Prolonged dry weather in parts of Europe, Russia and Ukraine has resulted in dry soils that are well below average. This has been a strong supporting factor for wheat markets in recent weeks. However, rain arriving in the western side of Europe, as well as Russia and eastern Ukraine, has eased concerns for crop development in those regions. Meanwhile, analysts have been assessing the impact of coronavirus on wheat demand in the milling, animal feed and ethanol sectors and have adjusted their balance sheets accordingly. Last Thursday afternoon, the United States Department of Agriculture (USDA) cut both world wheat and corn use by approximately five million tonnes each. This raised year-end stocks for each commodity by the same value. European analyst Stratégie Grains published its EU balance sheet this week, cutting two million tonnes from last month's estimate of EU wheat use this season and almost three million tonnes for the 2020/21 season.

COVID-19

• Updates to Frontier's response

This week, we have provided two new updates related to making electronic payments to Frontier and how our team is using technology to stay connected to farmer customers and each other.

We're working hard to ensure that we comply with all Government guidance and continue to deliver good service to our customers. You can always find the latest information on our response to Covid-19 on our website.

WHEAT

• Supply issues ease, demand is cut and prices fall

Prolonged dry weather in parts of Europe, Russia and Ukraine has resulted in dry soils that are well below average. This has been a strong supporting factor for wheat markets in recent weeks. However, rain arriving in the western side of Europe, as well as Russia and eastern Ukraine, has eased concerns for crop development in those regions.

Meanwhile, analysts have been assessing the impact of coronavirus on wheat demand in the milling, animal feed and ethanol sectors and have adjusted their balance sheets accordingly. Last Thursday afternoon, the United States Department of Agriculture (USDA) cut both world wheat and corn use by approximately five million tonnes each. This raised year-end stocks for each commodity by the same value.

European analyst Stratégie Grains published its EU balance sheet this week, cutting two million tonnes from last month's estimate of EU wheat use this season and almost three million tonnes for the 2020/21 season.

Markets have focused on the demand cuts and the consequent future uncertainty, losing approximately 5% of their value this week.

• UK markets feel the weight of old crop

The UK wheat market has found strong support from the winter wheat drilling difficulties over the autumn and winter period. There are few estimates above ten million tonnes for the 2020 wheat crop - in sharp contrast to the 2019 figure of 16.3 million tonnes. The much larger than usual projected carryover of up to three million tonnes from this season to meet demand next season has weighed on London wheat futures this week.

The gap between May 2020 and November 2020 positions has been maintained at approximately £10/t, extending this week to £13/t to reflect the costs for commercial operators carrying wheat over to next season. It is unclear how many farmers may carry their crop but, with consumers well-covered and UK prices uncompetitive for exports, the fewer that do will bring more pressure to the old crop market.

• France wins business in Egypt

We previously reported how France is shipping more wheat to countries outside of Europe than it has since 2010 – a year when Russia had an embargo on its wheat exports following a poor harvest. Analyst FranceAgriMer estimates the total French shipments will reach 13.2 million tonnes by the end of June. This is in comparison to 12.9 million tonnes exported in 2010.

Reaching this target will be helped by sales to Egypt that France secured this week, despite being at a freight disadvantage to its main competitor, Russia. Russia has dominated wheat sales to Egypt this season. In addition, France sold three cargos amounting to 180,000 tonnes at almost $252.00/t including freight of $12. Russian wheat is more expensive when loaded to vessel, but their freight is just over $9.

Meanwhile, the French wheat crop rating has dropped one point to 61% rated 'good' or 'excellent', compared to 81% last season.

BARLEY

• Currency pressurises old crop barley

Demand does exist for barley, however, with the firming sterling, the UK has not been able to compete in the export market. The world's largest importer of barley, Saudi Arabia, purchased 600,000mt of barley in its latest tender on Monday for July to August arrival. However, the expectation is that the majority of this will be loaded from Black Sea origins.

• Weather a key factor for new crop barley

New crop barley values have also seen pressure this week, as have global grains, where a combination of demand destruction from Covid-19 and more favourable weather conditions for key growing regions in the EU and Black Sea have had an adverse impact on prices.

Spring barley is starting to come through the ground throughout the UK but with varying degrees of success. Several areas have not seen significant rainfall for weeks and some crops are already showing signs of stress, particularly those drilled later and on heavy soils. Showers are forecast for some parts of the UK this weekend but the longer term forecast shows a return to the dry conditions.

• Consider grain pool marketing amidst market uncertainty

The barley market is not unique in experiencing significant volatility and uncertainty at the moment. With the demand destruction for malting barley as a direct result of Covid-19, fluctuating weather patterns across the world and Brexit just months behind us, the Frontier barley pools remain open and are an excellent tool to manage risk. As a low-risk option with a proven track record over several years, this should be worth considering. Please discuss options with your local Frontier farm trader. 

​OILSEED RAPE

• Sterling firms

It has been a quieter period of trading in oilseeds markets this week with limited fresh news on global crop development. However, there has been some stability in traders' views on the extent of changes over the past few weeks in the demand side of the market. European markets are little changed this week, but UK physical markets are down in value by around £5/t. Sterling has firmed by 1% against the euro and this has been the key factor behind this shift.

• US stocks building

US soybean export figures continue to run behind the pace needed to hit USDA forecast levels for 2019/20. Cheap Brazilian beans to China are the primary contributor to this shortfall. A build-up in US stock levels is beginning to look inevitable and, given the continued weakness in corn markets, a large bean planting programme this spring now looks likely, which will boost supply in 2020/21. Barring unforeseen weather problems, these factors are all going to limit any price recovery in US markets over the next few months.

 PULSES

• Egyptian demand limited due to lockdown

It has been another quiet week in pulse trading. There are very few old crop peas and beans in the marketplace and demand everywhere has very much reduced. Ramadan starts next week, which is usually a time for high demand in Egypt. But, with most restaurants closed and social gatherings for after fasting each day restricted, the market feels oversupplied with good quality Australian beans and plenty of poorer quality English beans, more of which are arriving each day.

 FERTILISER

• Nitrogen

Easter came and went with very little, if any, rainfall. The last of the drilling continued in the north with some very good seedbeds, but rain is now required to get crops moving.

Demand continues to be strong for all fertilisers, especially nitrogen and nitrogen sulphur grades. However, the market is pretty flat, with some issues building around Covid-19 in terms of supply, loading and concerns over shipping.

On the other hand, UK nitrogen production continues at Billingham and our customers have access to the complete CF Fertilisers product range. Depending on location and order size, delivery is predicted to take 5-7 days. In addition, there has been very little activity on imports and Billingham is facing more challenges to supply compared to what is already in stock/production in the UK. Some customers have asked about new season offers, but it's too early to call these in current conditions. Lower gas/oil prices are being offset by a weaker currency outlook, creating uncertainty over import availability going forward. Our advice is to talk to your local Frontier contact for more information.

• PKs and Blends

The blenders are just about coping with current orders and the logistical issues around Covid-19. The market remains flat with demand still high, pulling prices higher. However, firmer sterling is helping push replacement stocks lower. 

Get in touch

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.