Frontrunner - 27th February 2025

WHEAT

• Improving US weather picture
  
  

US wheat futures have dropped lower as temperatures in the winter wheat belt rise from last week's severe freeze, reducing the risk of winter kill. Chicago Board of Trade (CBOT) wheat gained over 10% in value during the first half of February, rising to its highest since last October. This was partly on fears US winter wheat yield potential had been compromised from the extreme cold.

However, this week almost half those gains have been lost as temperatures rose to 20⁰c from minus 20⁰c early last week, presenting a more optimistic outlook. Monthly crop ratings highlight a mixed picture for US winter wheat crop condition, with Texas up four points to 37% good / excellent whilst Oklahoma dropped four points to 34% good / excellent. Adding to market negativity were comments that Trump's administration apparently threatened to impose a $1 million fee on any Chinese vessels arriving at US ports, doing little to encourage trade talks.

• UK wheat lower again
  
  

UK feed and milling wheat prices continue to decline amidst ample supply and limited fresh demand. Both US and European futures markets have also been lower and sharing their negativity, 2024 crop London wheat futures started the week dropping to a new contract low.

Sterling strength and euro weakness has also been an additional bearish feature to contend with. The only positive feature for the UK market is a notable carry into the 2025 crop year, with November 2025 London wheat futures reaching its largest premium to May 2025 at £13 per tonne. Ultimately, old crop UK feed wheat prices probably need to fall to a point where some element of export activity can be established, although with outside markets weaker that continues to prove challenging.

Support for new crop comes from the uncertainty of the potential size of the UK 2025 wheat crop, with AHDB estimates ranging from a low 11.2 million tonnes - only 100,000 tonnes above 2024 to a high 14.4 million tonnes. This depends on the wheat area using the early bird survey, or applying a positive adjustment to that which many believe to be the case. Once the drilled area is known there is the matter of yield to establish.

• EU still drags
  
  

Algeria bought up to 170,000 tonnes wheat in its latest tender for April through to June delivery, with values $275 to $280 including freight. The origin is expected to be Black Sea. Despite futures weakness, these are the highest prices paid since last May and the highest basis levels (the physical price compared to futures) since January 2024. Jordan passed on its wheat tender whilst EU wheat exports - the bearish fundamental for European markets - continue to struggle. Weekly shipments for week ending 23rd February were just 313,000 tonnes, taking the cumulative to 13.646 million tonnes and putting it 7.66 million tonnes behind last year. With just 18 weeks to the end of the season, weekly shipments need to average almost double last week at over 600kt each week which looks increasingly unlikely without a significant fundamental shift in demand.

Egypt stated it has five months strategic supply which hardly presents an immediate need, although there were rumours Morocco had bought more EU wheat. From a longer-term demand perspective, North African dryness is impacting yield potential and will leave a greater import need. Morocco will see its crop fall to 2.9 million tonnes according to MARS, the EU crop monitor, with Tunisia and Algeria also likely to be lower on the year.

In contrast to the EU, Russian wheat export prices were reported to have risen $4 last week to $250.

BARLEY

• Low malting demand and falling wheat markets put pressure on feed barley
  
  

Low premiums and low demand has seen further chunks of malting barley sold into the feed market. This has caused pressure on feed, and alongside falling wheat markets, caused domestic old crop barley prices to fall in the latter stages of last week. It would appear feed barley has to maintain its discount of at least £20-£24 below wheat to remain attractive to consumers and maintain domestic demand.

On the export market, little progress has yet been made beyond the nearby positions, but with there being limited supply from competing exporting regions, UK feed barley may get a chance to be competitive again yet as long as market conditions allow.

• New crop remains quiet
  
  

One eye remains on UK and EU spring plantings amidst early progress being slow. There is still plenty of time for progress to be made, so this is yet to factor at all either in feed or malting markets. Feed consumers aren't in a hurry to buy in new crop with prices at their current level, with the discount to wheat currently around £16-£20 not been seen as a very attractive proposition. 

OILSEED RAPE

• Market movement remains
  
  

As per last week's report, rapeseed markets remain volatile but lack any strong price direction. Traders are trying to weigh up whether rapeseed imports will continue at enough pace to fulfil crushing demand and whether said demand can be sustained given a mix of cheap soybean oil and expensive palm/sunseed oil.

Trump's tariffs on Canadian imports look set to come in after being delayed for a month and this has led to Canadian canola becoming heavily discounted again vs. European rapeseed. This should allow more trade flow into Europe from the area.

New crop values remain heavily discounted to old crop as conditions across Europe are offering hope for a surplus of 19 million tonnes for the coming year. Crops for other oilseed coming into the new season also look relatively comfortable, with good soybean stocks present and a positive rebound in palm production.  

 FERTILISER

• AN/Urea
  
  

At last, some decent dry weather is helping to get the fertiliser season under way and many spreaders are calibrated and ready to roll.

Suppliers' order books remain high as the later farm demand has pushed production and logistics into the spring. Hopefully production facilities continue to work hard, with some even adopting 24-hour shifts to get product out to haulage as soon as possible.

The urea market has drifted over the last week, with the anticipation of India returning to the market to fulfil its annual requirements. Stock levels in India remain low so the market is expecting another tender very shortly. Strong spot demand for urea is still coming from Brazil and Europe, but after that and India we will enter a quieter period as we head towards summer when air conditioning gas demand could reduce raw materials for urea production.

Talks with the US and Ukraine over mineral rights will add to the market risks as we head into quarter two. Energy markets continue to find a new level, with European gas values down over 20% in last few weeks but still trading at levels that leave nitrate producers in loss-making territory.

Fertiliser supplies remain tight in Europe and the UK. Recent AIC producer statistics for January 2025 show an increase in output up 9%, but seasonal supply of all fertilisers remain 10% behind last year. Frontier continues to offer very competitive Nitram for March delivery, but volumes are lower than in previous seasons due to lost production in quarter four of last year.

• UAN/Liquid
  
  

As product is applied where conditions allow, growers are encouraged to call off from spring orders as soon as they have tank capacity to ensure product is on farm in a timely manner. Deliveries are prompt across the UK, however, any application disruptions due to the weather have the potential to concertina the season and increase lead times.

In recent days and as expected, UAN suppliers reviewed their nitrogen and nitrogen sulphur terms for spring delivery, and due to rising replacement costs they have increased their values. Despite this increase, UAN continues to offer growers competitive pricing when compared against solid programmes, and growers with additional UAN requirement for the spring should contact their local Frontier representative to discuss the portfolio of grades available.

• PKs/NPKs/Straights
  
  

Recent import statistics show both MOP and TSP well behind when compared to the previous season, suggesting the later demand has both reduced imports and moved arrival dates forward adding to the logistics challenge in the next few weeks.

Prices continue to firm, but more on demand rather than any major moves in the market. Currency and tariffs are not currently playing a part in the market. As mentioned in previous Frontrunner reports, supply routes will be affected which will cause price moves both in the short and longer-term. Movements will depend on the length and severity of the tariffs imposed. European tariffs set to come this summer will also have an effect on Russian imports into Europe, with the UK feeling the impact as a result. A recent Sky News article referred to European imports from Russia being higher now when compared to before the Ukraine war, so tariffs could make a real difference depending on value. 

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