitchens over the coming years.

successfully trial UK production of lentils and chickpeas. “Together, we are increasing the potential diversity of UK farming and the range of foods we can produce domestically.”

beans, peas, chickpeas and lentils in our


Fertiliser Report Market Commentary

Tighter environmental legislation and increasing concern among consumers over climate change will continue to ramp up pressure on the farming sector to reduce greenhouse gas (GHG) emissions.

Entering Q4, it’s apparent that UK fertiliser demand is set to rebound from last year. A large increase in wheat plantings will more than make up for the decrease in the oilseed rape area. Early buyers were presented with a gift from CF

Calum Findlay head of fertiliser

Every farmer should therefore be making plans to improve Nitrogen Use Efficiency (NUE) and reduce ammonia and carbon emissions.

Fertilisers who surprised all by entering the market at such a low level, setting prices well below those across Europe.

The need to maximise crop nutrient recovery and achieve the best financial return is now greater than ever. To deliver the UK’s ambition for increased productivity whilst reaching emission reduction targets, following best practice will be key in the future. Nitrification and urease inhibiters have been identified as tools to help combat GHG emissions and nitrate leaching. DEFRA has launched a consultation looking at solid fertiliser use and possible legislation that is aimed at significantly reducing emissions, including a potential ban for the use of straight uninhibited urea.

However, nitrate values, along with energy prices, have firmed since summer and the trend is forecast to continue into 2021. The break-even ratio (see graph) is the crop yield (kg) needed to pay for 1kg of N, and In the EU, Germany already requires the use of urease inhibiters and new fertiliser regulations have specific provisions for putting inhibitors into the marketplace. ADM Agriculture will continue to promote and support these products here in the UK, particularly as a possible inclusion in voluntary standards post Brexit cannot be ruled out.

is calculated by dividing the cost of fertiliser nitrogen by the crop price. The lower the ratio, the more the application of nitrogen is economically justified. it currently remains below 4, a level last seen in the summer of 2017 and a recognised buying signal. However, with all the uncertainty still out there this could soon alter. The dynamics are changing and the UK and Europe are still behind the curve on buying. There is less commitment on ammonium nitrate and especially on urea. Given the unknowns around Brexit, Covid-19 and currency, our view is that current nitrogen pricing looks excellent value, and that it would be prudent to cover at least some nitrogen requirements now. At the time of writing, the October value for CF 34.5% Nitram was an incredible ÂŁ48/t below the three-year average price for the same period.


Feed & Seed Reports As the first wave of Covid-19 appeared to be subsiding earlier in the summer, supply felt ample: solid South American harvests were in the bin and US crops were drilled early, with USDA predicting the largest maize acreage in 80 years.

Nick Halle trading manager, feed

Demand felt weak as the global economy continued to falter. This was literally and figuratively the calm before the storm. On 10 August, a severe storm system developed on the South Dakota-Nebraska border, intensifying as it moved into Iowa, where winds reached over 100mph. It destroyed or seriously damaged more than 2.9mln t of grain in store and flattened crops across 38mln acres. This sparked the first signs of life in a complacent market. By the end of August, funds flipped their short positions in corn and meal and increased their length in beans. Prices have barely looked back since. This autumn’s seed season was all but wrapped up by mid-October and the volume of sales has surprised many in the trade, given the amount of seed that remained on farm from 2020.

The demand side has arguably played a greater role in feeding the bull. Having declared the virus defeated and emerging from a gruelling lockdown, China began replenishing feed stockpiles and rebuilding its pig herd, which had been decimated by African Swine Fever.

Europe’s predominant soymeal supplier, Argentina, is heading towards its seventh currency devaluation in 20 years. This is likely to do little to convince farmers to part with soybeans, which form a perennial hedge against inflation.

Maize imports for 2020/21 are estimated to be 15-30mln t, the majority from the US, sharply up from the previous record of 5.5mln t in 2014/15.

Farmer retention has also featured in the Black Sea this season. With grain harvest late and yields disappointing, markets have become technical during the transition between crops.

The bull market shows little sign of abating. Soybean purchases have also stepped up. US exports to China for 2020-21 have reached 19mln t and a further 10mln t has been sold to “unknown destinations,” compared to 2mln t last year during the midst of the trade war. This pales in comparison to the flow of soybeans from Brazil, which stood at 51mln t during the first seven months of this year. Brazilian farmers are now planting their 202021 crop, forecast to be the world’s largest ever at 133mln t, with 85mln t pegged for export. By comparison, the 2020 US crop is 117.4mln t, with 57.83mln t of exports. Given the tighter stocks, growing conditions will need to be watched carefully.

and innovative products such as Tiros seed treatment, from Unium Bioscience, to support and enable growers to maintain output while achieving higher biodiversity standards and reducing fungicide reliance.

James Barlow head of seed

The obvious conclusion is that the 2021 winter wheat area will be big, with trade estimates putting us well over the five-year average.

