Frontrunner - 29th August 2024

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WHEAT

• EU wheat exports remain at a slow pace

This season's leisurely pace of EU wheat exports is contributing to market negativity. To the week ending 25^th August, exports are ahead by 238,000 tonnes to a total of 3.927 million tonnes which compares with 5.038 million tonnes last season.

There is a lower surplus of around 27 million tonnes which is four million tonnes below last year. According to analysts Stratégie Grains, this figure will leave a carryover stock almost four million tonnes lower than the carry in. Therefore, it would be premature to be overly concerned for the slower export pace at this stage.

In contrast to exports, imports are running only 131,000 tonnes behind last year at 955,000 tonnes. However, given Spain is usually the primary taker and has a crop that has doubled from last year at 6.75 million tonnes, we might expect imports to slow soon. Egypt remains the main buyer of EU wheat at 504,000 tonnes. Unusually, the UK is number five in the list of takers with 243,000 shipped so far.

The German Farmers Association stated that the German crop will be 18.03 million tonnes, 15% down on last year due to untimely rain leaving disappointing yields and quality. However, at this stage there is no evidence of a lack of availability to meet the one million tonnes of UK demand this season.

Given the cheap prices, it's likely that EU wheat will find its way increasingly into feed rations. This means less will need to be exported and will be heading off corn imports which are at 3.296 million tonnes and already ahead of last year's 2.543 million tonnes. Two million tonnes have already come from Ukraine.

• Wheat prices down again

Weak Black Sea prices, along with Russia and Ukraine's determination to sell and ship as much wheat as they can as quickly as they can, continues to be the main negative wheat market price driver and for now there is no let up to that.

Estimates suggest Russia could end this month shipping up to five million tonnes of wheat at pace to match any month last season when the surplus was around eight million tonnes larger.

The US and French markets were open on the UK's August Bank Holiday Monday and were weak again. The Paris market was down another 2% and closed within a euro of its contract low seen in March. Despite this, MARS, the EU crop monitor, again cut the EU soft wheat yield down to 5.68t/ha which compares to the previous estimate of 5.87t/ha and last year's 5.85t/ha.

After the US close on Monday, the US crop weekly progress report highlighted the strong yield potential for US spring wheat and corn.

The spring wheat harvest reached 51% complete versus the 53% average and although the condition slipped four points to 69% rated 'good/excellent' it's still well ahead of 37% last year.

Corn condition also slipped, down two points to 65% rated 'good/excellent' but still ahead of last year's 56%.

• Canada has less wheat than expected

Canada is the world's third largest wheat exporter after Russia and the EU, but this week estimates for production came in below expectations which helped to provide some market support.

With average trade guesses more than 35 million tonnes, Statistics Canada estimates the crop at 34.4 million tonnes. It said that lower than average precipitation and prolonged high temperatures across the prairies had resulted in a decline of crop conditions.

Nonetheless, the crop is up on last year at 32.9 million tonnes, although it's below the United States Department of Agriculture's (USDA) August estimate of 35 million tonnes.

BARLEY

• Harvest nearing completion

Harvest is nearing completion in the Southern half of England, whilst unsettled weather has delayed any meaningful combining in Scotland. The forecast for Scotland looks more settled in the coming days, so we expect more progress after the weekend.

So far, spring barley yields have been in line with the five-year average, better than the winter barley yields we saw which were approximately 10% lower compared with the five-year average.

We'll find out what yields are like further North in the coming days, where spring crops were drilled that bit later but experienced good spring conditions once they were in the ground.

• Feed barley markets

Feed barley prices have been relatively immune from the drop in wheat futures markets because of a lack of farm selling and continued demand from the UK compounder.

The lack of farmer selling has been stimulated by an early completion of the UK winter barley harvest and good spring barley quality.

Buyers have been looking to cover both spot positions and winter positions meaning barley's discount to wheat has narrowed closer to £20/t which compares to £23/t a week ago.

Malting barley premiums have come under pressure, particularly to the south of Oxford and west of the A1. If you're in these areas the risk versus reward must be considered, especially when marketing malting barley where a premium of £7/8/t could easily be lost in a claim or far outweighed by the costs of a rejection.

As a result, we have seen parcels of spring barley come to the market as feed in the last few days. If premiums for malting barley remain narrow, we are likely to see more spring barley price into the feed market in the coming weeks in these geographies. 

OILSEED RAPE

• Oilseeds markets up on the week

While oilseeds markets are on the up, the trade is consolidating positions and is looking for data on US soybean yields.

Vegetable oils have also had a better time recently, as the supply and demand is tighter in comparison to the supply and demand for seed - higher oil prices have helped seed prices rise.

The EU Regulation on Deforestation-free Products (EUDR) is still set to come into force from 1st January 2025, which will cause big trade flow changes for soybeans and their products destined for Europe.

There is a lot of ambiguity around which parts of these regulations will come into play and at what stage. If the full force of the legislation comes in at the start of the new year, this will surely be beneficial for domestic proteins, such as rapeseed and sunflower. 

 PULSES

• Bean values fallen further as wheat futures drop lower

Feed beans are still valued at a £40/t premium to London wheat futures and this week, we have seen some export interest at these values despite the strength of sterling.

However, domestic demand is still low as feed compounders deem beans expensive in comparison to other mid-range proteins, such as rapeseed meal and soybeans.

This week saw the first containers of human consumption beans loaded onto vessels; demand remains relatively strong as early beans in the Baltic region have relatively high levels of bruchid beetles.

If you have beans with low levels of bruchid beetles and an even beige colour with a green tinge, please send them to your local lab promptly for assessment to determine their specifications. 

 FERTILISER

• AN/UREA

This week, ammonia markets have shown no let-up and are trading firmer due to lack of supply caused by disruptions to feedstock. The end result is maintaining firm AN values for the foreseeable future, especially in Europe and the UK.

Current values on ammonia and gas are already having an impact on European production, with one plant already reported to be cutting back and it's expected more sites may follow.

India's urea tender is expected to conclude today (29^th August). Which way the market goes this time round will be heavily dependent on what tonnage is bought and where it is supplied from.

There are early expectations that one million tonnes will be sought from Russia and China which is in line with supply.

For domestic markets, granular urea has softened slightly to reflect replacement import values.

• Liquid

With recent rainfall across large parts of the UK, the presence of soil moisture has led to an increase in interest for NP and NPK starter fertiliser products for oilseed rape. A range of products are available for prompt delivery in either IBCs or bulk.

As mentioned in last week's report, liquid is not exempt from external factors influencing pricing and current offers.

Frontier's liquid UAN offer provides a competitive option, allowing you to tailor a balanced nutrition plan for your cropping.

Pricing remains unchanged since the start of the season and it's recommended that you cover a good percentage of your requirements for the 2025 season.

• PKs/Straights

Demand across the UK is steady as we currently progress through oilseed rape and early cereal establishment.

Phosphates markets remain firm which has been the case throughout August, and replacement values yet again show further price rises to come.

One let up is potash which has gradually been showing some weakness and delivered farm values are now reflecting a 12-month low. This pattern is holding PK blended prices stationery for the time being.

For growers thinking of planning PK applications for autumn, we recommend you evaluate your soil status and ensure that it has the adequate indexes to maximise crop yield. Your local SOYL advisor will be happy to help.

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