Frontrunner - 27th May 2022

LISTEN TO FRONTRUNNER

Frontrunner is also available as a podcast, so you can hear the latest from our traders while you're on the go. Listen below or subscribe to the report on Acast, Spotify, Apple Podcasts and Google Podcasts. The report this week is read by marketing assistant, Faye Lee.

Enter your custom HTML codes in this section ...

WHEAT

• Wheat prices slide

Wheat futures markets have again been volatile this week and have fallen sharply with losses extending by over 10% from the record highs reached earlier this month. Long liquidation and speculative selling gathered pace in response to newswire reports that Russia would provide a humanitarian corridor for vessels carrying food to leave Ukraine. Analysts estimate that over 21 million tonnes of grain will be trapped in Ukraine by the end of this season due to the Russian navy blockade of the country's Black Sea ports. The loss of Ukrainian grain supplies to the world's major importers has been the primary wheat price driver since the Russian invasion in February and has been the main element contributing to the prevailing global food crisis. However, subsequent news of Russian demands that some of the sanctions against it are lifted in order to allow these 'grain corridors' met strong opposition and stopped the slide in prices. How the West responds to these demands will be a factor in the direction of grain markets.

Meanwhile, prolonged heat and dryness has left Iran with an import need of over seven million tonnes of wheat to March 2023 and Russia has finalised a deal this week to supply five million tonnes of grain to help meet that need. Iran also faces Western sanctions.

• Crop concerns continue for major producers

The US, Canada and the EU continue to experience adverse weather impacting on crop condition and spring planting progress. US winter wheat edged a point higher on the week to 28% rated 'good/excellent', but this remains historically poor. This time last year, 47% of the crop achieved this rating. Spring wheat planting progress is a major concern with only a 10-point gain this week to 49% complete; it was 93% complete this time last year. North Dakota grows half the US spring wheat crop and, with just 27% planted, is progressing at the slowest pace ever recorded. This is due to persistent wet and cold conditions. In an average year, 80% of the crop would be in the ground at this stage.

Spring wheat planting in neighbouring regions of Canada are suffering similar weather-related planting delays. Corn planting progress, however, had a marked improvement with planting 23 points ahead on the week to 72% now complete – although this is still behind average for this time (79%). MARS, the EU crop monitor, has reduced its 2022 EU wheat yield estimates from 5.95t/ha down to 5.89t/ha. This effectively knocks 1.3 million tonnes from the estimated European crop size and is 2.5% down on last year's average yield. French winter wheat crop ratings for the week to 23^rd May dropped a further four points to 69% rated 'good/excellent', having fallen nine points the previous week.

• A mixed picture for India

Earlier this month, the United States Department of Agriculture (USDA) published its first 2022-23 world balance sheet estimates and saw India with a 108.5-million-tonne wheat crop, predicting that it would be able to achieve an export volume of 8.5 million tonnes. This export capability was seen as essential in helping meet wheat importer needs while Ukrainian supplies are blocked. However, a significant temperature spike in March was damaging for yields, which are now seen between 10-15% lower. Furthermore, this week the USDA Attaché Report estimated the Indian crop would fall to 99 million tonnes. Some private analysts' estimates are lower still and the likelihood of any supply being available for export looks slim, with the exception of exports approved by the government.

BARLEY

• Market reacts to Ukrainian 'grain corridors' rumour

This week, UK barley could not escape the weakness seen in other commodities and moved lower before bouncing on news of possible 'grain corridors' being opened for the Ukraine and the subsequent possibility of sanctions on Russia being lifted.

• Weather the primary focus in Northern Hemisphere

Fundamentally, weather remains the focus for the Northern Hemisphere. French spring and winter barley crop ratings continued to decline for a third straight week due to a lack of rainfall and higher than average temperatures. Spain is also a watchpoint where crops have seen little rainfall since late March/early April whilst Canada is seeing reverse conditions, with wet weather in the eastern growing regions resulting in spring planting that is well behind seasonal norms.

UK crops have benefitted from rains in the last 10-14 days and, combined with markets coming back from season highs, farmers were able to increase their percentages sold on crop 2022 feed barley. There has also been demand from domestic compounders who are taking advantage of a drop in prices. However, barley is facing competition from maize in domestic feed rations. 

​OILSEED RAPE

• New crop values suffering

It has been another incredibly turbulent week for oilseed rape prices. Old crop rapeseed markets are now relatively covered by the crusher and, with little left appearing from farm, the market has gone eerily quiet leading to the trade focusing more on new crop trading.

New crops values took a beating at the start of the week, continuing last week's trend, which began when news broke that Germany and other large European countries were close to imposing biofuel mandates which would decrease the demand for vegetable oil products, including rapeseed, in biofuel production.

The lack of bullish input at the start of the week led to a further drop in August MATIF values of €13/t by Wednesday morning. On Wednesday, news broke that Russia was prepared to offer a safe corridor for grain to exit Ukraine through the Black Sea and the trade hopped on this headline and proceeded to sell the market downwards. In time, it emerged that this was somewhat of a false promise with the offer being on the premise that sanctions against Russia would need to be removed for this to happen. The world has stood firm on its imposed sanctions and, by the end of the day on Thursday, the market had regained €30/t to place it back where it started on Monday morning. The market was also helped upwards after the news that the US had bumper biofuel production in the last year with its renewable diesel production up 100% year-on-year.

We continue to see this incredible volatility throughout commodity markets caused by news which is often inaccurate and very challenging to trade. Looking at ways to manage your risk continues to be essential. Please get in touch with your farm trader to talk about how Frontier can help. 

 FERTILISER

• AN/Urea/NS

The week started with no available domestic AN prices as the September to November terms had been withdrawn at the close of business on Friday 20th May. There are now values available for spot movement in June, which are approximately £135/t over the original start price set on the 12th May.

AN production both domestically and overseas remains very tight. Traditional importers into the UK have been unable and unwilling to compete with the levels UK-produced product has been sold at, as other European markets are trading at higher prices and therefore reflect a better return for manufacturers. However, the new domestic prices posted this week may well allow some imported products to arrive and maybe take some pressure off the physical supply situation.

Urea markets are showing signs of slowly starting to firm with sterling-to-dollar exchange rates and higher freight rates adding to costs.

Quality nitrogen sulphur grades are still problematic to source for the UK market, with the absence of any CF Fertilisers nitrogen sulphur grades. Demand is understandably very strong, but available imported supply is less than in previous years, highlighting a sulphur supply issue. Growers have and should continue to look at alternatives like PotashpluS® or Polysulphate. Please get in touch with your Frontier contact to discuss these alternatives further.

• UAN

Earlier this week, new season UAN values were released, with offers on various nitrogen sulphur grades mirroring the earlier values seen in the solid markets. Offers were strictly for summer tank fill delivery only and aimed at existing UAN growers. These offers lasted around 24 hours due to swift uptake from growers on a national scale. Values for autumn tank fill are not yet available and are not expected until next month. When available, these later delivery offers will provide growers switching to UAN for the coming season the opportunity to purchase ahead of Spring 2023.

Product is available for spot delivery for grassland and vegetables where required, alongside bulk foliar products for milling wheats. With wheat crops full of potential, please speak to your Frontier contact for further advice and information on the foliar products available.

• PK

There hasn't been much change this week on the PK markets. Potash currently looks a good buy given the replacement costs - Polysulphate and PotashpluS® prices have already slightly increased and are likely to rise again soon. Planning your P and K requirements for the autumn now, subject to soil type, could prove beneficial.

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.