Late afternoon last Friday, the United States Department of Agriculture (USDA) published a wealth of data for world and US grains, leaving the potential for price volatility to follow.
The January World Agricultural Supply and Demand Estimates (WASDE) report was accompanied by US 1st December stocks and the USDA's first look at the US winter wheat planted area.
WHEAT
- Lack lustre USDA for wheat but corn supports
Late afternoon last Friday, the United States Department of Agriculture (USDA) published a wealth of data for world and US grains, leaving the potential for price volatility to follow.
The January World Agricultural Supply and Demand Estimates (WASDE) report was accompanied by US 1st December stocks and the USDA's first look at the US winter wheat planted area.
Before the report, the Chicago Board of Trade (CBOT) suffered from a dismal set of weekly US wheat export sales at just 111,300 tonnes, 29,000 tonnes below last week's poor numbers which were the lowest for the season so far and below the lowest of trade estimates.
From the WASDE, the world wheat balance sheet was almost entirely unchanged. World production increased by just 29,000 tonnes with no changes for the world's major exporters. Consumption was cut by only 59,000 tonnes and year end stocks increased by 1 million tonnes to 258.82 million tonnes almost entirely in Russia.
Russian wheat stocks look set to increase to 9.24 million tonnes because of a cut in their exports to 46 million tonnes. Some see Russian wheat exports a little above 40 million tonnes given the slow start to 2025 and a quota in place from February to the end of the season of 10.8 million tonnes. The US winter wheat planted area was expected to be lower on the year by some in the trade, but at 34.115 million acres it was 720,000 acres up on the previous year. US 1st December stocks were also up on trade estimates at 1.5 billion bushels. Overall, a neutral to bearish set of data for wheat, but a boost in market fortunes came from some more major changes for US and world corn.
US corn yields were cut from 183.1 bu/ac to 179.3 bu/ac which, with a minor cut in the harvested area, knocked 7 million tonnes from the US 2024-25 production estimate down to 377.6 million tonnes versus 389.7 million tonnes last year. Other modest world production changes leave output at 1.214 billion tonnes, 3.5 million tonnes down on previous.
China production increased by 2.9 million tonnes to 294.9 million tonnes, in line with official estimates and reducing the country's future import needs. World consumption was marked 800,000 tonnes higher up to 1.2385 billion tonnes, leaving end stocks 3 million tonnes down on the previous report and now over 24 million tonnes down on the year. Adding to this bullish picture, there were lower than expected US 1st December corn stocks which were also down on last year. This backdrop puts increasing importance on South American output and whether there will be a careful watch to see if Argentina and Brazil can meet their estimates, both of which at this stage are up on last year. The National Supply Company (CONAB) edged its Brazil corn production estimate slightly to 119.55 million tonnes whilst the USDA estimates the crop up at 127 million tonnes.
- EU wheat exports still slack
After a strong start, Paris wheat futures have subsequently eased lower this week; a decline that is the result of another bout of poor EU weekly wheat exports. Official data from Brussels states just 323,000 tonnes shipped in the week ending 12th January, to a cumulative for the season at 11.488 million tonnes. This now trails last year by 6.5 million tonnes.
Romania is the star EU export performer amongst an overall disappointing effort, with almost 3.3 million tonnes shipped compared to traditional primary EU shipper France with 1.335 million tonnes.
Currently, there's no sign the euro weakness is bringing volume buying to EU exporters although rumours of fresh French wheat sales to Morocco gave support early in the week. Nigeria remains the top EU wheat buyer having taken 1.824 million tonnes so far, followed by Morocco with 1.1 million tonnes and the UK at 904,000 tonnes. Whilst EU wheat exports drag, EU corn imports are up on last year with 10.58 million tonnes from 10.113 million.
- UK wheat stuck in a narrow range
London wheat futures enjoyed a buoyant festive break, rising to their highest level since the end of October 2024 – albeit briefly. However, the start of the new year saw prices move lower again, dropping by as much as £7 per tonne while battling sterling strength and limited demand.
Domestic consumers have adequate cover short-term and even with domestic prices significantly below imported wheat costs for both feed and milling grades, attracting demand has been a challenge.
