London wheat closed at £189.30/t last Wednesday before sliding £5.75/t to a low of £183.55/t on Monday. This is the lowest the May contract has traded since early May '24.
Paris wheat followed a similar pattern closing at €226.50/t on 27th November, trading to a low of €224.5/t on Monday before closing at €228.75/t on Tuesday.
Chicago's May '25 wheat futures contract was the most bearish, trading to its lowest point since the contract started in back in July 2022 and reaching a low of $5.506/bushel on Wednesday.
WHEAT
- Market update
London wheat closed at £189.30/t last Wednesday before sliding £5.75/t to a low of £183.55/t on Monday. This is the lowest the May contract has traded since early May '24.
Paris wheat followed a similar pattern closing at €226.50/t on 27th November, trading to a low of €224.5/t on Monday before closing at €228.75/t on Tuesday.
Chicago's May '25 wheat futures contract was the most bearish, trading to its lowest point since the contract started in back in July 2022 and reaching a low of $5.506/bushel on Wednesday.
- Weather impacts
In the Southern Hemisphere, Argentina looks dry for at least another week, as does Western Australia but eastern parts of the country remain wet.
Rainfall continues across Europe except Spain and Portugal, which remain warmer than usual for this time of year.
Canada and the northeast corner of the US are cold and snow cover is building. The snow turns to heavy rain as you head southeast across the US. Like Europe, temperatures are above average in the Black Sea region and Baltic countries.
- Trade insights
The EU has exported 9.92 million tonnes of wheat this season (95% of which is soft wheat) - this is down 31% year on year.
The Baltics lead the soft wheat export table with 2.833 million tonnes shipped. Romania has exported 2.622 million tonnes and Germany has exported 1.017 million tonnes. EU imports are down 17% this season, having imported 4.549 million tonnes so far.
Nigeria is the top importer of EU wheat this season and has imported 1.614 million tonnes so far, which is up +16% year on year. Morocco, Egypt and Algeria are also big importers of EU wheat -1.998 million tonnes imported between them so far.
World FOB offers have changed little over the past week. German 12.5% protein milling wheat is being offered at $240/t for January, French 11.5% protein milling wheat is at $240/t and Baltic 11.5% protein milling wheat is at $232/t. Russian 12% protein milling wheat is offered at $226/t.
As we head towards the new year, it remains difficult to accurately estimate import/export volumes for the January to June '25 period due to conflicts, politics and financial troubles that continue to escalate. It's got to a point where Iran and Egypt are struggling to buy wheat due to seller concerns over payment.
BARLEY
- Barley's discount to wheat continues to narrow
It's been a very slow start to the week after the shortened trading session for Thanksgiving in the US on 28th November.
Domestically, compounders appear well covered in the January to March positions, with most of the trading volume being done in the spot position in the run up to Christmas.
Barley's discount to wheat has continued to narrow from around £30/t in recent months to closer to £20/t today. This has been an expected reaction as futures markets continue their downward trend and farm selling decreases.
With the slow pace of winter barley exports now a well-known dynamic in the marketplace, consumers overall are not incentivised to pay higher prices at this stage.
- A mixed first assessment of new crop quality
The Agricultural and Horticultural Development Board's (AHDB) first report on Great Britain winter crops was published this week.
Although it's early days to make an assessment on new crop, it was reported that only 57% of the barley sown is now in 'good/excellent' condition. What was particularly challenging was the delayed planting due to continued inclement weather in most parts of the country.
OILSEED RAPE
- Rapeseed values rebound from recent lows as vegetable oil values support rapeseed market
This week, political policy was one of the key drivers as rumours circulated that President Trump's tariffs on Canada would start in 2026, meaning less canola would be forced out of Canada to Europe.
In Indonesia, the new B40 biodiesel programme - dictating that 40% of fuel should come from vegetable oil sources - looks set to come into place in the new year. This will further increase palm oil demand and therefore increase prices in a tight supply year.
The EU Deforestation Regulation (EUDR), which was originally set to apply from 1st January 2025, has now been formally delayed until 2026. This is theoretically bearish for domestic oilseeds until the legislation's implementation, as it will allow potentially cheaper origin soybeans to continue entering Europe. Fortunately, the low domestic supply of sunflower/rapeseed is currently helping to negate the effects of this.
PULSES
- Feed beans
Domestic demand is very quiet both pre-Christmas and through the beginning of next year, with most homes bought up through quarter one. End users continue to watch for the bean price to drop before committing to include beans in the ration.
- Peas
The premium for feed peas above feed beans remains. However, with little demand for peas, it's a case of filling in shorts whilst they are available.
FERTILISER
- Urea/AN
Following on from last week's market commentary, this week seems like Groundhog Day.
More manufacturing curtailments in Europe causing lower production and zero stocks, further gas price increases and continued low farm activity all mean spring demand is growing while the availability of products decline.
The latest market statistics would suggest the UK is 15% behind on sales in comparison to previous years and based on a 'normal' year's demand, that would be a quarter of a million tonnes still required on farm by usage time. By the looks of things, this demand is going to roll into January to March 2025 and will be required on top of the usual demand in this period. Let's hope it's a late spring, otherwise supply could be tricky.
January UK AN offers are now sold out not due to demand, but due to lower production as discussed above. February is the next available delivery month on UK AN whilst we await news from the CF Fertiliser's Billingham Complex about February pricing. However, with only 12 selling days until the Christmas break, this lack of demand could push prices upwards.
Gas supply concerns also add to the above risks of holding off with nitrogen purchases, especially given the upcoming key gas transit deal expiring between Russia and Ukraine.
- Liquid/UAN
Root, forage and cereal growers can cover NP and NPK grades for spring delivery. A full portfolio of products are available for those either placing at drilling or broadcasting product in the season.
At present UAN values remain unchanged for the late tank fill and the spring delivery period across all nitrogen and nitrogen sulphur grades. However, as referenced last week, factors impacting AN and urea values are in play in the UAN market too; whether this be increasing raw material costs or the tightening of availability of finished product into the UK.
Therefore, growers with tank capacity and a known requirement for product this season or - based on autumn/winter cereal drilling - an increased requirement for product in the spring, should contact their local Frontier representative to discuss terms available.
- PKs/Straights
Nothing new to report on potash and phosphates since last week. Market demand has picked up a little but not enough to change any market levels. We expect to see replacement stocks at potentially higher numbers once demand kicks in.
With a major blender in the UK shutting for Christmas on the 13th December, inevitably some of the 2024 tonnage will not move until 6th January onwards. This, again, reduces quarter four despatches and adds to the spring supply pressure.
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