Frontrunner - 25th November 2022

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WHEAT

• Markets fall despite strong export pace

Wheat market volatility continued again this week, with London wheat futures falling £12/t below last week's highs. The extended Ukraine Black Sea export deal with Russia, coupled with the record Russian wheat crop and cheap export values, continues to pressure prices. However, support comes from robust demand for EU wheat.

Ukraine wheat exports for the season climbed to 6.3 million tonnes and Ukraine's grain traders union said the country would be able to ship a total of 13 million tonnes over the season if export channels remain open. Even so, that figure would be 20 million tonnes less than last season and is 7.5 million tonnes below the latest estimates made by the United States Department of Agriculture (USDA). By the end of November, Russian wheat exports will be between 18.5 and 19 million tonnes.

Despite strong competition from the Black Sea, EU official weekly export updates put shipment for November 20^th up to 13.627 million tonnes, which is 277,000 up on the week. Private analysts suggest this is understated by at least 1.3 million tonnes and if this is the case, half the available surplus has already gone with over seven months of the season to run. Primary exporter, France, may well have shipped between 75-80% of its surplus by the end of the calendar year. There is seemingly no let-up in demand for EU wheat, with sales made to China, Morocco and even the US. Rumours suggested Polish wheat had been sold to consumers in West Florida, which undercut US milling wheat supplies. US wheat futures fell to a three-month low following the release of this news ahead of the Thanksgiving public holiday, reflecting a need for US wheat to become more competitive.

• Canada crops bounce back

Domestic Group 1 bread wheat premiums continue to increase, reflecting the shortfall in the availability of appropriate quality wheat to meet the UK millers' minimum specifications. Historically, low protein levels across the country have resulted in a notable volume consigned to the feed bin and sourcing replacement German quality is an expensive option, with prices at least £55/t above current UK markets. Wheat quality levels across Europe are similar, as they lack protein and premiums are kept high. However, across the Atlantic in Canada, the situation is the opposite. The country's total wheat production has bounced back to 34.7 million tonnes, 55% up on last year's harvest when yields were devastated by extensive drought. Together with favourable yields protein quality is also high, with the Canada Western Red Spring (CWRS) crop achieving number 1 and 2 grades with above-average protein. CWRS is favoured by UK millers, who traditionally import it for blending with UK wheat to achieve high quality bread flour. It will be an essential addition this season.

BARLEY

• Feed barley

UK feed barley prices have drifted lower again given the continued lack of both domestic and export demand. Compounders remain well covered, especially in the spot positions, due to the mild start to winter - several mills have rolling tonnages from November to December. There has been some buying interest over the week, mostly to trade shorts at discounts to wheat of £16-18/t. Narrower discounts have been supported by a slowdown of farmer selling, but given the UK has a surplus of barley to market, this discount will need to widen if barley is to find more domestic demand. Export demand has also been limited; the extension of the grain corridor has meant importers have switched their attention back to Ukrainian origin grain. The Spanish market has been the main outlet for UK feed barley exports so far this season, but Spain was the single largest export destination for Ukrainian grain from August until the end of October. This highlights the competition UK barley exports face.

• Malting barley

Malting premiums remain supported as the stream of malting barley export cargoes continue to leave the UK and still look attractive combined with the drop in feed barley prices. There has been some export demand but domestic demand is limited to trade buyers post-Christmas. In terms of crop 2023, last week the Agriculture and Horticulture Development Board (AHDB) announced its Early Bird Survey planting estimates. It predicted winter barley will be higher and spring barley will be lower, which leaves the UK with a slightly lower total barley area on paper. Winter barley crops look well but the next focus will be on spring plantings. 

​OILSEED RAPE

• Oilseeds markets continue their slide

This week we have seen oilseeds markets weaken further, with rapeseed one of the worst performers. Rapeseed lost 23 euros on the MATIF futures market which equated to around a £25 decrease in UK ex farm values, assisted by a strengthening sterling in comparison to the euro. The logic behind the setback in rapeseed values is that crushers are able to take plenty of cover from an abundance of domestic and imported sources of seed. This influx of seed flowing onto the market is likely going to leave the EU and other exporting countries with a large carryover into the following crop year.

Agriculture and Agri-Food Canada estimated the Canadian canola crop would be 19.1 million tonnes; in stark contrast to the country's disastrous crop of 13 million tonnes last year. In combination with some bearish rapeseed figures, there have also been wider macroeconomic events influencing the price decline this week - the Russia/Ukraine conflict is a factor. Russia has extended its grain corridor for another 120 days, which should be long enough to allow Ukraine to export all of this year's rapeseed crop. Another reoccurring factor on world markets is Chinese lockdowns and the effect this has on demand for oilseeds and its products. This week, the Covid-19 cases in China continued to rise which resulted in lockdowns in Beijing, the capital. 

 PULSES

• Pulses values have decreased

Over the past week, feed bean values have fallen £15-17/t and in many areas there are no values for moving beans before January. It is likely that this fall will continue further and even when wheat values stabilise, it is expected that beans will need to find a lower level that makes them more competitive in feed rations.

In world markets, we continue to look at the prospects of the Australian bean harvest. Despite the heavy rains in some of the main growing areas the country is still set to have a big crop again, although the quality may be compromised. Demand in Egypt is still low due to a weak Egyptian pound and government currency controls limiting the flow of dollars out of the country.

 FERTILISER

• AN/urea

UK markets remain quiet on the ammonium nitrate (AN) and urea front, with markets looking for direction in terms of pricing forward. One large European AN producer which started production last month has shown its intention to now only produce for its own domestic market. This will tighten up the flow of exports around Europe and especially into the UK market, which is particularly short of AN products at the moment and this is likely to get even tighter. Currently no UK domestic AN values are available and product is being made to fulfil existing order books. UK and European gas values are rising with temperatures now starting to dip. At the time of writing, UK values are £3.47/therm and European values are €1.31/kilowatt hour, with gas futures at a premium to these levels into the spring. This will inevitably add to the production costs on nitrogen products going forward.

• Liquid

Nitrogen sulphur (NS) and nitrogen phosphate (NP) values are still on offer for spring delivery and both grades are competitive against solid alternatives. Please speak to your local Frontier contact to discuss any outstanding product to order. As mentioned in earlier reports, we advise the inclusion of Limus® Clear in UAN when conditions dictate – usually in the spring time when temperatures are over 15 degrees Celsius and conditions are dry.

• PKs/NPKs

This week has seen a pickup in orders, especially on PK grades and straights. A slight change in direction is being suggested as suppliers have indicated potential price increases, especially on replacement shipments of potash products and triple super phosphates post-Christmas. DAP has softened considerably over the past two to three weeks and has allowed NPK grades to be revalued at large discounts to previous offers in October. As mentioned earlier, with AN and CAN products being in shorter supply, it may be that granular urea will be used for blending NPKs and they will not offer the same quality that modern day spreaders need. It's advised growers secure early spring starter requirements and take advantage of the sharper values in the market.

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.