A change in sterling's fortunes might now indicate more movement and an improvement for UK wheat price prospects. Worsening economic indicators and the rising cost servicing UK debt has brought an end to sterling's rally that peaked just before Christmas at a 32-month high. Traders have sold sterling and we have seen it fall heavily since the middle of last week. It is now at its lowest versus the euro since 1st November 2024 and the US dollar since the end of October 2023. If sterling continues to fall, import costs rise and in the south of the UK, exports might even begin to feature.
UK 2025 wheat production prospects are encouraging, with crop condition for the eastern side of the UK in good shape, but this adds another potentially bearish factor for prices to account for.
BARLEY
- USDA report boosts feed barley prices
The USDA report described earlier led to a surge in corn futures trading on the Chicago exchange, which in turn increased demand for UK feed barley. As a result, more European buyers are looking to the UK for barley, and UK merchants who are short on domestic barley are placing more emphasis now on buying UK barley. It remains competitive in animal feed rations across most of Europe, especially since France's maize quality has been affected by a wet harvest and imported maize from other countries has become more expensive since December.
- UK barley exports slower than expected
UK barley exports to the EU have reached 200,000 tonnes so far, but the target is 700,000 tonnes by the end of June to avoid a large carryover into the 2025 crop.
This means the news of increased export interest is welcome, as malting barley exports have been slow and domestic demand for malting barley has been non-existent since mid-December. The question now is whether the vessels leaving the UK in the coming months will be carrying feed barley or malting barley grades which are struggling to find buyers. There's hope that a challenging sowing season in the EU could revive the malting barley market. Time will tell if this helps boost exports.
OILSEED RAPE
- High prices continue but may be difficult to hold
This week, rapeseed prices have remained near recent highs, supported by lower crush rates in Europe which have strengthened rapeseed oil values.
However, the supply and demand fundamentals for rapeseed suggest these high prices may be difficult to maintain due to adequate supplies in Europe. Additionally, a stronger soybean market has contributed to the support for rapeseed, as concerns about dry conditions in Argentina's growing regions are negatively affecting the country's crop prospects.
In contrast, European crop conditions for the upcoming harvest are generally positive, and the combined crop from the EU and UK for the 2025 harvest is expected to exceed 19 million tonnes if current conditions hold. Commercial funds are still heavily involved in the oilseeds market, holding record positions in MATIF rapeseed of over 60,000 lots. They have also recently been active in the soybean market on the buying side, which can cause sharp short-term price fluctuations.
PULSES
- Feed beans
The weakness in the pound brought some export interest for UK beans this week. This continues to be for the nearby, and demand is expected to carry on this way. With the reduction in domestic demand, the UK will need to push exports to balance the overall picture.
- Human consumption beans
We are still seeing bids in the market for good quality human consumption beans, despite the influx of Australian seed. This demand is likely to slow right down ahead of Ramadan at the end of February, so please continue to send samples to your local farm representative.
FERTILISER
- Urea/ AN
This week has seen a upturn in fertiliser demand on all products but especially straights such as MOP and TSP and ammonium nitrate-based products, driven by the close proximity of the application periods.
Global urea has firmed by approximately $70 since the start of December, mainly due to a lack of physical product as well as high demand coming in from India, Ethiopia and South America in particular. Once again there is a 1.5 million tonne tender due for the Indian market, requesting delivery by the end of February and offers are due in by early next week.
Given the current lack of product it is expected that offers will be a lot firmer, so we should expect further strengthening in the values of urea. This in turn has led to ammonium nitrate markets firming and indeed the lack of product across Europe and the UK will only serve to firm this market significantly over the next few weeks. Political upheaval has also weakened sterling against both the dollar and euro, meaning new imports will cost more.
- Liquid UAN
This past week has seen a significant amount of liquid orders come in and, with values from all suppliers firming this week - mainly due to firming urea and AN values - it is anticipated that we will see a marked move up in prices per tonne as the week progresses. As per previous reports we advise that growers place their outstanding requirements and indeed re-evaluate their needs for this season. We are also seeing more interest in Liquid NPs and NPKs for potatoes and root crops in particular – if of interest it's a good time to speak to your advisor.
- PKs/straights
As mentioned earlier, currency is having a big impact on replacement cargoes into the UK and values on all straights. Potash and phosphates will firm over the next week which will in turn increase pricing on PK and NPK grades. It's a late ordering season this year, however, now that autumn crops have established well across the UK, demand has certainly increased significantly since the new year. With January and February being short months, it is advisable to place orders at the soonest opportunity to avoid late delivery.
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.