Frontrunner - 13th February 2025

WHEAT

• Small changes from the USDA

Earlier this week, the United States Department of Agriculture (USDA) published its February updates to the World Agriculture Supply and Demand Estimates (WASDE) report, but wheat traders looking for a bullish boost were left disappointed.

Ahead of the report, Paris wheat futures rallied to their highest since 18^th October, but those gains were all lost once the report data was digested.

World production increased by just 55,000 tonnes to 793.79 million tonnes, with a small increase for Argentina and Kazakhstan somewhat offset by a slightly lower one for Brazil. World demand was up 1.83 million tonnes to 803.72 million, leaving end stocks 1.26 million lower at 257.56 million tonnes. At first glance this presents a bullish outlook, particularly with those stocks being 10 million tonnes down on the year. However, digging a little deeper, China wheat imports have been cut by 2.5 million tonnes down to 8 million, which is 5.64 million down on last season and a concern for exporters.

Outside of China, world wheat stocks are up to 126.96 million tonnes; down just 6 million on the year. There were similar cuts to China imports in the world corn balance sheet too, putting them down by 3 million tonnes to 10 million and therefore 13.41 million tonnes down on last year.

• Concerns for China demand
  
  

The USDA's changes to the world corn balance sheet looked similar to wheat on the face of it, presenting bullish numbers with lower production and year end stocks compared to the previous report.

World corn production is seen slipping 2 million to 1.212 billion tonnes tonnes with Brazil and Argentina each 1 million tonnes lower. Similar to wheat, the USDA sees lower China imports, putting them down by 3 million to 10 million tonnes. The concern for future demand is that this is now a notable 13.41 million tonnes down on last year.

Non-China stocks are down just 30,000 tonnes at 87.13 million tonnes. The bulls argue that China still holds 70% of the world's stocks, which will be 25.5 million tonnes lower on the year. South American corn production remains a key watchpoint, but planting in Brazil is still notably delayed; with only 20% done vs. 38% this time last year. For Mato Grosso, the ideal planting window ends at the end of February. The second corn crop accounts for about 75% of the total Brazilian output. Argentina crop estimates are falling due to prolonged hot dry weather.

• Questions for Russian 2025 crop
  
  

Russian 2025 wheat production prospects have been in question given the poor crop condition heading into the winter. Some crop estimates have fallen below 80 million tonnes whilst others remain more optimistic. This week, the Institute for Agricultural Market Studies (IKAR) made a modest cut in its estimate to 82 million tonnes, despite additional concerns for extended periods of dry weather over the winter, leaving crops exposed to winter kill should temperatures drop notably.

Southern Russia is now expected to see precipitation next week, while snow might provide a degree of protection against any extreme cold. In the meantime, old crop exports continue at half the pace shipments were made at pre-Christmas, with 580,000 tonnes of wheat shipped last week and IKAR cutting its season export total to 43 million tonnes. The USDA failed to address this matter in full in its WASDE report this week, making only a 500,000 tonnes reduction to 45.5 million tonnes. Russian wheat export prices continue to edge higher, with offers reported at $245 - $250 FOB.

Ukraine wheat exports reached 10.96 million tonnes, ahead of last year's 9.38 million and leaving little more than 1 million tonnes/month for the rest of the season to hit quota.

BARLEY

• Positive UK sales but uneventful malting markets
  
  

Good volumes of feed barley have been sold by UK farmers this week, matching continued demand especially with export enquiries. The spread between feed wheat and feed barley prices continues to narrow, which should be a signal of barley looking relatively attractive to sell, as well as likely to reduce demand for feed barley in feed rations.

It has been another quiet week in the malting barley market, with demand to both domestic and export destinations being muted. Malting barley premiums in some parts of the UK are now less than £10/tn. At this level there is minimal benefit to the grower and with the risk of claims and allowances some full specification malting barley is moving as feed. With reduced demand in both brewing and distilling sectors combined with uncertainty regarding potential US tariffs demand is unlikely to pick up soon.

Looking ahead to new crop, although the forecasted UK spring barley area will be lower than harvest 2024, the uncertainty regarding malt demand remains. As a result, crop 2025 malting barley premiums are at risk of being under pressure and buyers are understandably reluctant to enter the market.

Having a marketing strategy for crop 2025 spring barley looks to be more important this year than ever. Frontier is offering a range of solutions to help growers manage their risk, including fixed price contracts, guaranteed minimum premium contracts, feed and malting barley pools and wheat futures related contracts.

