Frontrunner - 20th June 2024

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WHEAT

• US wheat prospects pressures prices

Chicago Board of Trade (CBOT) wheat futures continued to fall sharply this week, only pausing mid-week when US markets closed for a public holiday. By end-of-trade on Tuesday, the December 2024 position had fallen to its lowest since 22^nd April, marking an 18% fall in value from the recent peak on 28^th May.

One of the primary price drivers that's encouraging selling is an improving outlook for US 2024 wheat production. The US weekly crop progress report puts the US winter wheat harvest 15 points up on the week to 27% complete, well ahead of the 14% average.

Crop condition improved by two points on the week to 49% rated 'good/excellent' versus 38% last year. Spring wheat condition improved by four points to 76% rated 'good/excellent' - well ahead of 51% last year.

In its June World Agricultural Supply and Demand Estimate (WASDE) the United States Department of Agriculture (USDA) increased the US 2024 wheat production estimate to 51.02 million tonnes - up 500,000 tonnes on the previous report and ahead of last year's 49.3 million tonnes. 2024-25 US wheat end-stock is seen rising to 20.64 million tonnes - over five million tonnes up from two years ago.

• Eastern EU production upbeat

In contrast to countries in the west, two of the EU's cheapest wheat sellers look set to harvest record or near record wheat harvests.

Romania is expected to reach 10.5 million tonnes which, if realised, would be up on last year and a new record. Neighbours Bulgaria harvested just over 5.3 million tonnes last year, but some observers suggest its crop could reach seven million tonnes. In last week's Egyptian wheat tender, Bulgaria, Romania and Ukraine made the cheapest offers and secured sales totalling 400,000 tonnes for delivery in August, which should help manage some of the expected harvest pressure.

In contrast, French wheat output is seen falling five million tonnes down on last year and might slip further below 30 million tonnes. Traders are concerned about ongoing rain and cool temperatures -crop ratings are at 62% rated 'good/excellent' and remain well below last year's figure of 85%.

• Old EU crop exports catching up

It appears trade data from Brussels remains out-of-date. The change on last week was 388,000 tonnes, bringing the total EU wheat shipped for the 2023-24 season to 29.151 million tonnes versus 30.7 million tonnes last year.

However, it's thought that French export data alone - at 8.45 million tonnes - is 1.5 million tonnes down on the actual figure. If this is the case, it puts the pace equal with last year and suggests that the total EU estimate of 32.5 million tonnes from analyst Stratégie Grains will be achievable.

This will leave end stocks at a very comfortable 13.5 million tonnes – similar to the end of last season. This is just short of the sufficient amount of wheat to meet consumption needs for seven weeks and will help cushion the impact of a smaller EU 2024 wheat crop.

BARLEY

• Feed barley follows the trend of lower wheat markets

Even with very little farmer selling, barley markets have declined over the last week. There have been buyers in the domestic market, but some merchant sellers have now become reluctant to sell at such low levels without farmer engagement.

On the bearish side, since Christmas very few boats have been sold for export as prices haven't been competitive in comparison to Baltic and Black Sea sellers.

Barley is now a very competitive raw material in all EU rations and depending on the size of the UK crop, the exportable surplus ranges from 500,000 to 900,000 tonnes. At the low end that could mean we only have 300,000 tonnes of feed barley to ship all year, and at the high end it'd be around 500,000 tonnes.

• Malting values decline - farmers and merchants wary of yield and quality problems

Old crop prices ended on a relatively high note, meaning crop '24 sellers do not have a bid overhang from the previous year to be wary of.
The late sowing of spring barley has naturally made growers cautious and while crops look pretty good overall, there are also some poor English crops.

There is a mix of crop factors that are yet to be 'buttoned down': low sunlight levels, spring crops having been sown very late and too thickly, and a wide range of area estimates for both winter and spring barley.

Premiums over feed are £30-55/t depending on variety, location and nitrogen specifications. You may wish to fix your feed base if you don't relish the prospect of further decline but have been advised to wait until after harvest to fix a malting premium.

OILSEED RAPE

• Rapeseed prices follow general oilseed and cereal prices lower

Prices are being steered by the improved weather conditions and funds are sellers in a market lacking any volume of physical trade.

In recent months, European rapeseed has developed a premium over other oilseed products and rapeseed of other origins to reflect its import requirement for this season. When running at this premium level, rapeseed can be much more reactive to movements in other markets, particularly soybeans.

The trade will be watching for early rapeseed harvests in the Black Sea regions where the Ukrainian and Romanian harvests will be key for early season supplies into Europe.

 PULSES

• Old crop UK beans finished trading due to lack of available UK supply

Several consumers - who can switch out of beans - have chosen to buy imported peas instead, which should see them through to the arrival of new crop UK beans.

The growing pulse crops are still benefitting from the recent warm, wet weather and although there are likely to be some disease pressures, several growers are reporting that their pulse crops are looking in very good condition.

A month ago, the UK bean crop was predicted to be below 500,000 tonnes - down from 650,000 tonnes last year. However, the recent favourable weather has resulted in the UK crop looking to achieve 550,000 tonnes.

Currently, the only buyers of UK new crop beans are the processors who manufacture extruded poultry feed. Buyers for cattle and pig rations do not see beans as a competitive ingredient at the current high premiums to wheat.

 FERTILISER

• AN/Urea

New UK AN terms for quarter four were released at the end of last week.

Unlike all other European markets, the UK offer is for delivery in October/November and at a small premium to the September terms. So far the uptake has been encouraging due to the tightness in supply of imported AN fertiliser and high gas prices in the UK and Europe.

Offers for the UK are at similar values but for July/August delivery and limited volumes. We expect the current offer for later delivery to be withdrawn very soon.

Granular urea offers firmed again earlier this week, as the gas situation and global demand pushed prices higher. Which direction the urea market will take over the coming weeks is difficult to predict.

Demand for gas in the urea producing regions in Egypt will depend on summer temperatures. Over the last two weeks, all urea production in the country has been affected by lack of gas - some producers have used the situation as an opportunity to do maintenance work.

Approximately 365,000-390,000 tonnes of urea is usually exported from Egypt per month. Therefore, this lost production will impact future market direction and reduce the chance of any summer surplus.

• Liquid

If you have on-farm storage capacity, you still have the opportunity to commit to tank fill volume in either the summer or autumn delivery windows.

A full and extensive range of nitrogen and nitrogen sulphur grades are available to suit a variety of cropping options; however, volumes are limited. On a cost per hectare basis, current values remain competitive in comparison to solid alternatives in the UK marketplace.

Winter wheats in certain geographies are at or fast approaching growth stage 69-75 (milky ripe) and the window for application of protein enhancing products is imminent. If you are looking to benefit from the high gross margin opportunity milling premiums currently offer, products aimed at increasing protein levels in milling wheats are available in both IBCs and bulk.

For further information about our liquid fertiliser offer, head to our website where you can also watch videos to hear about the benefits from our liquid fertiliser specialists. 

• Straights/PKs

TSP prices have jumped since last week due to world supply and demand as well as issues with production. However, the UK currently has very little requirement for TSP.

Over the coming months there will be a demand for DAP for oilseed rape establishment, but volumes remain unknown. MOP and other straights remain unchanged from last week, with little demand from the UK farmer.

During the next few weeks, Frontier's nutrition team will be at the 3D Thinking open days to talk all things fertiliser – register for your local event here.

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.

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