Frontrunner - 1st August 2024

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WHEAT

• Bearish European markets

Up until Wednesday, the past week has seen the bears take control of the market.

London wheat futures for the November contract opened at £195.75/t last Thursday before shedding £8.50/t to a low of £187.25/t on Tuesday – they recovered by close of play Wednesday.

Paris wheat futures for the December contract followed a similar pattern. They opened at €231.25/t last Thursday, then dropped by €9.75/t to a low of €221.50/t and recovered on Wednesday by closing at €227.50/t.

• Focus on weather variation

Due to the current muted buying demand in the market, many traders are now focusing on the weather.

Northern France and Germany have been wet recently, which is causing delays in harvest. Southeastern Europe and the UK has been dry and hot which has allowed harvest to progress in the southern areas and begin in the UK. The vast Russian spring wheat area has also been subject to cooler wet conditions and this is set to continue for the next week or so.

• Low harvest production for France

The next few weeks are crucial for European harvests. French farmers are turning to their government for support as the country is forecast to have the lowest production in the last ten years due to the fourth wettest spring ever on record. It's reported that French farmers could be facing income losses of €1.6 billion collectively. We will watch to see what effect this has on the European supply and demand picture for wheat.

BARLEY

• Winter barley harvest moving at pace

Good weather has allowed for another week of winter barley harvesting across the UK. With more good weather forecast into this weekend, many parts of England will be complete with farmers starting to move into other crops.

Winter barley yields have been lower - we would say yields are 10% down on the five-year average which was expected given the lack of sunlight through the spring compared to normal.

Bushel weights have been good but there is some variation. However, the majority of samples are testing over 63kg and with the recent good weather, this has meant most barley has been cut dry and below 15% moisture.

With a smaller area and lower yields, harvest pressure has been less than what was experienced in previous years. A contributing factor has also been the significant discount of harvest prices to October/November prices, which have incentivised farmers to keep grain on farm for a couple of months if they can hold it.

• Harvest pressure lacking

Less harvest pressure has meant there has been little need for the UK to discount feed barley prices to become export competitive.

Typically, the UK would need to export a significant quantity of feed barley during July and August. However, this year will be different because UK barley has been and remains uncompetitive in comparison to other European origins in the global market for several months now.

In the forward months, feed barley is generally trading at a £23-£25/t discount to feed wheat and is buying demand in feed compounders rations. This extra demand at the moment is keeping UK barley away from export business.

The focus now will be on the spring barley harvest and what sort of quality the UK produces. If the quality is poor, then we'd expect more feed barley to be available to compete into consumption points. 

OILSEED RAPE

• UK harvest progresses while markets remain volatile

The UK harvest is progressing faster than this time last year, with the warm and dry weather forecast to continue for another week. Yields are set to be lower than average - at a shade over 3.00 metric tonnes per hectare.

Markets remain extremely volatile as the conflicting supply and demand picture across the oilseeds complex takes hold. Global rapeseed supplies continue to tighten due to reduced European yields. Additionally, in Canada, above-average temperatures and minimal rainfall are expected to significantly reduce canola production, further impacting supply.

In contrast to rapeseed, global soybean supply looks ample and there are ideas about record yields developing in the US and weaker demand prospect in China. Europe has a challenge ahead as it decides how much rapeseed oil demand can be cut or replaced at current levels due to very low crushing margins, particularly with the new EU Regulation on Deforestation-free Products (EUDR) rules coming in 2025. This will limit the use of cheaper South American origin soybeans.

 PULSES

Demand for new crop beans remains limited due to the relatively high prices that beans are trading at, especially when compared to wheat. This premium must come down further to increase both domestic and export demand. Due to the warm weather, beans are developing rapidly which is bringing harvest closer.

Values for peas remain strong with harvest around the corner. If you require harvest movement, please ensure that samples are prepared and available for testing. 

 FERTILISER

• Urea/AN

For a second week, there has been little change on global urea pricing.

With Egyptian factories now restarted, albeit at a reduced production capacity, prices from the region remain static. There has also been little fresh sales as the country plays catch up on previously committed sales.

There is still no sign of China resuming exports and there's a potential for another Indian tender which is due shortly – this may give an indication on the direction the market will be heading in the near future.

Gas prices remain high in Europe after a brief dip in early July and ammonia prices have again increased to levels last seen in January this year and are up $150/t since the start of new season.

With the current ammonia pricing, values for ammonium nitrate should be much higher than we are seeing in the UK and are undervalued in comparison. As a result, European producers are unable to compete with the current CF Nitram offering.

The high values on both gas and ammonia are indicating a firm and tight ammonium nitrate European market as we head into the winter months, which is historically when gas and ammonia values increase.

Yet again, this could mean the possibility of reduced production rates or factory curtailments as we head through the autumn.

• Liquid

With harvest progressing across the UK, the demand for nitrogen phosphate products has increased and growers are looking for starter fertiliser options on oilseed rape crops which are due to be drilled in the coming weeks.

Products are available in both bulk and IBCs for prompt delivery. A range of nitrogen and phosphate ratios - along with NPK grades – are being offered to suit nutrient requirements.

Tank fill terms remain unchanged in the marketplace and continue to offer growers good value when compared against AN systems - a full portfolio of nitrogen and nitrogen sulphur grades are available.

Spring 2025 terms also remain unchanged and offer those who know their total requirements for the season the opportunity to lock into known costs. If you're in the market for urea polymer foliar nitrogen products (such as Nutrino Pro) to support cob or grain fill in maize as well as green canopy extension in potatoes, please be mindful of delivery timescales from the point of ordering. This is especially important for maize, as the crop is motoring through its growth stages and product is required imminently for application.

• Straights/PKs

The potash market remains flat with little global demand, but in contrast the phosphate market is still looking firm.

Today's replacement values into the UK are much higher than the current levels we are seeing on farm. Once suppliers' stocks diminish we will see much higher phosphate prices here in the UK.

It's thought that suppliers are taking a stepped approach with increasing phosphate rather than one big jump in price which would reflect the current values. Please consider purchasing your starter fertiliser requirements in good time for the usage period and while values remain as they are today before we see further increases in prices.

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