OILSEED RAPE

Rapeseed values are lacking strong price direction at the moment, as traders work out whether imports into Europe are going to carry on at enough pace to supplement this year's low domestic crop.

Demand for rapeseed oil remains relatively slow and crushers who have the choice have been preferring to crush soybeans due to the improved margins. Most of this oil will be going into the biofuel supply chain.

Heavily frontloaded exports of Canadian and Ukraine rapeseed boosted world exports of the crop and canola to a new high of 11.5 million tonnes in the period July to December 2024. This compares to 9.9 million tonnes a year earlier, which is assisting in a lack of demand in nearby months.

World production of palm oil also looks like it will recover in 2025 after some tightness last year, which should help ease some pressure in vegetable oil markets.

Today, the outlook for the UK crop in the ground is as positive as it has been in recent memory with good growing conditions so far, although the yields will have to do a lot of work to match last year's crop of c. 800,000 tonnes.

PULSES

• Feed beans

UK feed beans are priced competitively against the Baltics, being around €5 cheaper per tonne. There is demand in the market at these levels for March onwards so we will continue to see export programmes picking up in comparison to the first half of the season.

Domestically, homes have finished buying for the nearby, with some users suggesting they have completed buying until new crop now. Shorts for the February-May period are filling up quickly.

We are going to continue to see the hangover of 'cheap' rapemeal going in to new crop. Feed homes feel that new crop beans are expensive today against rapemeal, which is sitting around £230/t ex the crush.

We continue to offer  £30/t over London Wheat Futures contract for new crop beans.

• Human consumption beans

Egyptian consumers have indicated that there will be no demand for UK human consumption beans after March. At this point the colour of the bean tends to deteriorate in the hotter climate and Ramadan will be over. There are plenty of good quality Australian beans coming in to Egypt now, with the bulk of the crop now marketed.

 FERTILISER

• AN/Urea
  
  

The increase in gas prices in Europe has reached new highs, touching €58/MWh this week to become the highest since April 2023 as a result of low gas stocks in Europe.

This puts further pressure on European producers of ammonium nitrate to increase prices. On the back of this, yesterday saw moves by European producers to increase their prices by approx. €20 for ammonium nitrate and nitrogen sulphur grades. CF Fertilisers also increased its prices this week in the UK by £10/t for Nitram, further highlighting the pressure on costs of production.

Frontier has Nitram available for Feb/Mar delivery, which can be provided through our own logistics network.As we head into spring, it's predicted that we will see frequent uplifts in price here in the UK.

There is still strong global demand for urea keeping prices firm. The speculation on potential trade tariffs continues, with the new US president threatening to implement taxes on some fertilisers imported into the US. These tariffs look like they may affect Chinese, Russian and potentially Canadian products initially.

In the urea market, there is the possibility that there may be a further Indian tender imminent for shipment March onwards given that the two previous tenders fell short on the tonnage that was secured. India's urea consumption looks like it's hitting record highs year on year, hence leading to the possibility of a further tender due very soon. Egyptian urea values rose once again this week and are now at $455 FOB, with Europe recently purchasing most of the Egyptian production. China also continues its export ban.

It is recommended that growers purchase their nitrogen requirements sooner rather than later as production is limited and the chance of further price rises are remains inevitable.

• UAN/Liquid
  
  

At present UAN values remain unchanged, however, in light of changes in the ammonium nitrate and urea markets, current values are under review and volumes are limited. Growers are encouraged to review their total nitrogen and sulphur requirements for the coming season, and those with additional requirements for this spring should contact their Frontier representative to discuss the options available. Growers have access to a full portfolio of products across N, N&S and NPK grades to suit all cropping scenarios and where tank capacity is available prompt delivery is ensured.

• PKs/NPKs/Straights
  
  

Both the phosphate and potash markets continue to remain firm.With the potential of the US tariffs on Mexican and Canadian product - which is currently delayed for 30 days - it could mean that potash firms up in price and the global markets are already reacting to this due to the potential impact posed.

The EU also looks likely to implement tariffs on Russian and Belarusian products of approx. €45/tonne from 1st July.The UK currently doesn't import Russian product, but because some parts of Europe do it could impact UK prices and tighten supply further.There is also a rumoured deal between India and Morocco on phosphate - while not yet confirmed, it could supply India with much needed DAP product as stocks are low.

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