US 2024 wheat production looks set to be the largest for five years as winter wheat harvest progresses at a fast pace and the spring wheat condition continues to improve.
Last month, the United States Department of Agriculture (USDA) increased its total 2024-25 US wheat crop estimate up to 51 million tonnes which, if realised, will be the biggest crop since 2019 when US farmers harvested over 52 million tonnes.
The USDA weekly US crop progress report put the winter wheat harvest at 63% complete, which is up from 54% the previous week and well ahead of this time last year when only 43% had been combined. The spring wheat condition improved three points - now up to 75% rated 'good/excellent' which is well ahead of last year's 47%.
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WHEAT
- US wheat production prospects weigh on prices
US 2024 wheat production looks set to be the largest for five years as winter wheat harvest progresses at a fast pace and the spring wheat condition continues to improve.
Last month, the United States Department of Agriculture (USDA) increased its total 2024-25 US wheat crop estimate up to 51 million tonnes which, if realised, will be the biggest crop since 2019 when US farmers harvested over 52 million tonnes.
The USDA weekly US crop progress report put the winter wheat harvest at 63% complete, which is up from 54% the previous week and well ahead of this time last year when only 43% had been combined. The spring wheat condition improved three points - now up to 75% rated 'good/excellent' which is well ahead of last year's 47%.
Further price pressure comes from an upbeat picture for US corn which improved again, all be it by only one point on the week to 68% rated 'good/excellent' compared to 55% last year. Last month, the USDA World Agricultural Supply and Demand Estimates (WASDE) report put the US corn crop at 377.46 million tonnes with a planted area of 90 million acres. Subsequent to that, however, its prospective planting report at the end of June put the US corn planted area up to 91.475 million acres. The July WASDE report is being released this Friday afternoon and if these revisions are included, it will paint a bearish outlook from a US point of view.
Managed money funds extended their short position to over 350,000 contracts in Chicago Board of Trade (CBOT) corn futures, which fell to new contract lows this week and look set to benefit accordingly.
- French output in question
In contrast to the US, French 2024 wheat production prospects look increasingly challenged. Last week, the French crop condition fell two points on the week to 58% rated 'good/excellent', the lowest rating since 2020 and well below last year 81%.
Rain and cool conditions continue to harm crop potential for France which is traditionally the EU's primary wheat producer and exporter. The French Ministry of Agriculture made its first 2024 wheat production estimate, putting the crop below 30 million tonnes at 29.65 million tonnes.
Arguably the planted area and yield could be too high given the difficult weather conditions, so lower crop revisions in the future could be likely. In 2023, the crop was 35.1 million tonnes but 2024 will be the lowest for four years.
- UK mixed outlook
Analysts presented figures which led to a mixed outlook for the UK 2024 wheat crop.
The Agricultural and Horticultural Development Board (AHDB) planting and variety survey put the total UK wheat area at 1.56 million hectares which suggests a better than previously thought late drilling campaign. Yield potential is not helped by the continuing rain and cool temperatures but based on these numbers, a crop of 11.5 million tonnes is possible.
However, analysts Stratégie Grains disagree and see the UK crop well below this at 10.45 million tonnes, 3.53 million tonnes down on last year. Whatever the outcome, there is already a strong import programme in place to meet the consumer demand, particularly in the north of the UK.
UK soft wheat looks likely to be in short supply, with the AHDB seeing the area of Group 3 varieties making up under 2% of the total wheat area. The new Group 3 winter wheat, Bamford, looks set to address the supply issue going forward, with seed availability for up to 3% of the UK wheat area for the 2025 harvest. Frontier has a Group 3 contract specifically for Bamford for harvest 2025.
BARLEY
- Barley harvest delayed this week
After heavy rains in the south of the country at the end of last week and more rain in central and northern England throughout this week, the UK is facing lengthening delays to the barley harvest.
Continuing uncertainty regarding new supply and prices being lower than they were at the back end of April are the two key factors supporting prices currently. As a result, barley's discount to wheat has narrowed from around the £30/t mark to £27-£28/t though this is still sufficient for barley to retain a good proportion of lowest cost feed formula.
- UK still not export competitive
Domestic premiums remain strong in comparison to European and Baltic export levels. This has resulted in the UK having very little to export this harvest.