The Regenerative Approach The phrase ‘regenerative agriculture’ is now commonly accepted, but there is a hard decision to make for growers wanting to preserve maximum output whilst reducing inputs and fixed costs. Very rarely can we have both in parallel, especially in the short to medium term while in conversion to a more biologically-based system. ADM Agriculture is committed to finding new

This year, BASF’s biological seed treatment Integral Pro, which uses bacteria for fungal control, has been the main OSR fungicide product. And recently Syngenta has confirmed its purchase of biostimulant and nutrient specialist Valagro, becoming the latest in a string of major chemical manufacturers diversifying into biological business.

suitable break crops to fit their soil type and rotation. Without repeating every other publication on break crops, the basic principle is that our climate will not be advantageous to growing warm-season break crops until significant advancements have been made in plant breeding, for example to bring forward maturity. Faba beans we all know work well in cool climates. Peas perform well too, although they need freer-draining soil. ADM Agriculture is in the fortunate position of having its own pulseprocessing facilities at Long Sutton and offers market-leading buyback contracts to support your planting decisions this spring.

A key element in the future of arable production is also soil health, which is firmly in everyone’s sights at present. ADM is committed Covid permitting, we hope to see you all at a to ‘unlock the power of nature to enrich life’ trial day in 2021! through its mission statement. As such, the company is constantly reviewing non-chemical alternatives to control problem pests and diseases. So please do keep watching this space.

Spring Plantings With the reduced area of OSR this winter, many growers are facing the challenge of finding

People, the key to ADM’s success We are one of the UK’s leading agricultural merchants, a forward-thinking, peoplebased company that employs 175 staff. Landing on his feet - Oli Norris

A great place to work - Beth Wray

Oli Norris’s trading career is reaching new heights after his dream of becoming RAF aircrew was ended by swingeing defence cuts eight years ago.

Six months in and farmer’s daughter Beth Wray is relishing her new challenge as ADM Agriculture’s seed trading assistant.

“I was a newly commissioned officer with no plan B,” says Oli. “I applied for a job trading soymeal, with little idea of what it involved. “I then went on to buy and sell rapemeal, before moving on to trade vegetable oils into the UK.” At the start of this year, Oli received a call from ADM Agriculture’s trading director Jonathan Lane. “I had met quite a few ADM colleagues in my previous jobs and really liked the sound of the company. After a chat I was offered the opportunity to trade the East Anglian feed wheat book from Hemswell, under Freddie Humfrey.” It was the 30-year-old’s first major foray into trading grain. But he has quickly risen to the challenge of operating across one of the key grain-growing regions of the country. “No day is ever the same, and I especially like being involved in the strategy side of things, looking at the key influences and putting this into our overall game plan,” he says.

It’s been a tough year to start, given the problems with seed supply after the difficult season, as well as the restrictions of Covid. But Riseholme College graduate Beth has taken it in her stride. Beth, now 23, started working for Gleadell as a temporary assistant in the grain analysis laboratory at Hemswell during the summer of 2015. She moved to the seed department in April 2020. “There’s nothing like being thrown in at the deep end,” she says. “I am really enjoying my new role, which involves fulfilling seed orders from our national network of farm traders as well as making myself familiar with all parts of the UK seed sector.” Beth is involved in variety trials with all the main breeders, working with head of seed James Barlow to see which varieties the company will take forward, and why.

She is also training for the BASIS Seed Sellers Certificate. “There is so much to learn in the “I really value being job. But I love being busy, and ADM is very good part of a multifaceted at encouraging you to develop to the best of global company that has your potential. a willingness to invest in people and to push “One of the best things is you are not looked them on to bigger and down on because of your age. There is a very better things.” positive attitude here – it’s a great place to work.”

ADM Agriculture Ltd Lindsey House • Hemswell Cliff Gainsborough • Lincolnshire • DN21 5TH Tel: +44 1427 421200


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People are the key to our success. We want to employ and retain colleagues who show selfmotivation, initiative and dedication to drive their career forwards. We put great emphasis on developing our people. We encourage them to participate in internal and external development programmes, whilst our strong team culture ensures the wealth of knowledge amongst experienced staff is available for all to share. This helps all our colleagues make the most of our excellent career opportunities, and makes ADM Agriculture a great place to work.

Graduate training provides strong foundation - Ed Trefusis Feedstuffs trader Ed Trefusis had planned on a career in practical agriculture but changed his mind after graduating from the Royal Agricultural University, returning to study for an MBA in farm management and agribusiness. After finishing the course with a distinction, he joined ADM’s graduate training programme in 2018. “It was an excellent introduction to the company and provided a solid foundation,” says Ed. “I spent 18 months in three very different locations – feedstuffs, ADM Milling and a short time in Investment Services. “I was fortunate enough to be offered a full-time position, mainly trading soymeal with senior trading manager James Buckley.” The job involves sourcing internationally, from South America, Europe and North America, working with shippers and selling to farmers, straights customers and feed mills. Ed, now 26, is training for his GAFTA trade diploma and is also heading ADM’s Scottish Focus Group. This was set up to build business north of the border. “It’s a really broad remit and allows me to use my initiative,” says Ed. He believes the agriculture sector offers excellent prospects. “There are plenty of young people coming into the industry, which is good news, and there are plenty of opportunities available to us as well, particularly in a global company like ADM with its emphasis on learning and development.”