Frontrunner - 11th April 2024

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WHEAT

• Positive US crop outlook

The latest weekly crop condition and progress report from the US highlights a positive outlook for production potential. Winter wheat maintained a steady condition, seen 56% 'good/excellent', which is unchanged on the week. However, this is significantly higher than the same period last year when just 27% of the crop was seen looking this well. Kansas is the number one producing state and edged one point higher on the week, to 49% 'good/excellent'.

Spring wheat and corn planting is off to a good start with the US spring wheat area 3% planted, as expected, up from 1% last week and last year, and unchanged from the five year average.

The US corn area is 3% planted, which is the same as last year but ahead of the five-year average of 2%. It is important to bear in mind that the United States Department of Agriculture (USDA) sees US farmers notably cutting their corn planted area to just over 90 million acres, down from 94.6 million acres last year.

• Russia continues to dominate trade

Russia continues to dominate world wheat trade and is the likely origin for most recent volume sales. Tunisia, Morocco, and Saudi Arabia have all secured wheat purchases at prices up to $15 ahead of EU competition. However, analysts' expectations that Russia would ship up to five million tonnes of wheat in March have been pared back.

Continued disputes between private exporters and Russian authorities have left loaded vessels stranded in ports and unable to make their journeys without phytosanitary certificates. Private exporter RIF has reported ongoing problems with its vessels in Russian ports and that it will stop using its Azov terminal - seven of its vessels remain anchored.

It is likely that Russian March wheat exports will slip back to between 4.6 and 4.7 million tonnes. This has concerned market shorts and short covering boosted futures prices, but so far no vessels have switched to an alternative origin.

• India a wild card?

India has presented various production issue stories over the past couple of seasons that have spurred on markets. Around harvest time last year, there was talk of a government-to-government deal with Russia to buy 12 million tonnes of wheat, which triggered a price rally. At the time it proved to be all talk, with no actual sales ever made and futures prices subsequently fell lower.

Now, private analysts put the Indian harvest at 105 million tonnes versus other estimates in the region of 111/112 million tonnes. Indian domestic consumption is seen at 111 million tonnes this season and, therefore, there could be a notable import need. Markets will wait to see if there is evidence of imports before reacting to words and being caught out.

BARLEY

• Feed barley prices rise

Old and new crop feed barley prices have both rallied over the week and have increased by £10/t - £15/t since the start of February. Given that rise, we have seen farm selling gradually increase compared with the same period last year, despite the general lull in activity around the Easter break. Ex farm prices are around the £150/t mark in East Anglia and £160/t further north (depending on location).

The latest Agriculture and Horticulture Development Board (AHDB) animal feed production statistics show that compound demand for barley has increased year-on-year for the months January and February, highlighting barley's competitiveness in feed rations and that usage is up 3.3% this year-to-date. The UK market has needed this increase in demand given that the country has not been export competitive for large parts of the season and continues to be uncompetitive on barley exports.

• Rain continues to hamper crop '24 plantings

Another wet week has meant spring barley plantings have been delayed in many parts of the UK, though some progress has been made in southern and eastern areas of England where conditions have been drier. Even on a local scale there are significant differences depending on soil types, with good progress on lighter land and much less on heavier soils.

Scotland has also had an extremely wet start to April and we have seen little drilling progress north of the border to date. Weather on the continent has been drier and spring plantings in France are nearly completed. Today, fingers remain crossed for a drier spell.

OILSEED RAPE

• European rapeseed market continued to experience increased volatility, echoing the trends in previous weeks

After a robust surge at the beginning of March, prices underwent a correction towards the latter part of the month. Notably, the rapid exit of funds from record short positions played a significant role in the market dynamics. Around 40,000 lot short positions were swiftly reduced to zero within a few weeks, a pace unprecedented in this market's history. This activity fuelled upward momentum in agricultural markets, particularly in rapeseed, bolstered further by rising crude oil prices and rumours of potential EU tariffs on Russian products.

This week, crude oil prices remained robust, continuing to support biodiesel margins and consequently, rapeseed oil prices. This factor, combined with the escalating tension regarding Russian products and the subsequent increase in biofuel producers' willingness to pay more for rapeseed products, contributed to the market's upward trajectory and willingness to trade around the €450 level on May Matif futures.

Looking ahead, the supply and demand landscape will play a pivotal role in determining future prices. Forecasts suggest a large carryover, which could potentially dampen prices, especially with the anticipated influx of Australian imports and domestic farmer-held seed reaching crushers. Moreover, the performance of new crop rapeseed markets remains closely tied to crop prospects in Europe, Australia and Canada, where significant growing stages are yet to be completed and in Europe's case, not improving.

 FERTILISER

• Urea/AN

The week started quietly in the global fertiliser markets, although the Indian tender did cause an unexpected downside in pricing. The tonnage originally offered for the tender was approximately 720,000 tonnes, though the final amount secured was only 340,000 for shipment by 20th May. The product sourced was mainly from the Middle East, with an absence of Chinese origins. This took the markets by surprise and the global urea prices eased on the back of the reduced quantity purchased.

Aside from the Indian tender, Egyptian markets sold a small tonnage to mainly European buyers as values in North Africa eased slightly over the last week. The longer-term forecast is for the urea price to further erode over the coming months.

Values in the UK are stable and business is steady given the weather is still impacting demand, with a lack of farmgate purchasing in what would normally be a busy spring period. Some areas of the UK appear to be approximately a month behind normal spring applications. In England, growers need to be cautious of the new urea application rules that began on 1st April, which state that all urea grades should be treated with an inhibitor, such as Sustain.

In the nitrates market, prices in Europe and the UK remain stable, but supply is limited, with little imported AN available in the UK and CF Nitram only available for April/May delivery.Suppliers will be reluctant to take in big quantities of stock at this late stage in spring, due to a slow market for this time of year and a new season on the horizon.

• UAN/Liquid

Port-side storage and supplier facilities are well stocked with UAN across the UK, as large vessels have arrived and discharged as planned through quarter one. Growers with additional requirements for product this spring have access to a full portfolio of N, NS and NPK grades, all available for prompt delivery for on-farm storage.

Applying fertiliser through a traditional spreader is now virtually impossible in well-established oilseed rape crops. Growers who have missed applications this season should look to apply a foliar product post-flowering - such as Nutrino Pro - to extend canopy duration and increase yields.

• Straights/NPKs

Values on straights remain unchanged for yet another week, with limited demand from farm gate. Suppliers are still reluctant to hold stock of any great quantity and the outlook for the coming months could be further price weakness.

China could return to the export market soon and cause an oversupply - particularly in MOP - which could put pressure on prices. As with urea / AN delivery, timescales are still an issue on straights so it's worth considering quality NPK compounds which are ready for dispatch.

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