Wheat markets have enjoyed a buoyant start to September. Just three days into the new month Paris futures topped a 9% price gain from their contract lows seen trading during the last week of August. With the US and EU harvests nearing completion and harvest farm selling pressure drying up, trade liquidity has become an issue at the lower price levels. Speculative short covering has provided buying interest, although the primary negative wheat price driver remains in play.
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WHEAT
- Markets edge higher
Wheat markets have enjoyed a buoyant start to September. Just three days into the new month Paris futures topped a 9% price gain from their contract lows seen trading during the last week of August. With the US and EU harvests nearing completion and harvest farm selling pressure drying up, trade liquidity has become an issue at the lower price levels. Speculative short covering has provided buying interest, although the primary negative wheat price driver remains in play.
Russian wheat prices remain close to their lows - below $220/t FOB - as the world's largest wheat exporter continues to dominate trade. August wheat shipments are expected to reach five million tonnes, with a similar tonnage projected for September, taking the first quarter total to approximately 14 million tonnes. This could be marginally lower than last year but will still be the second highest ever and this strong pace provides the price pressure we have seen on world markets.
However, there are yield and quality issues for Russian spring crops due to persistent rain. Kazakhstan, which had suggested before harvest that it would achieve a record high crop, has similar issues. Heat and dryness for much of southern Russia is another concern and not beneficial for winter wheat drilling. Escalation in hostilities between Russia and Ukraine is another worry, although to-date there has been no impact on grain flows. The most recent Russian 2024 wheat production estimates are lower, down to 82.5 million tonnes.
The Ukraine Farm Ministry estimates that the country's combined grain and oilseeds harvest could be 15% down on the year, including 21.76 million tonnes of wheat. The United States Department of Agriculture (USDA) estimate that 3.4 million tonnes of the 14 million tonne season total has been shipped so far. At the current pace, the estimated season total will be reached by the end of February!
- