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Late last Friday, the United States Department of Agriculture (USDA) published its final 2022 US wheat production estimate and surprised markets by cutting over 130 million bushels from its September estimate, which was in line with average trade expectations. The USDA sees the crop down to 1,650 million bushels; the equivalent of 44.9 million tonnes. This reduction in the US wheat production estimate coupled with lower-than-expected corn and wheat stocks in the US (as of 1^st September) saw futures prices make sharp gains. The rally continued into the beginning of this week.

You can also listen to the Frontrunner podcast - press play to hear the latest report. The report this week is read by farm trader, Lucinda Redgate.

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WHEAT

• Cuts to the US wheat crop boost prices

Late last Friday, the United States Department of Agriculture (USDA) published its final 2022 US wheat production estimate and surprised markets by cutting over 130 million bushels from its September estimate, which was in line with average trade expectations. The USDA sees the crop down to 1,650 million bushels; the equivalent of 44.9 million tonnes. This reduction in the US wheat production estimate coupled with lower-than-expected corn and wheat stocks in the US (as of 1^st September) saw futures prices make sharp gains. The rally continued into the beginning of this week.

Meanwhile, Paris wheat futures have hit their highest levels since the last week of June, supported by continuing weakness of the euro against the US dollar.

• Recession fears and slow demand sees lower prices

Supply issues and concern over demand has caused markets to slip lower this week. US weekly wheat export sales were poor at 229,400 tonnes; this is the worst week for US wheat exports since 2015. Corn sales were also low at 227,000 tonnes. This is the worst week for US corn sales since 2012.

The soaring US dollar is leaving US exports struggling to compete in global export markets and has contributed to widespread offers for Iraq's wheat tender this week. Offers from Ukraine were cheap at $386/t including freight in comparison to US Hard Red Winter, which was offered at $552/t.

EU wheat exports increased by only 345,000 tonnes last week, which indicates a decrease in demand for EU supplies despite the sharp drop in the euro in exchange markets.

Russia will supply wheat for the previous Algerian tender, which traditionally is supplied by France.

• Domestic Group 1 wheat supply in doubt

An early look at UK merchant-certified seed sales raises concerns for Group 1 milling wheat availability next season. Although the data is far from complete, sales registered to date see a marked move away from the millers' preferred bread-making varieties in favour of Group 4 feed wheat varieties.

So far, Group 1 accounts for little more than 12% of the market share, which signals a notable deficit for our domestic needs. Crusoe, Skyfall and Zyatt are maturing varieties becoming increasingly costly to grow and falling further behind the latest Group 4 varieties in terms of yield potential.

The soaring fertiliser prices are no doubt a major factor in a farmer's variety choice. Group 2 variety, Extase, may help to plug the milling wheat supply gap. Currently, Extase accounts for around 18% of the market share.

However, the majority of millers have shown little interest in Extase unless receiving a significant discount. The vast majority of Extase crops failed to meet the 12% protein requirement in the 2022 harvest, let alone the 13% required by millers. The market will monitor upcoming seed sales with interest to assess whether Extase will recapture the 20% market share it held last autumn.

BARLEY

• Exchange rates limit export opportunities

Feed barley markets have come under pressure this week for numerous reasons. A firmer sterling against the euro has resulted in a lack of export interest this week, although the UK did connect on some trade to the Spanish market when the currency dipped last week.

Domestically, demand remains lacking in the pre-Christmas positions where farmer selling has been strongest and, as a result, barley's discount to wheat is generally £26-28/t.

Temperatures have remained fairly mild and led to some late-season grass growth which has been beneficial, especially to the ruminant sector given the lack of grass growth over July and August that resulted in a lack of spot compound feed demand.

• Interest for Jan/April positions

Post-Christmas, barley's discount to wheat is slightly narrower given the lack of farmer selling in these positions but, given this discount has widened in recent weeks, the market is seeing some interest for the Jan/April positions. However, a question remains around the total feed demand at these higher grain prices. The market will keep a close eye on prices as we enter the traditional winter feeding period.

