Frontrunner - 13th June 2024

LISTEN TO FRONTRUNNER

Frontrunner is also available as a podcast, so you can hear the latest from our traders while you're on the go. Listen below or subscribe to the report on Acast, Spotify, Apple Podcasts and Google Podcasts. 

WHEAT

• Markets in decline

Global wheat markets continued to fall earlier in the week. US Chicago Board of Trade (CBOT) wheat futures dropped for the ninth consecutive day on Monday, reaching their lowest levels since early May and marking a 14% decline in value since the recent peak at the end of May.

The liquidation of old crop stocks at significant discounts to forward futures prices has driven much of the speculative selling. Despite significant purchases by Algeria, Egypt, and Morocco, futures prices continued to decline.

Concerns over future wheat demand also contributed to the bearish sentiment, particularly after Turkey announced an indefinite ban on imports. From July to September last year, Russia shipped two million tonnes of wheat to Turkey.

• Russia sparks a recovery

On Tuesday, concerns over Russia's 2024 wheat production resurfaced, sparking a sharp price rally. Paris wheat futures gained nearly 3% following news of more extensive crop damage than previously reported. The head of the Russian Grain Union stated that 15-30% of the Russian winter grain crop had been affected by frosts, which is significantly higher than the 1.2% previously reported by the Russian Agriculture Ministry. Additionally, the southern Rostov region declared a state of emergency due to drought, with potential crop losses of up to 30%.

Egypt received numerous offers for another tender totalling up to 1.8 million tonnes, but Russian offers remained uncompetitive due to a previously established floor price. The cheapest cargoes for August shipment came from Bulgaria, Romania and Ukraine, with prices ranging from $265 - $270, including freight. Egypt purchased 100,000 tonnes from Bulgaria, 120,000 tonnes from Ukraine and 180,000 tonnes from Romania.

The United States Department of Agriculture (USDA) will publish its June updates to the World Agricultural Supply and Demand Estimates (WASDE) report for both the 2023 and 2024 crop years. These updates will need to account for lower production estimates in Russia, Ukraine, the EU and Brazil. Turkey's ban on imports will also impact trade flow data.

• UK 2024 crop even smaller

Domestic estimates for the UK's 2024 wheat production have varied widely, but European analysts Strategie Grains have undercut most of them. It estimates the crop will reach just 10.351 million tonnes, citing prolonged rainfall and low temperatures as damaging to yield potential.

East Anglia has received just 50% of its usual sunlight for this time of year, reminiscent of the poor conditions seen in 2012 that resulted in widespread ear disease and low specific weights. If the 2024 UK crop is just over ten million tonnes, the wheat carry from the old crop and imported volumes will each need to exceed three million tonnes to meet domestic demand. This might be possible with the carry, but UK ports may struggle to handle such high import volumes.

BARLEY

• Compounder demand picking up

Farm selling has continued in a subdued fashion this week, as futures markets slowed their recent sell-off, but did not reverse it. The demand picture, however, has improved. Domestic compounders - especially in Yorkshire and the Southwest - have actively been seeking crop '24 cover, a contrast to last week when most new crop demand came from the trade. With barley discounts to wheat holding around £30+ per tonne, barley is expected to remain a significant component of feed formulas.

• New crop growing conditions remain challenging

Growing conditions for both winter and spring barley remain challenging. Whilst May brought much needed rain, especially for spring barley, June has so far failed to deliver adequate sunlight or warmth. The weather for the rest of the month will be critical in determining how new crop yields might be affected.

Given the volatile markets and uncertainty surrounding next season's crop, now is an opportune time to contact your local farm trader to discuss how best to mitigate the risks at play for crop '24.

OILSEED RAPE

• Prices somewhat redeemed

Oilseed rape prices recovered slightly this week, due to the price of crude oil appreciating. MATIF rapeseed futures remain volatile, experiencing a €10 range throughout the week. The global outlook for 2024/25 predicts reduced production of canola and rapeseed to a three-year low, with the sizeable increase in Canadian output likely to be offset by lower crops in other key countries. Most production forecasts predict a crop of around 18 million tonnes in Europe, a fall from 20 million tonnes last season.

In the USA, soybean crops are off to a favourable start with 72% rated 'good to excellent' - much higher than last year and the five-year average. The US biodiesel market is proving disappointing - despite a $2 rally in crude oil, veg oil could not find a bid.

 PULSES

• Strong values but limited activity

It has been another quiet week for old crop pulse trading, although values remain very high, especially when compared to new crop.

New crop beans continue to grow very well, especially winter crops drilled into good conditions. It's worth remembering that June last year was the hottest on record and the heat certainly had a negative impact on pulse yields that year.

Prices of new crop bean prices continue to follow wheat values, with the recent wheat volatility being reflected in the bean market. This price uncertainty not only prevents buyers from making any commitments but is also justification for growers not to sell any new crop.

 FERTILISER

• AN/Urea

The UK's new season AN price was slowly withdrawn by sellers at the end of last week as their allocated volume was used up, with no signs of any further volume becoming available for summer delivery. At the time of writing there is no update on terms for UK produced AN - any new terms will likely be for early autumn delivery and will mirror the upward movement seen in the rest of Europe by £5-£15/t.

Meanwhile, all imported AN sources have been comparable in £/kg/N to that of UK AN - taking into consideration product quality – however, tightness of supply on all AN options still remains the same.

As forecast by urea traders, the UK urea market has seen an increase of £10-15/t - dependant on geographical location – keeping its position as the cheapest £/kg/N nitrogen source on offer.

Globally, urea trade continues with no major changes reported over the last week. However, given that North African producers have a significantly reduced production capacity - due to restricted gas supplies - this will have an impact on short and long-term supply and demand.

Those UK growers that did not purchase last week, could consider looking at alternative systems. There are nitrogen sulphur options available that demonstrate good value versus other systems.

• Liquid

Liquid terms released by one national supplier last week remain unchanged; however, growers should not get complacent, as terms could get pulled at any point. We would advise getting tank fill covered at the earliest opportunity.

From 10^th June, liquid N/S systems are at a lower cost per hectare to that of some solid nitrogen sulphur systems.

Milling wheat growers are now calling off delivery of their products for supporting proteins. Application timing is likely to be over the coming weeks and delivery timescales are under pressure due to the increase in product demand - growers are advised not to delay purchase.

• Straights/PKs

With UK growers focusing on nitrogen and sulphur over the past week, there are no market changes to report.

Oilseed rape growers looking for NP product for establishment should keep an eye on the ammonia or nitrates market, as this will increase/decrease DAP (or equivalent) accordingly.

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.

To be notified each time this report is published in the future, you can also subscribe at www.frontierag.co.uk/blog/subscribe to ensure you always have the latest market insights.