Frontrunner - 25th July 2024

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WHEAT

• Quality concerns rally French wheat futures

Reports of poor quality and plunging crop ratings triggered a sharp price rally for wheat futures markets earlier this week, as the French wheat harvest progressed northwards. Paris wheat futures found strength, adding 12 euros from its recent low last week.

Reports suggested that the specific weight of newly harvested French wheat was testing below that needed to meet the minimum Paris futures specification of 76kgs. This triggered a spell of panic, short covering and a welcome lift in prices. Fears were heightened by a marked drop in condition for French winter wheat, five points down on the week at 52% 'good/excellent', comparing badly with last year's figure of 80%. Widespread testing later in the week showed that a specific weight of over 76kgs was more commonplace and Paris wheat futures prices eased. Yields however have not improved as harvesting has progressed, suggesting a crop below 28 million tonnes - seven million tonnes down on the year.

• Mixed Russian reports

Two different analysts have suggested a contrast in fortune for Russian grain production as harvest has progressed. Russia's leading agricultural consultancy, IKAR, has cut its Russian grain production estimate by 1.5 million tonnes to 128 million tonnes, whilst Black Sea research firm, SovEcon, has increased its estimate from 127.4 million tonnes to 130.5 million tonnes.

The Russian Deputy Prime Minister said Russia's grain and oilseed harvests amounted to over 50 million tonnes so far - double the amount in the same period last year. This is probably due to a spell of heat and dryness, which is good news for harvesting but damaging for maturing spring cropping, particularly corn.

Heat in Ukraine could see the country's corn crop drop to 24 million tonnes, down from last year's figure of 31 million tonnes and the July United States Department of Agriculture (USDA) World Agricultural Supply and Demands Estimates (WASDE) report figure of 27.7 million tonnes.

• US Winter wheat harvest largely done

There had been concerns for US spring wheat, with elevated temperatures forecast for maturing crops, but the US weekly crop progress report showed no issues. Spring wheat crop condition remained unchanged at 77% 'good / excellent', although 12% of this is rated 'excellent', in comparison to 10% last week. Only 49% of the crop was rated 'good / excellent' last year.

The Wheat Quality Council estimated hard red spring wheat yields in southern and east central North Dakota at 52.2bpa following its annual crop tour, up from 48.1bpa on the first day last year. This is well above the five-year average of 42.2bpa.

The winter wheat harvest reached 76% 'done', with the major producing states of Texas and Oklahoma complete and Kansas - the largest producing state - 99% 'done'.

BARLEY

• Winter barley harvest in full swing

The feed barley harvest has begun in earnest throughout the UK this week, with combines able to roll at the weekend. This means that the south of the country could be as far as 50% through cutting, with progress in the realms of 20-40% in central and northern England.

Quality is looking largely ok, with solid bushel weights and very low admixture in the loads that have moved so far. However, some issues have begun to surface, with ergot present in the feed barley and yields not quite as good as last year.

• Still early to assess spring barley quality

It is still very early in this year's spring barley harvest and a more robust sample is necessary to make any firm judgements on quality so far. However, what can be deduced from the little analysis that is available is that nitrogen is generally low, with wide variability in screening results. Overall yields are down. However, it remains to be seen how representative these early results are in relation to the quality of new crop malting barley in the UK.

With the winter barley harvest now well underway, UK exports staying uncompetitive and the potential for various quality challenges this year, now is an ideal time to consider risk management strategies for marketing your new crop.

OILSEED RAPE

• OiIseed rape market remains volatile

The latest crop progress reports indicate lower than expected rapeseed yields in parts of the EU and Ukraine, which have been adding support to the market.

Recent oilseed and general protein imports have been slow to enter the EU, increasing dependency on domestic seed. The speed at which domestic farmers release their rapeseed will be ever important moving forward.

UK yields and oil levels seem to be improving as harvest progresses, although there is an area in Lincolnshire and Yorkshire where crops look worse for the remainder of the year.

 PULSES

In the UK, the premium of new crop beans to wheat futures has fallen this week by another £5 due to the limited demand from UK feed compounders. Despite this price drop, UK beans are still uncompetitive in the export market, with Baltic beans being offered at approximately £10 to £15 cheaper. Export competitiveness is also not being helped by the strength of the pound.

Both the UK and Baltic crops continue to benefit from the sunny weather, which is ideal for finishing the crop off. Whilst these conditions are helpful for the crop, they are not helping the price, as supply is expected to be ample.

In Australia, the crop has benefitted from the recent rains, especially in Queensland and northern New South Wales and its these beans that are favoured by Egyptian buyers.

 FERTILISER

• Urea/AN

Globally, there has been little movement on the price of urea over the last week, even though trade continues. Although there hasn't been any meaningful information to indicate that exports from China are likely to increase, buyers and sellers will be keeping a watchful eye on Chinese exports given that domestic production is at 182,000 tonnes of urea per day.

The fragility of North African urea production continues and it is lucky for buyers that there has not been a high demand that has coincided with this curtailment.

Although we have entered a period of warmer, more seasonal weather, which has helped progress into harvest, it unfortunately hasn't reduced the UK and European gas price. This is most likely due to the reliance on European gas markets, which keeps pricing stable and less reactive to peaks and troughs.

Understandably, manufacturers and suppliers within the UK and EU are currently quieter and are likely to remain so for a few weeks whilst harvest progresses in Europe and begins here in the UK. However, we must not forget about the global markets we trade within and that manufacturers will move product to where there is demand. We would therefore encourage growers to ensure they have some cover for crop 2025.

• Liquid

UAN trade has entered a quieter period following the buying of tank fill requirements in recent weeks, with some growers waiting for autumn establishment before committing to spring tank fill. With little or no changes in the urea market, the trading values for UAN in both the European and US markets remains unchanged.

Final applications of protein sprays will take place this week on late planted winter milling wheats or spring milling wheats. Manufacturers of these products have seen a higher demand this season and have had to buy additional raw materials to support the demand, this however has not impacted price.

Growers who plan to use urea polymers such as Nutrino Pro over the coming weeks - on maize for supporting cob or grain fill and potatoes to support green canopy - are reminded to be aware of delivery timescales and order ahead of requirement.

• Straights/PKs

UK importers are incrementally increasing the price of phosphates as they look to replace existing stock, rather than increasing prices in one jump. If you are planning to buy for oilseed rape establishment then we suggest you look to cover this now due to the markets and delivery timescales.

Potassium markets remain unchanged, however the magnesium market is currently tight on supply, which has impacted kieserite prices.

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