• Malting barley premiums widen

With feed values weaker on the week, malting barley premiums have widened slightly to around £35-40/t depending on location. The market remains well supplied given the excellent pass rates and above average yields on spring barley, although farmer selling is slow for the moment and perhaps unlikely to pick up until malting tonnage starts to move ex farm in the coming weeks. 

​OILSEED RAPE

• Black Sea tensions

Underlying rapeseed prices in Europe have been relatively flat since the start of last month as a result of being caught between downward pressure from a much-improved global supply position and fears that an escalation of tensions in the Black Sea region could trigger a sudden jump in values. This latter situation is the hardest to predict. There is concern that the situation will escalate, yet discussions are ongoing over whether the safe export corridor will remain open. For now, exports from the region continue to be substantial.

• Unstable sterling

For the UK, changes in currencies also need to be taken into account. Sterling is currently 5% weaker against the euro than it was in the final week of August. This makes imports about £25/t more expensive and has been reflected in domestic prices into the crushers. After a period of stability, we should now expect further moves in exchange rates as the domestic political situation plays out.

• Mixed global news

In global oilseeds markets, there are several areas of interest to monitor although nothing has yet significantly impacted UK rapeseed prices.

The Canadian canola harvest was only 30% complete at the end of September, compared to 94% at the same time last year, although this does not seem to be causing concerns at present. Palm oil prices are weak and there is an expectation that US soybean stock levels will be raised in next week's USDA report.

The Chinese markets are still due to national holidays, but this is only delaying the release of further gloomy economic data as the country reels from lockdowns and massive losses in real estate markets.

Markets still await final US bean yield figures and South American weather will be keenly watched over the coming weeks and months.

 PULSES

• Old crop bean values fall

Old crop beans are holding their value despite falling wheat prices. This is due to the increasing prices of other mid-range proteins that are available to feed compounders. In the northwest, rapeseed meal is now valued at a £40-50/t premium to feed beans, which will discourage compounders from switching.

The question remains as to whether this price gap will be enough to significantly reduce the UK's exportable surplus of beans. The UK would need to sell 70,000-100,000 tonnes of beans to balance the supply situation.

 FERTILISER

• Urea/AN

This week sterling continued its recovery against the US dollar, rising from its low of $1.04 up to $1.13, subsequently delivering a reverse in the urea price gains of the past seven days. All urea is purchased in US dollars and it's the exchange rates that have caused recent large fluctuations in the UK market.

Globally, spot demand has been steady since the Indian tender was settled, but producers are also not chasing markets to sell physical product. A few sales out of North Africa have happened in recent days, with each transaction increasing in price. This is a sign that the market is moving on from its temporary lull ahead of India and South America coming to market.

The UK's focus remains on exchange rates and the demand that is anticipated to soon hit international markets for pre-Christmas shipments. Transactions are gradually increasing in price.

Our advice remains for growers to look at urea and protected urea at their earliest opportunity.

Ammonium nitrate offers have been circulating in the UK on a very limited tonnage. Product supply will remain extremely tight due to uncertain and volatile production costs. Please speak to your Frontier contact for more information.

• UAN

UAN liquid values started October as POA with UK suppliers and shippers watching the developments in the exchange rates and volatile gas prices. Demand for spring 2023 UAN remains steady.

Drilling across the UK continues, which is allowing for a more accurate assessment of the volumes of UAN required for the remainder of the season.

A full portfolio of nitrogen and nitrogen sulphur products is now available, which is giving comfort to growers who are still finalising their nutrient strategies. We advise growers to meet with their crop nutrition advisors in the coming months to finalise their nutrition plans and confirm their required volumes. Planning in the autumn allows for a smoother execution of deliveries to on-farm storage in the busy spring period.

• Phosphate/potash

In the phosphate and potash market, the focus remains on drilling which means trade is currently limited. Improved exchange rates have stopped levels rising, allowing growers time to gather soil sample results and grain analysis information so they can consider product options and plans to replace vital nutrients taken away during harvest. Your Frontier contact can assist you with your planning.

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.