Frontrunner - 27th January 2023

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WHEAT

• Wheat recovers from multi-month lows

News that tanks are to be sent to the Ukraine from Germany, the UK and the US has signalled the potential of an escalation to the conflict. News of a missile strike in the port of Kherson that damaged a Turkish cargo vessel has been widely reported this week. The port of Kherson is not included in the export corridor agreement that has allowed Ukraine to export via the Black Sea, but its attack does signal that the export corridor may be at risk. Speculation that the corridor is once again vulnerable may see a return of the 'war premium' that had previously been present in the market.

• Export data helps encourage further price gains

Wheat futures buyers have been encouraged by another set of strong export data for both the EU and the US. Falling prices have attracted fresh demand, with Morocco rumoured to be showing interest in EU wheat this week. Official export data from Brussels showed an increase of 471,000 tonnes on the week, bringing the current season's total for EU exports to 18.143 million tonnes. However, private analysts estimate this total to be at least one million tonnes higher.

Around 11 million tonnes remain of the EU estimated exportable surplus with 23 weeks of the season to go. This will require shipments to continue at a similar pace to last week in order to move the entire surplus by season's end.

Physical wheat premiums for primary EU exporters France and Germany remain high as a result of continued demand and subsequent stock depletions. This interest has continued despite competition from the Black Sea and a strengthening Euro, which reached a nine-month high this week.

The United States Department of Agriculture (USDA) has reported strong US wheat export sales for a second consecutive week. US wheat export sales this week have reached 500,400 tonnes.

• Black Sea export competition may fall in 2023

The USDA has claimed that Russia's official estimate of its 2022 wheat production, which is in excess of 104 million tonnes, is not feasible. The USDA's own estimate, as cited in its January World Agricultural Supply and Demand Estimates (WASDE) report, is 91 million tonnes. The 2023 Russian winter wheat area is believed to be 4% lower on the year, with only 17.7 million hectares sown compared to 18.4 million last year.

The Ukrainian Grain Association (UGA) has reported that Ukraine's wheat and corn production will fall again in 2023 and will not exceed 16 million tonnes and 18 million tonnes respectively. The Russia-Ukraine war may impact final volumes further in the year ahead.

10% of Ukraine's current corn crop remains in the field and total production is likely to be 22-23 million tonnes less than the 41.9 million tonnes it achieved in 2021/22. The UGA has reported its 2022 wheat production at 20 million tonnes, although the USDA estimate is a little higher at 21 million tonnes. The USDA has given a figure of 27 million tonnes for Ukrainian corn production.

The UGA has also predicted its 2023/24 grain and oilseeds crops will achieve 50 million tonnes, which compares to 67 million tonnes this season and 106 million tonnes in 2021/22. As a result, Black Sea export competition in world markets could be notably lower next season.

BARLEY

• Feed barley discount widens

UK feed barley values haven't followed rallies in futures markets on the week. Domestically, barley had narrowed to a £10-12/t discount to wheat at the start of the week with bids to many of the ports in southern and eastern England holding the barley market firm. However, at such a narrow discount to wheat, domestic interest was lacking and, as shorts have been filled by farmer selling, fresh buying interest has waned. The discount has now widened to around £18-20/t with the wheat market firming, which indicates we may see some domestic interest return for feed barley.

• Average new crop values fall

New crop farmer selling remains slow with values largely below the £200/t that has been the average in recent months. There has been some demand since the start of the New Year but, at this early stage of the season, the discount to wheat has been £15-17/t given the lack of any market liquidity. The key focus in the next couple of months will be the weather in South America before attention will turn to spring plantings in the Northern Hemisphere. 

OILSEED RAPE

• Rapeseed makes a rebound this week

Rapeseed values have ended the week higher than where they started, which is a first for this calendar year. Towards the end of last week, rapeseed values were seen dropping away dramatically after news of proposals in Germany to ban the crop-based element of biofuels which accounts for around 50% of European rapeseed demand. This week, traders learned that the proposed ban was to take full effect in 2030 and, in turn, proceeded to buy back into the rapeseed market. Within the trade, there is also the feeling that this switch to alternative biofuel sources may be more challenging than first meets the eye. Otherwise, rapeseed supply remains plentiful and accessible which limits the likelihood of price increases for the remainder of this crop year.

There has been strength elsewhere in the oilseeds complex with soybeans making a rebound after five straight downwards trading sessions on the CBOT futures exchange. This is despite China, a key price driver, being away this week. Factors that include increased biofuel investment in the US and rumoured Chinese buying gave beans some upside. Brazilian harvest progress and Argentinian crop development will be key watch factors in the months to come. 

 PULSES

• Oversupply of beans limits demand

Despite the gains made in wheat and oilseeds this week, there have been no corresponding rises in beans values as a result of an oversupply of beans that remain on farm and very few buyers. Some of the compound feed mills in the west of the country have recently bought beans for their summer production, but at this point, this demand will make little difference to the market.

The market is in need of export interest. However, with plenty of beans available in Europe and the Baltic states as well as a very big crop in Australia, it's unlikely that beans will become competitive again soon.

 FERTILISER

• Urea/AN

The gas price in the UK and across Europe remains relatively weak despite recent cold spells. European producers of ammonium nitrate (AN) remain uncompetitive in comparison to urea values. Reports have speculated that it may be now viable for some European plants to resume production for their own domestic markets.

As the anticipated Indian tender has not yet been finalised, the global urea market has remained quiet and prices have remained weak this week. On farm values for spot delivery in the UK have stayed relatively flat in the last seven days, with little change to report.

There have been rumours of new season urea values, but we advise all growers to consider the upcoming legislative changes around reducing ammonia emissions through using a protected urea source before finalising plans. Please speak to your Frontier contact for more information about alternative product options to straight urea.

• Liquid/UAN

With applications planned for the coming weeks, growers should continue to confirm any additional requirements for UAN wherever they can in order to ensure their fertiliser supply during the spring season.

At present, a full portfolio of nitrogen and nitrogen sulphur products is available at values that continue to track the AN market, along with nitrogen phosphate starter fertiliser grades for root crops. All growers are encouraged to include Limus® Clear, a urease inhibitor for inclusion within UAN, throughout their liquid fertiliser programme in the spring. The benefits include an improved nitrogen use efficiency (NUE) of up to 7% through reducing ammonia emissions by up to 98%. Please speak to your Frontier representative for advice and information.

• PK/NPKs

On farm purchasing activity has increased on PKs and NPKs. Whilst the phosphate market remains weak, the potash market is stable to firm. Compound NPKs are available and ready for prompt delivery. Blended alternatives could suffer delays and be subject to availability issues, so planning is key to ensure product is on farm in time for usage as we enter the spring period.

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.