Frontrunner - 18th April 2024

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WHEAT

• Little change from USDA report

Last week's United States Department of Agriculture (USDA) report brought minimal shifts in the global wheat landscape. While world wheat production saw a slight increase to 787.36 million tonnes and consumption rose marginally to 800.1 million tonnes, end stocks dipped to 258.27 million tonnes. Notably, the adjustments made for India hint at a potentially bullish scenario for world wheat markets.

The USDA's upward revision of India's domestic consumption by two million tonnes brings the country's end stocks to 6.9 million tonnes. Contrary to the USDA's production estimate of 110.55 million tonnes for India, the Indian millers association projects a lower figure of 105 million tonnes, possibly leading to a significant import demand.

In the USDA's corn balance sheet, discrepancies arose over South American production forecasts. While Argentina's projection was trimmed to 55 million tonnes, the Rosario Grain Exchange slashed its estimate to 50.5 million tonnes due to crop disease. Similarly, Brazil's estimate remained unchanged at 124 million tonnes by the USDA, yet Conab lowered its projection to 111 million tonnes which signalled a considerable disparity.

These variations, if proven accurate, could significantly impact global corn production and end stocks.

• Mixed 2024 wheat production prospects support markets

Across Europe, mixed prospects continue to impact wheat production for 2024. France is still facing adverse weather conditions and anticipates its second-smallest wheat area in three decades, with crop conditions deteriorating compared to the previous year.

Conversely, Spain and Poland look to have more favourable outlooks, while Romania and Bulgaria grapple with dry spells, raising production concerns.

In Germany, despite a slight uptick in production estimates, figures remain below those of the previous year.

Strategie Grains' April report mildly increased EU wheat production but it suggests a downward trend compared to last year. Ukraine's production estimate also sees a decline, maintaining competition in export markets. 

BARLEY

• Good two-way trade on old and new crop

In recent weeks, we've witnessed active trading in both old and new crop barley as farmers look to secure financing and hedge spring sowings.

Prices remain relatively stable and demand from livestock farmers and feed compounders have ensured steady market activity.

• Sowing progress and weather uncertainties

By 15^th April, sowings had reached 75% in areas south of Hull via Derby and down to Cheltenham.

Shropshire, Cheshire, Yorkshire and Lancashire have suffered from more wet weather and perhaps only 30% had been sown by Monday of this week. Scotland's progress was also stalled, with only 15% sown there.

The current forecast is dry until Friday, so more progress will be made over the next few days. With higher feed prices and decent new crop malting barley premiums, there is every incentive to get the crops in the ground before the end of April cut off point.

OILSEED RAPE

• Rapeseed prices experience volatility

Rapeseed markets responded to fluctuating vegetable oil markets, influenced by geopolitical events and energy market uncertainties.

Crusher cover remains decent in old crop positions, while attention shifts to new crop prospects. European weather conditions have been mixed, with the eventual crop size being somewhat uncertain. Meanwhile, competing oil production levels (such as palm oil) are contributing to the bearish market dynamics which warrants careful monitoring. 

 FERTILISER

• Urea/AN

Since last week, there haven't been any changes in prices in the UK nitrates and urea markets. Some weakness in pricing is expected but with no fresh cargoes arriving, we can't access these slightly lower levels yet.

The market has now had time to digest the lack of Indian urea volume in the recent tender and with China getting closer to coming back into the urea market following a period of restricted trade, all the signs point to a weaker trade in the short term. However, as we have seen over the weekend, things can change very quickly.

Middle Eastern conflict has influenced energy markets, pushing gas prices higher in both Europe and the UK and the colder weather doesn't help either. This will have a ripple effect for nitrate producers who are already struggling to compete with lower urea levels. At this time of year these nitrate plants have historically needed some maintenance, so taking them offline may be back on the agenda.

Many of these plants have been working at lower production rates due to higher gas prices, so a spike might not be great timing for a summer new season reset.

Free stocks of nitrates and urea in the UK remain tight. The summer reset in prices has historically been just a month or so away and suppliers don't want sheds full of stock as we get closer to this period. However, with delayed spring 2024 activity, we could still see a spike in demand just as stocks are running low.

• UAN/Liquid

When conditions have allowed, UAN applications continue across most regions.