World wheat futures markets continued to fall this week and have now lost 14% of their value since the end of 2022. The primary drivers for the market negativity are twofold. Firstly, the ongoing competition from cheap Russian wheat exports following Russia's record 2022 wheat crop; and secondly, a strong belief the Ukraine Black Sea export deal with Russia and the UN will renew at the end of next week. If this is the case, Ukraine will continue to ship cheaply offered wheat, corn and other grains on world markets. This makes it likely the US, the EU and other major exporters will be left with burdensome year end stocks.

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WHEAT

• Wheat prices continue to fall

World wheat futures markets continued to fall this week and have now lost 14% of their value since the end of 2022. The primary drivers for the market negativity are twofold. Firstly, the ongoing competition from cheap Russian wheat exports following Russia's record 2022 wheat crop; and secondly, a strong belief the Ukraine Black Sea export deal with Russia and the UN will renew at the end of next week. If this is the case, Ukraine will continue to ship cheaply offered wheat, corn and other grains on world markets. This makes it likely the US, the EU and other major exporters will be left with burdensome year end stocks.

Rainfall across drought ridden France and US winter wheat producing states, where dryness had been a concern, compounded market negativity. A lack of any bullish surprises in this week's United States Department of Agriculture's (USDA) World Agricultural Supply and Demands Estimates (WASDE) report encouraged a further subsequent bout of speculative selling.

• Nothing bullish from the USDA

As referenced earlier, this week the USDA published their WASDE March updates. The world's wheat balance sheet production for Australia was marked up one million tonne to a total of 39 million tonnes. This figure is broadly in line with the Australian Bureau of Agricultural and Resource Economics and Sciences' (ABARES) estimation of 39.2 million tonnes made earlier in the week.

There was a surprise increase for Kazakhstan production, up 2.4 million tonnes from the previous figure to 16.4 million tonnes. This is a near 40% increase on last year's 11.81-million-tonne total. Adding to the mix, India is up one million tonnes to 104 million tonnes, taking world production five million tonnes higher to a total of 788.94 million tonnes.

World consumption is seen two million tonnes higher up to 793.19 million tonnes. However, if you exclude China, world stocks are now seen 2.9 million tonnes up on the month to 127.62 million tonnes. Nonetheless, this is still seven million tonnes lower on last year.

The USDA made a more significant cut to its Argentina corn crop estimate, down seven million tonnes to 40 million tonnes. However, this was offset in part by a three-million-tonne increase for Paraguay. World production slips four million tonnes to a total of 1,151 billion tonnes. World consumption was cut by 5.5 million tonnes to a total of 1.157 billion tonnes – this edges world stocks up 1.2 million tonnes. Subsequent to the USDA report, the Buenos Aires Grains Exchange (BAGE) lowered Argentina's corn production estimate down to 37.5 million tonnes from their previous estimate of 41 million tonnes. Had the USDA employed this data, world end stock at would be 293.96 million tonnes, 11.7 million tonnes down on the year.

BARLEY

• Old crop

Both domestic and export feed barley demand remains very quiet, the market continues to feel heavy with a weighty surplus. The cold weather may bring some extra short-term demand, but it is hard to find many bullish factors which could turn the tide for old crop feed barley.

• New crop

New crop feed barley trading has been slow this week, with very little farm selling. We have started to see more enquiries from consumers which is unsurprising considering the fall in values in the last three weeks.

• Malting barley

Old crop malting barley markets remain quiet, with domestic maltsters covered for the season and fresh export business not being possible due to the UK lacking competitiveness against Scandinavian malting barley.

New crop malting barley values have fallen sharply this week as a result of widespread rainfall throughout Europe and the UK, alleviating concerns about crops being at risk of lack of moisture.

Frontier is offering a range of marketing options to help growers manage risk and market their malting barley crops. Guaranteed minimum premium contracts, futures related distilling contracts and malting barley pools are just a selection of the contracts that are offered. Please speak to your local farm trader for more information.

​OILSEED RAPE

• Rapeseed prices suffer as heavy supply kicks in

During the week, ex-farm rapeseed values in the UK have lost £30 at time of writing, as the realities of a huge global rapeseed crop and only limited demand hit home. Crushes across Europe are now thought to have reasonable cover for the remainder of the season which is owed to increased imports (now thought to be 5.1 million tonnes on the season), combined with strong domestic production which is allowing the crushers to be more relaxed with their buying.

Rapeseed meal prices had helped to keep the rapeseed prices elevated as a protein shortage in Europe increased demand. However, prices have now cooled off with further cover taken and fresh South American soymeal offers surfacing.

The main point to watch for rapeseed in this week's WASDE report was that Argentinian soy production was lowered sharply to 33 million tonnes. Although the consensus around other private estimates are lower, the market was clearly expecting this figure as it failed to react in an upwards fashion. The market now watches for developments in South American and European crops, as well as demand from China and political tensions to drive the next move. 

 PULSES

With all markets under pressure, old crop beans are certainly following suit with levels falling by £3-5/t over the past week. As said before, there's expectations to see this decline in values continue as the demand for old crop beans appears very limited now. Recent sales have only been for summer runs to UK consumers for May to September delivery. New crop beans are still not trading with most consumers happy to wait before starting any buying program.

 FERTILISER

• AN/Urea

After the withdrawal of domestic AN terms last week, due to March available tonnage being sold and haulage capacities being full, CF Fertilisers returned on Monday this week with April levels at a £5/t increase on the previous offer. Demand is still strong and showing that the preference for nitrates is in the form of ammonium nitrate over other alternatives.

Imported AN still struggles to compete in the UK but is available in some regions for March delivery. However, logistics will remain under pressure for the next six to eight weeks.

India has confirmed 1.1 million tonnes of urea purchases, but on an unusually long shipment period to June. The volume is a disappointment to producers given the timescale and will not offer the support to the market they had been looking for as stocks globally continue to grow.

Growers in the UK should just 'keep an eye' on forward urea levels and get regular updates from their Frontier contact as to the direction markets take. European gas prices are 85% lower today than the highs of autumn 2022. With this in mind, forward AN price comparisons remain absent. Whilst urea stocks grow, in combination with the introduction of usage period changes in the UK, any nitrate buying decisions should be fully discussed before firm commitments are made.

• Liquid

Where current weather conditions allow, planting of root crops is imminent. Growers in these regions looking to source NPK products have access to a full range of readily available grades to suit crop type and requirement. A full portfolio of nitrogen and nitrogen sulphur grades continue to be available nationally for growers seeking to secure additional volumes for application this spring. Please speak to your Frontier representative for advice and information.

• PKs

Due to the understandable last-minute purchases by UK blenders to re-stock as prices reduce, it comes as no surprise that raw materials have suffered delays into UK ports, adding pressure to the supply chain to get physical product on farm. Prices on phosphates look stable after recent international price corrections and demand in the UK has now increased. Potash stocks will now start to run down as the forward global levels look weaker. Any price corrections are unlikely to happen for our current usage period but are around the corner in the coming months.

Get in touch

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