Frontrunner - 3rd October 2024

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 farm trader, Lucinda Redgate.

WHEAT

• Markets react to Middle Eastern conflict

Towards the end of last month, speculative traders extended their short positions in Paris wheat futures. They expected weaker prices due to the poor EU wheat export pace and Russia and Ukraine dominating world wheat trade.

Latterly, adverse EU weather raised concerns for winter planting which triggered some short covering and a lift in futures prices. However, news broke on Tuesday that Iran had launched a ballistic missile attack on Israel accelerated the short covering, leading to a sharp jump in all wheat futures markets.

Paris futures traded at their highest level since 9^th August and US Chicago Board of Trade (CBOT) futures also went to their highest level since early July. There may not be any direct impact on global grain flows at this stage but with energy prices up 7% on Tuesday and fears for an escalation of hostilities in the Middle East, short covering in wheat markets to reduce risk seems likely to continue.

• Russian wheat prices rise

The free flow of wheat from the worlds cheapest sellers looks less likely to continue. Prices have risen over $5/t from the lows seen last month but offers are reported to only be available in near positions and not forward.

Dryness continues in Southern Russia with above normal temperatures, leaving the slowest drilling pace for over a decade. The Voronezh region declared a state of emergency due to the drought. This is the fifth biggest wheat producing region in Russia.

Some rain is forecast but it might be too late as the winter wheat drilling window normally ends early November - a record breaking 2025 seems highly unlikely.

For parts of western Europe, weather conditions are the opposite with excessive rainfall which provides a reminder for last autumn's difficult winter wheat drilling conditions.

Parts of the UK where winter wheat is the primary arable crop, record rainfall has been recorded, leaving waterlogged fields and flooding. The potential for 2025 wheat production is already in doubt.

• USDA see ample US wheat

On the last day of September, the United States Department of Agriculture (USDA) published its quarterly stock report and small grains summary, updating its US wheat production estimate.

There were no surprises with the published data falling close to pre-report trade estimates. The total US wheat crop is seen at 1.971 billion bushels, over 9% up on last year. Winter wheat makes up about two thirds of the crop.

1^st September stocks were put at 1.986 billion bushels - marginally above trade guesses and up on last year's figure of 1.767 billion bushels. The larger US wheat crop is finding plenty of customers.

US weekly wheat export inspections were 537,000 tonnes and although this was below the 723,000 tonnes from the previous week, it takes the cumulative to 8.235 million tonnes which is 35% up on the year. The USDA exportable surplus estimate is 22.45 million tonnes.

BARLEY

• Feed compounders well covered until Christmas

The relatively small domestic malting premium is the key driver for the continued feed barley supply. More and more marginal tonnages continue to be sold as feed rather than for malting or distilling purposes.

Generally, these downgraded tonnages have come forward in the nearby months which has helped supply feed compounders up until Christmas. As a result of the cover that has already been purchased, we've seen less consumer involvement and more merchant activity in the spot positions.

Discounts to wheat in the Southwest are now around the £15-20/t area and closer to £25 in Yorkshire and the North of the country. The contrasting discounts reflect barley supply in each area. With less spring barley in the in the South to be committed as feed, discounts have tightened up more there than anywhere else.

Having missed most of the rain in England this week, the Scottish harvest is entering the latter stages with parts of Aberdeenshire now around 80% cut and Southern regions 100% cut.

• September rains delay winter barley planting in England

The new crop planting season is already challenging in England, with provisional precipitation reports showing over 200% of average rainfall for September. Growers will hope to avoid last year's situation and progress winter plantings.

OILSEED RAPE

• Rapeseed values strengthen

Rapeseed markets are strong, driven by increased margins for crushers due to strength in the vegetable oil markets which led to improved buying interest.

Vegetable oil markets were also strong after tensions in the Middle East increased and European imports remained low for the season. Rapeseed values have appreciated closer to levels where the European farmers are more willing sellers.

Soybean values are also slowly increasing as dryness persists in Brazil during its key planting period and Chinese demand remains stable.

Further conversations are occurring around the EU Deforestation Regulation (EUDR) levels. The EU commission has proposed a 12-month delay to the scheme after complaints from many EU trade bodies around the punitive and restrictive nature of the scheme. This will enable more soya to enter the EU supply chain for the coming 12 months, pending the delay's approval. 

 PULSES

• Harvest progress slow

Bean harvest progress remains slow in northern areas with far from ideal weather conditions hindering progress.

The total cropped area is still to be determined, but supply looks to be ample with limited demand and strong yields. In contrast to feed beans, there is still good demand for human consumption beans as quality issue persist from the Baltic regions.

 FERTILISER

• AN/urea

Urea markets have firmed again following the recent announcement of a fresh Indian tender, the result of this won't be known until later this week.

Increased demand for urea from other regions and the lack of Chinese tonnage due to an export ban, together with uncertainty developing in the Middle East, will potentially see prices continue a steady upward direction.

Year on year, European and UK ammonium nitrate markets continue to run behind traditional volumes committed by growers which - with positive raw material prices - is causing producers to edge towards or put them at the limit of cost-effective production.

Natural gas and ammonia have moved up by over 40% since May which hasn't yet been passed on in the retail prices of ammonium nitrate.

The current lack of demand experienced by every manufacturer means it's likely all production will be reduced to cover existing orders. This of course won't allow for stocks to build and these production cuts will mean less available AN in quarter four, with a knock-on effect into 2025 very plausible.

Options for quality imports of AN to the UK remain economically difficult, as UK produced product is already very competitive and offered for forward months.

In light of continued and potentially new and evolving negative geopolitical situations, we advise you look at options available whilst you have product choice.

• Liquid/UAN

Current UAN terms for autumn tank fill and spring 2025 are still available but are under review and look likely to reflect the increase uplift in gas and ammonia prices. Higher replacement costs are also likely, as shippers look to replenish UK dockside stocks and make product available for the whole of the spring 2025 offtake period.

This uplift could be sooner rather than later, especially given the recent Indian urea tender and the previously mentioned uncertainty in the Middle East.

Please review your cropping plans and aim to cover a percentage of your requirements at the current levels which compete very favourably against solid nitrate-based products.

• PKs/straights

Phosphate prices in the UK have slowed, mainly due to stocks held at ports but internationally these values continue to increase steadily and replacement levels for the UK will be at higher numbers.

Potash markets in South America and Europe have been quiet. Therefore, we've witnessed prices sliding back but as demand now increases, levels are holding and potentially showing signs of a minimal uplift.

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.

To be notified each time this report is published in the future, you can also subscribe at www.frontierag.co.uk/blog/subscribe to ensure you always have the latest market insights.