Frontrunner - 31st March 2023

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WHEAT

• Russian export uncertainty rallies markets

Wheat futures markets continued to rally until mid-week, making impressive gains from last week's multi-month lows. The London wheat market added £19/t which encouraged further farmer selling, but with limited interest in physical wheat buying, domestic prices subsequently dropped again towards the end of the week.

In recent weeks, speculative funds have built a significant short in Chicago Board of Trade (CBOT) wheat futures, but uncertainty over Russian wheat exports has triggered spells of short covering and a lift in prices. Comments that Russia may restrict exports if wheat prices fall too far was the catalyst for this. Although this was denied, it was suggested that traders were asked not to sell Russian wheat for export below $275/t to ensure Russian farmers were able to cover their costs of production.

The future shape of Russian wheat exports was presented with more uncertainty when Cargill announced it would stop handling Russian grain from its export terminal as of July. Viterra, 'The Agriculture Network', also said it was planning to stop grain trading in Russia. With this, coupled with news that Russia's state-owned agriculture leasing company had placed orders for 60 cargo vessels with 40,000-60,000 tonne carrying capacities, some took the view that Russia may take state control of its world grain sales, divorcing itself from Western influence. This might make it more difficult for several leading importers to secure the supplies they need from Russia, perhaps turning them to wheat of EU or US origin instead.

• Russia and Ukraine dominate current export markets

The future of Black Sea exports may have some uncertainty, but the current dominance of Black Sea origin grain in world markets is highlighted by the latest statistics for March. Russia is estimated to have shipped 4.3 million tonnes of wheat during the month, up from 2.9 million tonnes in February and on a par with this season's previous highest exporting months of October and November.

Ukraine says it will have shipped 5.1 million tonnes of grain in March - this compares to the low figure of 1.4 million tonnes shipped in March 2022, when the country's Black Sea ports were blocked by Russia. Ukraine's export destinations include Spain, which is traditionally a prime UK grain market. This limits any fresh opportunities for UK old crop export sales, adding to UK domestic price challenges with a burdensome surplus of feed wheat from the 2022 harvest. Ukraine's neighbour, Poland, is trying to find methods to block cheap Ukrainian grain flooding its country and undermining Poland's domestic prices. The EU are putting a support package together for farmers in Poland and other neighbouring countries, such as Bulgaria, to help offset its financial losses.

• A mixed picture for 2023

2023-24 could present a less productive Russian harvest, with the Russian Grain Union not ruling out a grain crop of 120 million tonnes due to adverse winter weather. This compares with over 157 million tonnes from the 2022 harvest. The Russian Agricultural Minister, Dmitry Patrushev, said that a gross grain harvest of 125-127 million tonnes will maintain a balance of interests for grain producers, consumers and exporters.

For the EU, there's a more upbeat prospect. COCERAL, the European association of trade in cereals, oilseeds and other commodities, estimate an improving EU wheat and corn crop potential for 2023 - up 2.7 million tonnes.

The United States Department of Agriculture (USDA) will update markets late on Friday with its latest estimates of US farmer planting intentions for their wheat and corn crops, as well as an update on US wheat and corn stocks. 

BARLEY

• Prices lift early/mid-week as last of cover taken on old crop

Prices lifted almost £10/t on the lows of the previous week's trade, as feed compounders priced rations for the first half of the summer. It seems that there is enough uncertainty around the world for wheat and corn futures shorts on various exchanges to buy in some of their short positions.

Domestic interest remains strong, as the export market is still non-existent, with eastern EU countries and Ukraine offering cheaper supplies. It's believed that very little trade is taking place, as demand is still muted from the UK's usual customers, Spain and Ireland.

• Farmers clear out malting barley balances into thin demand. Spring barley sowing has stalled.

Malting barley is trading at around £220-225/t ex-farm, which still represents about £45-50/t premium over feed barley prices. Demand from the domestic market and the EU is minimal at present, as they're well covered. These values represent a discount to autumn new crop values of £15/t. Spring barley sowings have not progressed over the last week due to rainfall of approximately 15-45mm across the UK. England still has around 20% left to sow and Scotland has 75%. While this is not late in Scotland, Central and Southern England would now benefit from a dry spell so sowing can be completed which is forecast from Sunday.

• Increased new crop values leave growers side-lined

Even though prices had risen £15/t from the lows of last week, growers had not sold much into the rally by Wednesday. This may be due to production cost fears and it being too early for growers to commit more. However, crops look good in the EU apart from Spain where there may be issues if rain doesn't fall by the end of April. 

OILSEED RAPE

• Rapeseed continues upwards rebound

A well overdue rebound in rapeseed values began last week, after fresh news of China buying EU rapeseed oil circulated. This brought much needed confidence into the market after a period of 13 consecutive down days. This new business with China spurred previously absent domestic oil buyers into engaging with the market again and consequently gave crushers reason to buy more seed.

In addition to this, English ex-farm values reached £400/t again, which prompted further farm selling of rapeseed, which appear to be more abundant than usual. This upward movement continued throughout the week, as participants in the market filled their orders.

However, it unfortunately didn't last as we saw a sharp correction lower yesterday, with May MATIF futures closing €12/t down on the day. The direction of this market, going forward, will be reliant on consumer confidence and how quickly stocks are used up. 

 PULSES

Old crop bean values have been trading broadly in line with wheat values over the past week, although tending to follow more on the downside rather than the upside. There is no doubt there needs to be more demand either domestically or for export if there's hopes for any price stability or even possibly price rises. Recent domestic demand has all but dried up as other mid-range protein products, such as rape meal, are seen as better value compared to feed beans.

As the gap between old crop wheat and new crop wheat widens, we should see that carry reflected in better new crop bean prices. The problem is that with little or no new crop business trading, it's almost impossible to give new crop bean values. Hopefully when the weather dries up a bit and the final spring beans get planted, we should be able to give more definitive prices. 

 FERTILISER

• Urea/AN

Domestic markets remain quiet, mainly because of poor weather in the UK and ground conditions not being favourable. Offers of urea into the British market, both short and long term, look to have stabilised in value. However, North African FOB values may soften further due to smaller demand, as some destination ports still have existing stocks to use. Sterling has appreciated in value over the past week and at the time of writing the exchange rate is sitting at $1.23. Gas values are also showing some signs of stabilisation, sitting at £1.09/therm.

Ammonium nitrate values are stable on nearby positions. The further into spring we get, the closer we will be to knowing the new season values for May or June onwards.

• Liquid

Spring progress remains lacklustre due to ground conditions and unsettled weather, but we would urge all our growers to keep ensuring their tanks are full, especially if there is a rush to get applications done when conditions allow.

For anyone requiring additional top up product once spring contracts are delivered, we would advise speaking to your local Frontier contact to discuss. Please also keep the Easter weekend in mind, as sites may be working on restricted hours or closed.

• PKs

As mentioned in earlier reports, potash offers were showing signs of weakness and fresh offers will reflect some softening in value into next week and beyond. Long-term weakness remains in the market and if world events don't flare up too much, new season purchases should offer some comfort going forward.

Phosphates are also showing signs of continuous weakness, but these may not b e reflected in pricing in the immediate weeks. Suppliers have been reluctant buyers of cargoes of all straights, due to the reduced demand this year. It remains paramount that growers buy now to ensure timely deliveries, but also expect delays.

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.