Frontrunner - 26th August 2022

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WHEAT

• Losses for US and EU maize triggers wheat price rally

Wheat prices moved higher early in the week in response to strong gains in US Chicago Board of Trade (CBOT) corn futures, which rose to a two-month high. Corn futures rose in reaction to disappointing results from the Pro Farmer Crop Tour as it progressed through the main corn-producing states. Iowa is the world's number one corn producer, yet yields from Western Iowa were reported at 181.12 bu/ac, which has fallen from 183.96 bu/ac last year and is lower than the three-year average of 183.47 bu/ac.

The second-largest corn producer, Illinois, saw yields that are estimated to be 190.7 bu/ac, which is down from 196.3 bu/ac last year. This result is still greater than the three-year average of 185.6 bu/ac.

Yield potential in Nebraska and Indiana is seen being significantly down on the year. In its August World Agricultural Supply and Demand Estimates (WASDE) report, the United States Department of Agriculture (USDA) estimated that the 2022-23 corn crop would reach 364.73 million tonnes, which would be 19 million tonnes down on the year. This lower forecast was primarily based on a lower planted area, which was 3.6 million acres down on the year.

The Crop Tour suggests lower yields will see an even smaller US crop, which has added strength to world corn prices. This follows major revisions to estimates for the EU corn crop which, following drought, is seen just above 55 million tonnes, which is 14 million tonnes down on the year.

MARS, the EU crop monitor, made a notable cut in its EU corn yield estimate, bringing it down from 7.25t/ha to 6.63t/ha. The European Drought Observatory offered little comfort, noting that Europe's worst drought for 500 years could extend through into November.

• Russian wheat weighs on prices

Reports of record yields continue as the Russian wheat harvest progresses. Private estimates suggest total wheat production could rise to between 95 and 100 million tonnes - at least 25 million tonnes up on the previous season. The previous USDA estimate was 88 million tonnes with exports at 42 million tonnes, which was nine million tonnes up on the year. However, export taxes have resulted in a slower start to Russia's 2022-23 wheat export campaign, with only 5.9 million tonnes shipped in July and August; this is 27% down on last year.

Russia is likely to become increasingly competitive in export markets, which presents a major bearish threat. This week, Russia sold 240,000 tonnes to Egypt in a private sale. In contrast to recent tenders from the General Authority for Supply Commodities (GASC), where the export tax prevented competitive forward sales, deliveries in this private sale will extend through to November. Egypt says it has strategic reserves to meet seven months of domestic consumption.

• Mixed fortunes for Russia's neighbours

Farmers in neighbouring Kazakhstan have to date harvested 3.3 million tonnes of grain from 13.9% of its sown area. Yield is up to 1.46t/ha from 0.91t/ha – a 60% gain. The USDA seeks Kazakhstan producing 13 million tonnes of wheat; up from 11.81 million tonnes last year. The Kazakh Grain Union estimates the 2022 wheat crop at 14.4 million tonnes.

Meanwhile, the Ukrainian Grain Association has cut its country's 2022 wheat production estimate to 19 million tonnes, which is down from 33 million tonnes last season. It has also cut its corn estimate down from 37.6 million tonnes last year to 24 million tonnes. Agricultural exports from Ukraine could rise to four million tonnes in August; up from three million tonnes in July. The Black Sea port shipping corridors have helped this be realised.

More concerning for Ukraine's future agriculture production potential were comments that 30% of Ukraine's agricultural enterprises may 'refuse' to drill winter crops this autumn due to monetary concerns.

BARLEY

• Malting barley prices drop but premiums remain substantial

Pressure came early in the week as the harvest in Denmark moved to a close and some spot cargoes were sold quite cheaply as yields and quality have proved better than expected. With feed barley prices modest due to lack of demand in the EU (even with the lower prices), premiums are now seen at £22-40/t depending on location.

The UK has a substantial surplus of malting barley still to sell and we may see areas with traditionally higher feed prices and/or which are some distance from a malting barley home or export point may end up selling their crop as feed should prices fall further.

• Scottish spring barley harvest gains momentum

About 85% of Scottish spring barley has been cut in the borders, approximately 75% has been cut in the Fife area and around 50% has been cut in Aberdeenshire. Quality and yields are very good and the harvest may be heading towards a record yield. Hopefully, the forecast will remain favourable and the rest of the crop can be cut without running into weather issues. Post-harvest haulage will be the next point of concern for growers.

