Frontrunner - 28th July 2023

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WHEAT

• Sharp upward price movement

This week, US wheat futures markets rallied to briefly touch their highest level since late February this year in what has been a notably volatile period of trade. On Monday, aggressive fund short covering took prices to their daily trading limit of 60 cents up - the equivalent of a 9% price gain. The primary trigger for the gains was the Russian military attacks on Ukrainian grain loading terminals on the River Danube. This river has proven an effective export route for Ukraine wheat and other grains since the Russian invasion in February last year. However, coupled with the attacks on the Black Sea port of Odessa, it seems that Russia is intent on preventing any Ukraine access to world markets. Wheat prices subsequently eased through the week when the EU said it would fund Ukrainian grain transit costs through EU member states to help maintain Ukraine exports, and Russia said it would provide free grain for six African nations to ensure they are not left short.

• Adverse weather trims crop output

Canada and the EU are world leading wheat producers and exporters, but adverse weather has seen further revisions made to their respective wheat output potential. Persistent heat impacting the Canadian Prairies has left conditions comparable to 2021 in places and a crop between 29- 30 million tonnes, which is similar to the United States Department of Agriculture's (USDA) estimate that was made earlier this month. Following a reduction from MARS in yield estimates for EU wheat crops, the EU commission cut its 2023 wheat production to 126.4 million tonnes. This is down from last month's estimate of 128.9 million tonnes and is now marginally above last season's figure of 125.7 million tonnes. This leaves a notably tighter balance sheet than first estimates, with less of an export burden at a time when Black Sea supply capability is difficult to measure.

• Slow start to UK wheat harvest

Winter barley and oilseed rape in many areas of the UK are still to be harvested and the ongoing low pressure weather patterns continue to bring showers and prolonged periods of rain. In some southern areas, a fortunate few have managed to combine wheat and, despite the recent weeks of adverse weather, quality so far is reasonable but variable. Specific weights range from 70-80kg, proteins again are variable ranging from below 10% to 14% and crucially Hagberg results have met milling standard so far. The concern remains over the vast majority of the crop still in the ground, with little change in the current forecast. 

BARLEY

• A volatile harvest week

This week, barley has seen a high level of domestic farm selling as a result of much of the crop being harvested now. This effect was compounded by markets rising sharply at the start of the week, due to the escalating conflict between Russia and Ukraine as the UN-brokered Black Sea grain export deal ended. While the price spike seen in futures markets was not as steep in the physical barley market, the physical price move was sufficient to encourage farm selling. Domestic demand has been variable, with compounders most active in the south of the country. However, we are seeing more interest further North as harvest progresses, albeit from a low pace.

• Export demand picking up

Export demand is beginning to pick up as the UK becomes more price competitive. Although relative to previous years, it remains well behind pace. Potential supply shocks because of attacks on the port of Odessa and other ports on the Danube River, which are used to move grain to the Romanian port of Constanta, have left infrastructure badly damaged and could curtail Ukrainian export capabilities for some time. However, just how much pressure this will put on global supply remains to be seen, as Ukraine has materially increased its export capacity through road and rail routes since the war began. We are yet to see any significant tenders on the market from the large importers.

Please contact your farm trader to discuss grain marketing options. Managing risk in volatile markets is imperative and there are numerous options available. Find out more about Frontier's risk management offers here.

OILSEED RAPE

• Rapeseed market retreats after Black Sea attacks assessed

This week, the rapeseed market has lost around £15/t as the market reassesses the real impacts of the increased attacks on port infrastructure in the Black Sea region as reported in the wheat and barley sections. Harvest pressure and high levels of old crop stocks is also impacting the markets. Currently, the decrease in market values would suggest the trade is confident that there will be sufficient supply from all sources.

The European rapeseed crop looks likely to meet expectation. However, France and the UK are seeing some variability in yields, early indications suggest UK yields will be 0.5t/ha to 1t/ha down on last year's. Concerns over the canola crop in Canada have subsided slightly as increased rains have arrived. However, more moisture is required in the high-producing region of Saskatchewan if we are to avoid significant crop losses. 

