Frontrunner - 30th January 2025

WHEAT

• Markets continue to struggle

A lack of positive price drivers, slow domestic consumer demand and a renewed spell of sterling strength took London wheat futures lower this week, trading to within £1.50 of the contract low set on 2^nd December.

Despite a host of global weather-related crop issues that may impact 2025 production potential, there isn't yet anything severe enough to trigger speculative short covering. Funds in the Chicago Board of Trade (CBOT) wheat sit just below 100,000 contracts short. They are concerned the US could end the season with a heavy carry out wheat stock despite decent weekly US wheat export inspections taking the cumulative shipped tonnage to 13.764 million tonnes 25% ahead of last year.

The EU export picture is the opposite, with shipments for the week at 437,000 tonnes. The cumulative for the season is now up to 12.180 million tonnes compared with 19.34 million tonnes last year at the same stage of the season. Analysts Strategie Grains estimate the 2024-25 EU wheat surplus to ship is 24 million tonnes, which means weekly shipments need to rise to almost 540,000 tonnes each week through to the end of June to avoid a heavy carry out stock. The UK remains the third largest taker of EU wheat so far, but UK feed wheat prices in the southeast are moving closer to export competitiveness and this could lead to a change in market dynamics.

Highlighting the lack of world price movement, Jordan bought wheat again this week as part of its regular buying policy, and at $265.25 it paid the lowest price including freight since August. Russian wheat prices reportedly moved up to the high $230s FOB, whilst Russian exports slowed to 2.1 million tonnes in January - less than half the tonnage shipped the previous year.

• Corn underpins

Traders have been concerned that President Trump may impose damaging tariffs on imported goods into the US, leaving agricultural markets on the defensive. Even corn with its bullish outlook had to take the odd step back, as it did this week following a widespread selloff.

Trump may impose an across-the-board 2.5% tariff on imports to the US as soon as Friday, but with the backdrop of a bullish world balance sheet, funds have maintained their long position in CBOT corn above 320,000 contracts, driven by strong US exports and increasing concerns for South American crops.

Argentina bowed to farmer pressure, asking for a cut in export taxes given poor commodity prices and the impact of drought on output. Corn and wheat export taxes will be cut from 12% to 9.5%, whilst crop estimates dropped lower to 49 million tonnes.

Rains continue to hamper the Brazilian soybean harvest, leaving the second corn crop planting as the slowest since 2011 in Mato Grosso, similar to 2021 which coincided with poor yielding years.

BARLEY

• Active feed barley trade

It has been a good two-way trade over the last week, with merchants buying in the nearby months and compounders covering May to July positions.

Discounts to wheat are around £24/t on old crop apart from Devon, with mid-teen discounts in nearby counties.

New crop barley discounts to feed wheat are £14 - £17/t depending on location due to the uncertainty of the overall crop size. We do know that the winter feed barley area is lower due to the decline in oilseed rape planting. Export sales have dried up, with limited tonnage offered close to Ipswich and Tilbury so UK merchants don't have much new tonnage to offer at a competitive export price.

• Malting barley market dead on old and new crop

There is very little buying interest for old crop malting barley both domestically and in the EU, with premiums over feed barley falling to £4-£10/t. Farmers with malting barley in the West, Midlands and North of England are selling their Laureate / Planet as feed if it needs to move now.

Maltsters are also behind malting barley intake as malt production is below forecast due to brewers' beer sales being low. The air of over supply permeates the new crop market, where the premiums over feed are notionally more like £40/t due to most of the UK and EU malting barley still to be planted.

OILSEED RAPE

• Rapeseed values drop sharply

Prices have declined as a result of strong nearby crusher cover, meaning trade activity is relatively quiet. Rapeseed oil values have also given up some value for the same reasons and consumers are well covered in the nearby positions.

The soybean harvest in Brazil remains much behind the pace of last year although it's worth noting that the crop was slightly later to be planted so the trade is eagerly watching its progress. In Argentina, some of the dryer areas also received beneficial rains which added pressure to prices.

Markets are still waiting for firm details on President Trump's tariff threats. Canadian tariffs would be bearish, forcing more Canadian rapeseed into Europe. As time goes on it is getting more likely that tariffs will be implemented in new crop timings, therefore, influencing prices in further forward positions. 

 PULSES

• Feed beans

Demand for feed beans has increased over the last couple of weeks, both domestically and on the FOB market.

UK beans continue to be offered at a discount to Baltic beans, with the currency being the factor to watch here. This export demand continues to be for the nearby, so it's likely there will be more opportunities as we go further through 2025.

Domestically, demand has picked up for the April – August position, however, there is a question around where this will come from in the later months. The general feel is that the core domestic consumers have bought requirements for the first quarter of 2025, meaning these shorts will be filled in quickly.

 FERTILISER

• Urea / AN

Increased demand in January from UK and European farmers has now put pressure into an already tight supply situation.

End of November 2024 import statistics on AN, urea, UAN and CAN + S show that imports to the UK are down on AN and urea, slightly up on UAN and flat on CAN + S compared to last year's figures. The question is: why would this be seen as significant?

In November 2024 - which was a normal buying season despite the regional wet weather - the market going into the Christmas break was approximately 75% done leaving the usual 25% to purchase in spring.

However, spring was somewhat late due to continued wet weather so the market size dropped again due to changed cropping i.e. more spring crops than usual.

It's expected that this year's spring area will be larger than 2024 given the much-improved autumn planting conditions, but the later buying has caused suppliers to reduce imports in line with demand, coupled with the urea and gas markets firming through December.

If any urea shippers in the UK didn't jump in to purchase tonnes in early December, it looks to be a very risky purchase at this stage of the season given India is in the market for another 1.5 million tonnes. Will new cargoes arrive in time for the spring demand?

More locally, UK-produced AN is now for March delivery and there are very limited tonnes available to offer. Prices have firmed slightly but it's only a small increment on the previous week.

As always speak to your Frontier contact for more supply information and offers.

• Liquid

Nitrogen and nitrogen sulphur UAN values remain competitive when compared to solid systems. With this in mind, as the window for deliveries ahead of application narrows, growers with on-farm storage capacity have access to a full portfolio of grades for immediate delivery. As winter cereal cropping is assessed and total nitrogen requirements are revised, those with an additional demand for UAN this spring have the same opportunity to commit to tonnes for delivery in the coming months. In either situation, contact your local Frontier representative to discuss the options available.

• PKs / straights