Frontrunner - 4th July 2024

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WHEAT

• June decline in wheat prices

June saw a significant decline in wheat prices. Futures prices had peaked at the end of May due to concerns over Russian wheat production for 2024. As these fears eased and prospects for other major wheat producers improved, managed money traders sold heavily.

Consequently, US Chicago Board of Trade (CBOT) wheat futures lost 25% of their value. On the last day of June, the United States Department of Agriculture (USDA) reported increased wheat and corn stocks compared to the previous year - corn planting is ahead of last year, adding to the bearish sentiment.

The USDA reported that US farmers planted 91.475 million acres of corn - over a million acres above trade estimates and nearly 1.5 million acres more than the USDA's previous estimate from last June. This increase outweighed a 260,000-acre reduction in the wheat area from the March estimates.

However, the total wheat area is now 2.3 million acres down from last year which might offer some market support. June stocks for both corn and wheat were up over 20% from last year, although this was not entirely unexpected given the poor export pace during the season.

The US weekly crop progress report showed the winter wheat harvest progressing 14 points during the week to 54% complete, well ahead of the 39% average and last year's 33%. Spring wheat conditions improved by one point to 72% rated 'good/excellent', significantly better than last year's 48%. However, corn conditions slipped by two points to 67% 'good/excellent' compared to 51% last year.

• European uncertainty sparks recovery

As July began, wheat futures made strong gains and traders reacted to concerns about wheat production in Europe.

French wheat crop ratings dropped by two points to 60% rated 'good/excellent', down from 81% last year. French winter barley yield and quality for crops harvested up to the central regions were reported to be poor, raising concerns for French wheat potential.

However, central EU crops are expected to be better, with potential records in Bulgaria and Romania leading the EU Commission to increase its EU wheat crop estimate to 121.9 million tonnes from 120.2 million tonnes.

France - typically the trading bloc's primary wheat exporter - faces challenges. Analyst, SovEcon, cut its 2024-25 Russian wheat export estimate from 47.8 million tonnes to 46.1 million tonnes which is down from 52.2 million tonnes this season. This highlights the changing dynamics in world trade and suggests the June sell-off might have been overdone.

• World trade remains competitive

Despite signs of market recovery, physical world trade for near-term delivery continues to be conducted at low prices.

Following significant purchases by Egypt and Algeria last week, Saudi Arabia bought 235,000 tonnes of wheat for September delivery at low prices. Average prices were down to $263/t including freight - equivalent to about £184/t FOB excluding freight.

For UK supplies to compete, ex-farm prices would need to be below £170/t for 12% protein milling wheat. Fortunately, the UK market is reflecting import rather than export prices.

BARLEY

• Harvest approaching

The UK barley harvest is expected to begin the week commencing 8th July in the South and East of England. However, most of the barley in these areas will likely be harvested the week commencing 15th July, weather permitting.

Prices had been falling since early June, but the decline has recently halted. Farmer selling at these lower levels has been slow, with many waiting for the harvest to start before committing more barley to the market.

As a result, barley's discount to wheat has narrowed slightly from £30/t to £27-28/t. Despite this, barley remains a good value in compounders' feed rations compared to wheat.

• Quieter export market

Due to slower farmer selling, the UK has had little reason to discount itself to be export competitive so far this season.

Typically, the UK exports a significant volume of harvest feed barley to Europe, but this year UK prices have been too high compared to other European origins. Additionally, Spain is expecting a much larger barley harvest year-on-year, reducing the volume of exports sold for crop '24.

However, with a smaller winter barley area this year, harvest pressure may not be as strong as in previous years which makes it a situation to watch in the coming weeks.

OILSEED RAPE

• Rapeseed values increased sharply

Early yield reports from western Europe have been below expectations, leading some analysts to lower their European crop size numbers closer to 18 million tonnes than the original 19 million tonnes estimate.

Vegetable oils are also strong, led by soybean oil where funds have been aggressively covering in the record short position they have been holding. India has been a strong buyer of vegetable oils, partly from the Black Sea region, which has helped the price go up and improved crushers margins.

Crusher cover for new crop rapeseed is also assumed to be relatively low for this year, partly due to the European farmers reluctance to sell rapeseed at these levels. However, we are now reaching some key target levels which could bring farm seed out.

 FERTILISER

• Urea/AN

Last week, gas supply problems continued in Egypt because the previously restarted factories halted yet again due to further cutbacks in supply of gas to the country's urea producers. However, some reports suggest that these plants will now gradually restart after the gas supply is predicted to resume shortly.

At time of writing, at least four factories have had notification of an imminent restart. However, production is likely to be down to 70-80% of the normal manufacturing rates. Some factories have been using this as a period to complete plant maintenance while these issues get resolved.

This has caused the Egyptian urea prices to firm, and as you would expect, no new sales have been completed from Egypt recently due to no output and some earlier sales of urea shipments have been delayed.It's thought that around 500,000 tonnes of production has been lost in the downtime, with 70% of this for export and the other 30% used for the domestic market.

Egyptian values have increased over the last couple of months by approximately $100. India have come back into the market with a tender due to close on 8^th July for around one million tonnes of urea for shipment in August, despite the fact they currently have good stocks of granular urea built up in the country.

Furthermore, China have continued to implement its export ban into August from an initial end date of June this year, meaning there is less urea available to the world markets. All of this is holding the urea price firm for the foreseeable future at least.

In the nitrates market, European gas prices remain high for the time of year which is putting pressure on product availability (imported ammonium nitrate and nitrogen sulphur compound grades) to the UK. This, coupled with freight rates that have increased rapidly due to lack of available vessels to supply fertiliser, has caused UK suppliers to have low stocks which further substantiates the firm prices we are seeing to the UK.

CF Nitram prices for October/November delivery remain good value in comparison to imported AN alternative, which are for an earlier delivery period than the current Nitram offer. It's hard to see in the current market - with the high gas prices in Europe - an easing of nitrate prices to the UK in the near future.

• Liquid

Liquid UAN purchasing for summer and autumn tank fill continues at a steady pace as many of you look to complete your cropping plans for the season ahead and assess tank capacity on farm.

Spring 2025 UAN terms are now available and are competitive against solid equivalent systems.

You can now lock into your requirements for the whole season with some certainty in an unpredictable environment. However, be mindful that suppliers will look for full execution of contracted tonnage. In most cases, covering 70-80% of tonnage for the planned drilling area would make sense until crops are fully established.

NP/NPK compounds are also now available for the autumn position and offer an accurate, high-quality solution for those looking to place their nutrition orders. This is especially important when drilling oilseed rape.

Are you new to liquid fertiliser or are considering converting to a liquid system? You can go to our YouTube channel to hear about the benefits and answers to common questions.

• Straights/PKs

TSP prices have risen once again due to global supply and demand, with an increase from spring '24 of at least $50.

DAP has also followed TSP in price, with a rise of approximately $50 and is probably the one fertiliser nutrient in shortest supply to the UK. If you need DAP or Oilseed Start for oilseed rape establishment, please consider purchasing in good time while prices remain at current levels and stocks in the UK are readily available.

The MOP market remains flat and although there is high demand from Brazil this is offset by low demand from Europe which is keeping prices stable at present.

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.

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