On the other hand, domestic supply has been slow to come forward at these price levels and considering the barley area this year is smaller, harvest pressure may not be as drawn out or as intense as it would typically be. However, there are many conflicting factors at play this season which could add some pressure; growers' need for space in the shed in comparison new crop cash flows is a good example.
Due to these opposing dynamics, it will be interesting to see which are most significant when the combines start rolling. The level of uncertainty is high this year, even at this early stage when crops are still in the ground.
OILSEED RAPE
- European harvest progress influences markets
In the last week, rapeseed prices have been subject to increased volatility as harvest progress increases through the Black Sea and European region.
Initially prices were subject to a sharp rise as early yield reports were poor and crushers were stretching for cover - ex farm levels were above £400/t for many parts of England. As harvest progress increased, the West improved its yield data and at the higher prices, crusher cover improved. This led to a sharp decrease in prices of around £25/t in three days.
European harvest data and farmer selling levels are going to be the key driver for values over the coming month.
Currently, European rapeseed is relatively expensive compared with other origins and competing oilseeds which is making it reactive to movements in other markets. For example, soybean took a negative turn this week after news that China was looking to sell volumes of soybeans back onto the market. This could be a worry for that demand picture.
PULSES
- All eyes are now on crop 2024
The first dry pea crops are likely to be just four weeks away, depending on the weather.
Values are remaining strong with little supply of old crop around. If you require harvest movement please ensure that samples are sent to your local lab promptly.
Conversely, the bean harvest is unlikely to begin much before the end of August this year. Overall, UK crop conditions look good with largely cool and moist weather this spring, which points towards a better yield than the last few years.
Values for UK beans are currently trading around a £45/t premium to November wheat futures. This is a significantly increased premium over the more traditional levels of £30- £35/t at this time of year. The high premiums are limiting export demand, with the Baltic and Australian crop looking a cheaper alternative at present.
FERTILISER
- Urea/AN
The gas curtailment issues that have affected urea production in Egypt since 21st May are gradually being resolved and production is reported to be slowly building up to 80% of capacity.
Roughly half a million tonnes of urea production has already been lost, meaning shipments committed from the region will suffer delays, including to the UK where stocks remain low. The situation of gas supply remains unstable so prices continue to be firm.
The current Indian tender for shipment in August is potentially going to result in the country buying less tonnage than markets anticipate. The volume offered was 2.7 million tonnes but it's likely no more than 700,000 tonnes will be physically purchased and most of that will be prilled urea. This tender, coupled with the uncertain production issues and lower grain prices, has caused global markets to stall.
Fresh Chinese produced urea is largely absent from international markets and unlikely to be involved with the current Indian tender. The country is doubtful that it will export any tonnage in quarter four which has again offered positive price support to markets.
Ammonium nitrate supply continues to track the low demand in Europe and the UK, as the focus of buyers moves towards harvest.
Production in mainland Europe has slowed down as unseasonally high gas prices have reintroduced manufacturing caution. Therefore, supply will remain tight for the foreseeable future unless energy costs reduce.
CF Fertilisers in the UK remains the only supplier in the European region willing to offer product into quarter four and with supply uncertainty growing in most other areas, it's difficult to see an alternative ammonium nitrate being offered at a better value.
However, CF Fertilisers can't supply all the UK's requirements and with June to September deliveries sold out plus the October/November positions progressively filling up, growers could face increased risk with product choice and also higher prices if they choose to wait.
- Liquid
General tank fill terms on product for delivery in the summer period have been withdrawn. Stock and vehicle capacity to complete existing business has been reached. However, terms remain available for autumn delivery.
Spring terms remain unchanged and continue to offer growers a quality and accurate crop nutrition system on a competitive cost per hectare basis against solid offerings in the UK marketplace. You have access to a full range of grades, from nitrogen and nitrogen sulphur products to NPK grades.
For those looking to establish oilseed rape in the coming weeks, NP and NPK products are available for prompt delivery in both bulk and IBC options.
- Straights/PKs
DAP prices have moved up due to an increase in global demand with TSP following the trend - both products remain low in stock at UK ports.
Stocks of Oilseed Start are readily available in the UK for oilseed rape establishment.
The MOP market remains flat and although there is high demand from Brazil, this is offset by low demand from Europe which is keeping prices stable at present.
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