Frontrunner - 18th March 2022

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WHEAT

• Russia-Ukraine war impacts wheat markets

Wheat futures continued to see volatile trading this week as the trade reacted to the impact of the worsening conflict between Russia and Ukraine. There were early notable falls in prices with reports that peace talks between Russia and Ukraine were making some headway and that all five of Russia's Black Sea ports were operating normally for grain shipments. However, news that Russia would ban grain exports until 30^th June 2022 triggered a sharp correction and helped London wheat futures rally back up to the previous week's contract highs. Subsequently, Russia's deputy prime minister said that grain exports would be possible under certain licenses and futures prices fell lower again. Analyst group, SovEcon, had previously estimated that Russian wheat exports in March would reach 1.6 million tonnes, which is well below Russia's February shipments, which are estimated to be 2.5 million tonnes. Analyst group, Stratégie Grains, increased its EU-27 wheat export estimates by 2.1 million tonnes, anticipating that these countries will cover the deficit from Russia and Ukraine for countries looking to import.

• Egypt seeks alternative wheat origin

Egypt, the world's largest wheat importer, has been significantly affected by the war in Ukraine, having sourced 80% of its wheat from Ukraine and Russia this season. Egypt reported that it was expecting 63,000 tonnes of previously purchased Russian wheat to arrive this week and that it is working to buy future supplies from alternative origins. The Egyptian government has stated that the country has sufficient stocks to meet its needs - including stocks from its domestic harvest - until the end of 2022. The Egyptian harvest starts in April. The Government of Pakistan reported an acute wheat shortage with only 3.3 million tonnes of wheat stocks, which is only sufficient to meet demand until the end of April. The country is therefore looking to import two million tonnes of Russian wheat.

There is a need for other wheat producers to fill the export deficit. However, there are mixed fortunes for US winter wheat crops with further declines in condition for Kansas, where only 23% of the crop has been rated 'good/excellent'; this is down one point on its previous crop rating. The Texan crop sees 6% rated 'good/excellent', down from 7% previously. Crop condition has improved in Oklahoma, with up to 24% of the crop now rated 'good/excellent', up from 15% previously. However, as of 8^th March, half of Kansas is classed as under severe drought or worse. The state is experiencing its driest conditions since 2018. Severe drought is more extensive in Texas and Oklahoma although some limited rain arrived this week. A further brief spell of rain is forecast before longer term drier weather returns.

BARLEY

• Old crop barley sees new season price highs

Demand from both compounders and trade shorts for old crop barley remains strong and, as a result, values have reached season highs, trading at over £300/t and being delivered to the premiums areas of Yorkshire and the northwest of England. Compounders are largely covered for March and April although some purchasing for May, June and July is yet to be made. Barley is maintaining its position in the ration even at these higher prices given its competitiveness against substitutes such as wheat and corn.

• New crop spring plantings ready to begin

Spring drilling has started in many parts of England and on early land in Scotland although widespread rain on Wednesday paused progress in most areas. However, the forecast for the next 5-7 days looks fairly settled so fieldwork should see some good progress. Markets have remained volatile as the conflict in Ukraine enters its fourth week, although the daily swings in prices seen in the first ten days of the conflict have now reduced. Subsequently, some compounders have looked to take some new crop cover, with new crop at a significant discount to old crop. With markets a little more consolidated at these higher levels, farmer selling has slowed due to the risk of rising input costs. As a result, farmers are marketing their grain forward fairly conservatively. Subsequently, barley is trading at a narrower discount to wheat than in previous weeks.

On the continent, French spring barley plantings reached 90% completion (compared to 96% at this time last year) and farmers will be looking for some rain in the forecast after what has been a relatively dry start to spring. Rain over the last 7-10 days in Europe has largely been concentrated to Iberia with more forecast for the short term. 

​OILSEED RAPE

• Challenges for vegetable oil markets set to continue

In the last ten days, the market has seen a large correction in crude oil markets. Between the 9^th and 16^th of March, Brent Crude oil lost 30% of its value. In an average year, this would have a weighing impact on rapeseed prices; however, with the current oilseed supply deficit due to the war in Ukraine, this has had little impact on the market. At the time of writing, ex farm old crop rapeseed values are up around £20/t on the week with sunflower oil users scrambling to replace now non-attainable sunflower oil supplies with rapeseed oil. This is causing some serious friction in supply chains with rapeseed already being short in supply this year. New crop rapeseed had been rising in line with old crop until the start of this week, with new crop prices down £8/t on the week.

The ongoing conflict has slightly less impact on new crop supplies as Canadian and Australian exports will replenish supply levels. However, if there were to be a crop disaster in Europe, Canada or Australia, then the lack of Ukrainian supply would be highly problematic for the new crop season.

• UK relies on domestic rapeseed supply

Historically, the Ukrainian rapeseed export programme is executed within the first six months of the season. A similar pace is looking unlikely this year, which means there will be a greater reliance on domestic rapeseed in the next few months, particularly until Canadian supplies start to enter European markets (typically around November). The global oilseeds complex remains complicated with all eyes on the war. Any weather issues for the remaining key producers could cause serious shocks to the market.

 PULSES

• Egypt bans exports of staple commodities

Further rises in bean values have stalled this week as buyers withdraw in response to what they perceive as better news from Ukraine. Given the trade over the past month, the UK bean supply and demand situation is now more balanced. As a result, any further news of export activity or weakening of Sterling would help improve values. Last week, Egypt banned the export of many staple foods, including beans, so any containers planned for transhipment in Sudan and other nearby countries will now have to stay in Egypt, which is likely to discourage any further buying activity.

• Limited new crop activity

New crop activity is also very limited. However, with winter crops looking very promising, a few growers are locking into strong new crop prices ranging from £270-280/t for feed beans depending on location. 

 FERTILISER

• AN/urea

Suppliers in the UK generally remained out of the market this week as they took stock of replacement product pricing and considered the logistics of shipments and delivery.

Supply chains across the globe have been greatly affected as a result of the sanctions placed on Russia and the lack of export from other regions, as demand for AN and urea remains strong. Urea values continue to firm with shipments being purchased for Europe into April at over $1100/t.

There has been continued pressure on gas flow into Europe, which has held up ammonia prices, although traditional AN supply chains are currently working as normal.

It has become clearer that some UK importers have been impacted by products or vessels linked to Russian sources and are subsequently experiencing delays on product entering the UK market. Wherever possible, Frontier is using domestic sources.

On farm enquiries have increased on nitrogen and nitrogen sulphur products as growers start to apply inputs to crops across the UK. Given the limited availability and volatility of some products, we encourage growers to enquire about their requirements as soon as possible.

• Liquid/UAN

Supply tightness continues as pre-ordered product arrives on farm while additional purchases are being made to support crop 2022 applications later in the season.

Suppliers have varying levels of confidence in regard to the stability of supply for all grades through the spring season. Please speak to your Frontier contact if you still have product to buy.

The market has recently seen a large increase in interest and purchases of foliar nitrogen products, which has caused most manufacturers or suppliers to temporarily withdraw from the market as a result of raw material price volatility and shortness of supply.

• PKs/straights

PK values remain unchanged on the week. DAP as a straight is likely to remain unavailable for some time.

Get in touch

Please speak to your local Frontier contact or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. for more information or advice related to any of the topics and services mentioned in this report.