Frontrunner - 18th November 2022

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WHEAT

• Ukraine export deal extended

This week, wheat markets continued to fall and have seen further losses in value – over £30/t since the beginning of the month.

The primary bearish price driver has been the hope that Russia would extend the grain export corridor agreement in the Black Sea. On Thursday, the UN Secretary-General confirmed the deal would be extended for 120 days.

Ukraine's agricultural ministry has reported that Ukraine has successfully exported 5.7 million tonnes of wheat to date this season and that the extension of the agreement will allow that figure to increase. However, continuing Russian military action in Ukraine raises concern for further damage to Ukrainian infrastructure, including power stations, which may impact export potential.

• EU wheat production estimates increased

Analyst group Stratégie Grains increased its EU wheat production estimate by 100,000 tonnes in its latest monthly update, bringing the new estimated total to 125.6 million tonnes. If realised, this would provide 31.6 million tonnes for export. The group also increased its import estimate by 700,000 tonnes, bringing the new estimated total to 6.1 million tonnes.

Despite fierce competition from Russia and Ukraine, EU wheat exports are continuing to run at a fast pace. Official weekly data from Brussels saw an increase of 828,000 tonnes on the previous week with the total for the season up to 13.350 million tonnes. However, private estimates suggest the official data is underestimating this figure by over 1.1 million tonnes. If this proves true, around 50% of the current wheat surplus may be shipped by the end of this month with seven months of the season remaining.

China is contributing to demand for EU exports, reportedly buying "several" French wheat cargoes this week.

• Argentinian production potential worsens

During 2021-22, Argentina was the world's sixth-largest wheat exporter, shipping 16.25 million tonnes and accounting for 8% of total world trade. However, severe drought will result in significant crop losses this season.

The latest crop estimates from the Buenos Aires Grain Exchange (BAGE) have been revised lower again, from 14 million tonnes to a new figure of 12.4 million tonnes. Similarly, the Rosario Grain Exchange has dropped its estimate from 13.7 million tonnes to 11.8 million tonnes.

Severe drought conditions are also prevailing across North America which raises concerns for 2023 winter wheat potential. Weekly crop conditions were slightly up on the week to 32% rated "good /excellent"; this is historically low and compares to 46% that achieved this rating for the same period last season. The US will account for 10% of world wheat exports this season.

​OILSEED RAPE

• Rapeseed values slide lower amidst increased supply certainty

This week, ex farm rapeseed values for the UK grower have lost around £30/t in a market environment that has lost many of its short-term bullish factors. Notably, Russia has agreed to extend the Black Sea export corridor into the new year which will ensure that all of Ukraine's remaining rapeseed will be exportable in the near future. To date, approximately 75% of its exportable surplus has been shipped.

The market has also seen indicators that China is unlikely to reverse its current zero-Covid policy. The policy has been restricting demand for oilseeds and oilseeds products in China since the start of the pandemic.

Markets have also been sent lower on news of improved conditions and planting forecasts for South American soybeans. However, with planting at only around 12% complete in Argentina, it will be some time before final volumes can be assured.

Meanwhile, extreme rainfall continues in Australia. This will only affect a minority of the crop but may have some impact on logistics. If there is a chance that the seed could take longer to enter the European market as a result, rapeseed prices could gain some underlying strength.

In recent weeks, vegetable oil prices have been very strong, which is mainly due to increased demand and capacity in the biodiesel sectors. However, these prices have weakened in the last two days.

To summarise, market fundamentals – including an oversupply of rapeseed globally – have taken over a market that has been previously swamped by uncertainty and political changes. However, the current volatility of the market could see this change again in a matter of hours.

 PULSES

• Bean markets quiet

The bean market remains relatively quiet in comparison to other grains. With the values of raw materials for wheat, barley and rapeseed meal falling, buyers have refused to bid for further supplies both domestically and overseas. These buying delays continue to build a backlog of beans on farm, which subsequently reduces the time available for attracting buyers.

On a brighter note, there is still demand for old crop green peas to supply the micronising feed trade. Please contact your local Frontier farm trader if you have unsold samples of peas left on farm. 

 FERTILISER

• Urea/AN

Activity in the UK and European ammonium nitrogen markets is subdued due to the uncertain outlook on manufacturer production costs and a subsequent lack of offers for physical quality tonnage.

In Sept 2022, 70% of European production was curtailed and, whilst some plants are now recommencing production, this activity is generally to cover existing order book commitments and to contribute to domestic requirements in the countries where the plants are located.

The war in Ukraine has disrupted normal procurement practices and has hit European fertiliser markets hard by creating many changes in raw material supply chains. Fertiliser prices will continue to be impacted into the spring by global events and by increasing energy costs as the colder months arrive in the continent.

Buying demand in the UK for quality ammonium nitrate is low, but growers are advised to discuss plans and options during this market lull.

Urea prices are slightly weaker in the UK and continue to maintain a reasonable discount to ammonium nitrate. This week, India has issued another tender for approx. 1.5 million tonnes of urea but has been offered two million tonnes at $75/t less than the October settlement price for 1.4 million tonnes. The tender is for December shipment and will potentially take some tonnage from Egypt; a country which is already well committed for November and December.

Egypt is a major supplier into Europe and the UK so any new tonnage required in these regions is unlikely to be fulfilled until January at the earliest. When this is considered alongside the limited supply of ammonium nitrate, it indicates the potential of an upcoming 'pinch point' in nitrate supply in January 2023 ahead of the usual usage period.

• UAN

After several weeks of POA pricing on nitrogen and nitrogen sulphur UAN grades, this week saw revised levels from UAN suppliers in the UK market. Terms offered are predominantly for spring 2023 delivery and reflect the softening seen in nitrogen markets. This means that UAN still offers growers good value compared to solid alternatives. In recent days, values on nitrogen phosphate grades have been released for delivery from January onwards. This gives potato and vegetable growers the opportunity to lock into starter fertiliser products and take advantage of the reduction in phosphate levels seen in recent weeks.

• PKs

Potash levels are showing signs of firming following the recent price drop enticing growers. Phosphate levels have had little change and demand is weak.

Please discuss your nutrient plans with your Frontier contact for more information.

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.