UK wheat futures have struggled to recover from last week's 9-month lows. UK wheat futures are currently hindered by low world prices and a slow export pace. Official customs data puts UK wheat shipments to the end of October at 313,700 tonnes and it is likely a further 200,000 tonnes will have been shipped by the end of December. With a wheat surplus of more than two million tonnes, the pace of shipments needs to increase significantly in the new year to avoid a considerable build-up of carryover stocks. Domestic demand to the feed sector is in question, with many feed wheat consumers unable to take delivery of existing purchases due to a slowdown in usage.

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WHEAT

• Markets struggle to recover from lows

UK wheat futures have struggled to recover from last week's 9-month lows. UK wheat futures are currently hindered by low world prices and a slow export pace. Official customs data puts UK wheat shipments to the end of October at 313,700 tonnes and it is likely a further 200,000 tonnes will have been shipped by the end of December. With a wheat surplus of more than two million tonnes, the pace of shipments needs to increase significantly in the new year to avoid a considerable build-up of carryover stocks. Domestic demand to the feed sector is in question, with many feed wheat consumers unable to take delivery of existing purchases due to a slowdown in usage.

In contrast, suitable quality Group 1 wheat for the domestic market remains in short supply with premiums for milling specification (13% protein) above £60/t across much of the country.

• Lower wheat estimates for Argentina

The Rosario Grains Exchange made further cuts to Argentina's wheat crop estimate this week. Its earlier prediction in May came in at 19 million tonnes. However, a lack of rain coupled with high temperatures throughout the season have severely cut production prospects. It now estimates the crop will produce 11.5 million tonnes, which is only half the volume of the record 23-million-tonne crop produced last season.

Meanwhile, Australia is expecting a second consecutive record wheat crop, predicted to come in at 36.6 million tonnes.

• India's stocks plunge

India is the world's second-largest wheat producing country after China, but traditionally it exports very little as its wheat harvest is usually consumed domestically. However, this season, India has produced a record crop that the United States Department of Agriculture estimates will reach 103 million tonnes. This has presented a surplus of six million tonnes for export. This additional tonnage from India will help replace wheat supplies lost from Ukraine earlier this year as a result of port closures.

One of the world's primary importers, Egypt, accepted wheat from India for the first time this year as a result of wheat being inaccessible from Ukraine. However, some Indian observers have suggested the Indian wheat crop is much smaller than official estimates have reported following a spell of extreme heat that damaged developing crops and a government export ban on wheat introduced in May. India's domestic wheat prices have risen by 28% since the export ban was introduced.

Official government data shows wheat stocks held in government stores in India as of 1^st December are at their lowest for six years at 19 million tonnes. This figure is only half of the wheat stocks held at this time last year (37.85 million tonnes). 

BARLEY

• Cold weather raises opportunities for spot sellers

Barley markets have been quiet with muted farmer selling and demand as we head into the festive period. Demand has been limited to trade buyers for the January/March positions with discounts to wheat at £18-20/t.

Cold weather has resulted in logistical challenges in some areas of the UK, particularly in the southeast and southwest of England. This raised some opportunities for spot sellers to achieve higher prices; however, these opportunities have disappeared as the week has progressed.

• UK barley production figure increased

The Agriculture and Horticulture Development Board (AHDB) has increased its UK barley production figure from 7.19 million tonnes to 7.39 million tonnes, which is as a result of strong yields for spring and winter barley in harvest 2022. The UK now has a sizeable barley surplus on paper.

With domestic feed demand lower for the July to October period, the UK will need to seek export opportunities in the new year. There is limited forward trade due to the current trend of hand-to-mouth buying, particularly from European compounders. If UK feed barley struggles to find demand in the export market, it is likely that the discount of feed barley to wheat could be widened in order to increase domestic barley usage.

​OILSEED RAPE

• Rapeseed values impacted by heavy European stocks

Heavy European rapeseed stocks continue to weigh on the market and are keeping rapeseed values from recovering; this picture looks likely to remain into the new year. However, dry growing conditions in South America might offer some support as soybean crop estimates begin to be trimmed. The high end of the Brazilian production range is now below 160 million tonnes and closer to 155 million tonnes.

The Chinese New Year holiday starts in a few weeks, which adds concern that this might trigger another round of Covid infections and subsequent lockdowns, which will impact demand for oils and proteins and add to the bearish picture. 

 PULSES

• A look back at 2022

The UK pulses market has seen extreme volatility this year, as with all crops. Following the outbreak of the Ukraine-Russia war beans values rose earlier this year, which attracted many export buyers – especially for new crop. However, UK growers were reluctant to export, despite values in excess of £350/t.

After a successful and dry harvest, the average bean yield was approximately 3.5t/ha and 4.0t/ha for spring and winter beans respectively. The missing factor in this year's marketing has been the absence of any volume trade to Egypt for human consumption beans. This is due to Egypt having plentiful old crop and the option to purchase beans from cheaper Baltic and Australian origins.

• Bearish outlooks for beans in the new year

From summer highs, beans values have now fallen over £100/t as the market tries to find fresh demand. The outlook post-Christmas is still bearish as the UK has at least 75,000-100,000 tonnes of export business to conclude and buyers are still very reluctant to commit at this stage. 

 FERTILISER

• AN/urea

There has been some activity on urea traded across Europe over the past seven days, but this has not been the case in the UK as farm interest remains low in the run-up to Christmas. Offers for ammonium nitrate from European producers are limited with the cost of production being scrutinised due to colder weather and increased gas prices.

With only 35 working days until usage, pressure is already building on physical supply of nitrogen-containing products. It is advised that growers assess their remaining requirements early in the new year, if not earlier.

• Liquid/UAN

Growers who have experienced changes in cropping this autumn are advised to reassess the UAN volumes they require for this season. With a full portfolio of nitrogen and nitrogen sulphur grades available for spring 2023 delivery, growers with outstanding UAN requirements are encouraged to secure additional tonnes ahead of usage. Offers remain in the UK marketplace across a range of NPK fertilisers in both bulk and IBCs, offering vegetable, potato and spring cereal growers the opportunity to cover their starter fertiliser requirements. All growers are encouraged to include Limus® Clear, a urease inhibitor for inclusion within UAN, throughout their liquid fertiliser programme in the spring. The benefits include improved nitrogen use efficiency (NUE) of up to 7% through reducing ammonia emissions by up to 98%.

• PKs

Potash prices had seen a slight increase of late, but due to slow demand, pricing levels remain static at present. The phosphate market remains subdued with little activity on purchasing.

Growers could consider NPKs for spring application. Please speak to your Frontier contact for more information.

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