• Blowing barley a priority, even in dry conditions

In England, where much of the barley crop was cut in temperatures of over 30°c, growers need to be aware that there can still be germination issues if the crop is left in the store for a long time without blowing air through it, even when temperatures are dry. As temperatures drop, turning the fans on becomes even more important. Even if the humidity is relatively high, cooling and lowering the temperature in store should be a primary aim.

​OILSEED RAPE

• Bullish factors prevail amidst bearish rapeseed fundamentals

This week, bullish stories outside of rapeseed fundamentals have driven the market up in the short term. This is down to two main factors: the Russia-Ukraine conflict and US soybean production.

Heightening of tension as a result of further military activity between Russia and Ukraine led the market to believe there could be some disruption to the newly established export corridor through the Black Sea.

Meanwhile, US soybeans have seen fewer crops rated 'good/excellent', which is supported by reports from the annual Pro Farmer Crop Tour.

Despite these challenges, rapeseed supplies still look set to have a plentiful year. The Canadian crop is getting closer to completion and Australia is getting close to seeing one of its largest ever crops, contributing towards an estimated global rapeseed production of 73-74 million tonnes. If realised, the market should see a large rapeseed carryover into the next crop year.

It is also worth noting that rapeseed processors will be feeling the crunch this winter. With skyrocketing energy prices, it may be more cost-effective for some processors to turn off their plants.

• Current market values

The November MATIF rapeseed futures contract started the week at €595/t and hit €640/t on Wednesday. It closed at €623/t on Thursday, leaving prices higher than they started the week and showing that volatility is now a permanent feature of our markets.

Don't forget, Frontier customers can use MyCropMarketing within MyFarm to track prices daily. Please speak to your Frontier contact for more information if you do not yet have a MyFarm account. It is free to sign up and we're happy to help you get started.

 PULSES

• Good yield in most areas for beans

The UK bean harvest is far from over with a lot of crops still to be harvested especially from the midlands and further north.

Yield indications are still looking good for winter beans with most crops in the 4-5t/ha range. However, spring bean yields are more variable with some very poor yields being reported on lighter land.

• Poor demand for feed beans

Export demand for feed beans is currently non-existent and there is limited domestic demand also.

Feed market values continue to follow wheat, but the market is beginning to see some renewed buying interest for human consumption beans. Trade is very sporadic with many of the smaller Egyptian buyers unable to trade due to foreign exchange controls imposed by the Egyptian government, which is preventing the flow of US dollars out of the country. These early premiums may soon disappear due a lack of cash or due to competition of new crop supplies from the Baltic states.

 FERTILISER

• AN/urea/liquid

European nitrogen supply has been dealt another big blow this week due to high gas prices and subsequent high ammonia production costs. Levels in the UK for spot gas have been hitting £6.00/therm - this is a 450% increase since 12 months ago, when costs were only £1.08/therm before prices began to rise.

Over the past week, producers in Poland, Germany, Lithuania, Spain and Italy have all announced plants will temporarily halt production. Many others are considering their options due to the current high gas prices. In addition, the forecast is firmer again for the winter, making it uneconomical to convert ammonia into ammonium nitrate.

Where possible, producers are swapping from manufacturing ammonia on site to importing product from lower-cost gas regions. This will allow production to continue in the UK.

No terms are on offer for quality ammonium nitrate including domestic product.

Granular urea and treated urea still remain financially attractive for the UK grower but, given the energy issues and increased demand due to the lack of ammonium nitrate, it's likely we will continue to see urea prices rise and reduce its current large discount to the ammonium nitrate replacement value.

This week, urea prices have increased by $80/t on the back of negative production news in Europe.

Please speak to your Frontier contact for advice and product information.

• Liquid

At present, UAN terms for nitrogen and nitrogen sulphur grades remain in the marketplace, although volumes are limited for the spring delivery period, with some suppliers withdrawing terms in response to current volatility. UAN terms remain available for the autumn position for those growers still to cover product for tank fill.

• PKs/straights

Demand for PKs and straights in the UK has slightly increased this week as growers look to replace valuable nutrients removed during harvest. It remains important that growers ensure offtakes are replaced for next year's crop. Markets are stable with products available.

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.