 PULSES

• Beans

We are still a couple of weeks away from new crop beans being harvested, with the crop looking quite varied in different regions of the UK. Overall though they continue to look good and we expect to see a similar crop to last season in both quality and volume. Looking back on the volatility we experienced for harvest 2022, with prices ranging from the lows of £230/t and highs of £340/t, the Frontier bean pool achieved an average price of just over £314/t. Such positive results allowed growers to secure a great price for their beans in an otherwise difficult market to navigate.

Looking ahead, it won't be too long before we open our new crop bean pool for marketing next year's crop. Given the expected ongoing volatility, the pool is a useful risk management tool that also provides members more time to concentrate on other commodity marketing. You can learn more about the performance and opportunities available with the Frontier pools here. 

 FERTILISER

• AN / urea

Global urea markets advanced again this week as purchasing activity increased. Egyptian producers, who are large suppliers into Europe/the UK, remain hesitant to sell tonnage for August/September as they continue to run at lower production rates. Originally, the Egyptian government placed a 30% restriction on gas supplies for one week but it's reported that this has been extended without a deadline. This is estimated to impact around 40,000 tonnes of production per week from the region and will potentially cause delays in shipments.

Purchasing activity is also strong ahead of the next Indian tender, which was finally announced this week following a delay while it expected the market to cool off. This adjournment has failed in its intention and the tender, which doesn't specify a volume, will close on the 9^th August for shipment required by 26^th September. On the last tender, India purchased 200,000 tonnes less than required due to low counteroffer prices put forward. This next tender could see volume requirements of up to 1.5 million tonnes in an already tight supply market for August/September.

Nitrogen supply in Europe continues its rollercoaster-ride on the back of fluctuating natural gas prices. Most producers are still only able to offer tonnage into their own countries for August/September with very little for export. In France, prices for ammonium nitrate moved up by €20 following target volumes selling out. No forward offers past October are reported due to the lack of producer confidence with production costs.

This week in the UK, CF Industries took additional steps to secure the long-term sustainability of its business, with a focus on a more efficient way of servicing its UK customers. The company proposed the permanent closure of its only UK ammonia plant in Billingham, citing that UK ammonia production is no longer considered competitive in the long-term compared to importing it. This is down to projected high domestic natural gas prices relative to other regions, as well as the impact of carbon costs. The CF Industries ammonia production plant has not operated for the past ten months, during which it has already been producing ammonium nitrate (AN) from imported ammonia sourced from low-cost regions.

This move will ensure a continuation of a cost-competitive product for UK customers - which it has been for the past two months and remains so on the current January to March offer. It is also the only forward AN offer available throughout Europe.

With a tight supply of AN at acceptable price levels, it's a good idea to discuss options and requirements on availability before pressure increases values again.

• Liquid

This week saw the release of terms for spring 2024 delivery, offering growers the opportunity to cover their requirements where cropping plans are firm and volumes are known. A full range of nitrogen and nitrogen sulphur grades are available. Based on the current offering, a urea ammonium nitrate (UAN) system remains competitive against UK AN on a cost per hectare basis.

Offers for autumn tank fill remain unchanged, whereas values for summer delivery have been withdrawn from the market due to the tightness of capacity to move product into on-farm storage within the next four to five weeks. NP (nitrogen + phosphate) and NPK (nitrogen + phosphate + potash) solution grades are available where growers are planning to take advantage of the current soil moisture and establish oilseed rape once land is cleared in the coming weeks.

• PKs

Potash markets remain stable following its recent decline. Phosphates, as reported previously, saw more weakness during the week and are now at levels that are in line with global replacement prices. This is attractive to UK growers as demand increases. We recommend you look to cover your starter fertiliser requirements very soon to ensure this product is on farm in time for the usage period. If growing oilseed rape, it's worth considering Oilseed Start as part of your fertiliser programme.

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.