Frontrunner - 24th January 2020

WHEAT

• Higher stocks fail to dampen markets

The International Grains Council (IGC) published its world Supply & Demand report this week, in which it cut consumption by two million tonnes and year-end stocks by one million tonnes on its previous estimates. However, consumption at 755.9 million tonnes is a record level and 17.6 million tonnes up on last year. Stocks are seen at 271 million tonnes which is also a record high and 5.7 million tonnes up on the year.

Despite world wheat stocks being seen to reach record levels on paper, world wheat prices rallied further this week, driven higher by the fast export pace from the world's major producers. Ukrainian wheat exports have reached 15.6 million tonnes so far this season – 4.2 million tonnes ahead of last year. EU wheat exports are even more impressive. Despite the recent French dock worker strikes, EU shipments are 15.7 million tonnes up – 71% on last year. Russian export prices are up $8 on last week at $231 for 12.5% protein wheat. In the Southern Hemisphere, Australian wheat is effectively priced out of the export trade and Argentina has reportedly already sold its surplus.

• Larger world wheat area

The IGC also highlighted its view that the global wheat area drilled for the 2020/21 season will rise by 1% to 220 million hectares. It believes this signals the potential for increased output and stocks. Increases in the winter drilled grain area for Russia will need to offset decreases in Western Europe, particularly Western France and the UK. Long range forecasts for expanding warm dry weather conditions across the Black Sea region should be watched.

• UK wheat drilling woes continue

UK wheat markets continue to be dominated by adverse drilling conditions. Most of the UK has been damp this week and rain is forecast for the weekend and following week. The worst rain-affected areas in the middle of the country still need to dry sufficiently to allow land work to progress but the window to drill winter wheat is closing. Domestic wheat prices are supported by the prospects for a significant shortfall of crop versus our demand needs and potentially a huge import programme. Reflecting this, new crop wheat futures have moved significantly compared to other origins. In August, the London November 2020 futures contract was trading at £25 below the French wheat futures December contract. That discount has eroded over recent weeks as drilling problems have persisted and the London contract is now at a £4/t premium.

BARLEY

• Feed barley market remains firm

With no real change in the feed barley market this week, values remain steady. Good progress with exports has resulted in continued bids for February and March into south and east coast ports up to the Humber. Domestic demand remains quiet with little new spot business being done this week. On the farm side, a steady stream of sales are being made at a rate fast enough to satisfy demand without putting pressure on prices.

With regards to new crop barley, we have seen some end user purchasing of feed barley for the winter run as they lock into significant discounts where feed wheat is available. Farmer selling of new crop barley continues at a steady pace as growers lock into better forward prices than we see today.

• Malting barley market remains neglected

With the potential for a large UK spring barley crop from harvest 2020, end users are largely absent from the market. Weather conditions across the country are improving as the spring barley drilling season approaches. All eyes will be on progress, especially in the midlands where a large increase in spring plantings is expected. Will the worst of the heavy flooded land across the midlands be drilled this spring, or will growers look to cover crops to improve soil structure and a fresh start in the autumn?

As spring barley crops are drilled, growers should look to fix feed base prices as a hedge and add premiums at a later date when they become available.

​OILSEED RAPE

• Weaker old crop markets

It's been another negative week for the global oilseeds market with US soybean futures down 3% and physical UK rapeseed prices falling back by £5/t. With early reports from Mato Grosso stating that yields are up 10-15% on last year, there is a growing realisation that the Brazilian soybean crop could be huge. Another potential influence on the global market is the widening spread of the coronavirus which could impact Chinese demand.

• Tighter EU market in 2020

New crop prices have been a bit more robust this week, as Europe faces up to another season of tight supplies. EU rapeseed production is forecast to rise by 800,000 tonnes to 17.7 million tonnes from harvest 2020. However, year-end stocks are forecast to counteract this as they are down 1.1 million tonnes, representing a five-year low point. To provide some perspective, the average EU rapeseed crop over the previous four years has been 21.2 million tonnes.

• Import challenges

The real challenge is seeing how the EU will be able to secure an increase, or even a repeat, of the 2019/20 import number of 5.5 million tonnes. Production is projected to be slightly down in Ukraine and marginally up in Russia, but overall supplies from the Black Sea ports are not looking as though they will increase. The difficulty with the Russians is that, in the past, their primary export flows have been to Belarus and China. Price will ensure that the EU gets the rapeseed that it requires, but 2020/21 already appears to be a season where the suppliers will hold the power. 

 PULSES

• Beans

The old crop feed bean market remains firm with values rising £2-3/t over the course of this week. As long as the shorts need to get some cover, we will continue to see this strong market. Sterling's strength, however, may temper any further rises, as the prospect of imported peas looks more likely. Egyptian demand for both feed and food beans remains strong but, as soon as the first bulk vessels from Australia arrive towards the end of February, we are likely to see values come under pressure.

• Peas

Buyers of old crop quality green peas are still looking to take further cover to see them through the summer months, but with dwindling supplies left on farm, values are now trading up £15/t since the turn of the year. If you have any unsold green peas, please contact your local Frontier farm trader for values and further information on our pulses buyback contracts for 2020.

 FERTILISER

• Nitrogen

With the usage period now upon us, the market is balanced between pressure to get product delivered to farm and an improved currency position, which is making some imported nitrogen products appear to be very good value. However, physical stock available for immediate delivery is limited in many areas. It is likely that product availability will be key over the coming weeks and prices could well firm on the back of this. In the meantime, there are good offers available and growers are advised to talk to their Frontier contact for details. Indications are that nitrogen sulphur compounds could also be in short supply and serious consideration should be given to which grade suits your system. Sulphur Gold (29 N, 20 SO3) provides an excellent flexibility and is ideally suited to many spring cropping options.

• PK

The market remains largely unchanged. Blenders are beginning to get busy with spring grades. Again, advice is to book early where product is needed for application.

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.

Alongside its divisions, SOYL and Kings, Frontier is hosting a series of 17 winter training events. Open to all farmers interested in learning more about the use of digital technology to improve crop production performance, the events will include valuable insight into MyFarm and its role as a complete farm management platform.

You can find your local event and book your place by visiting our website.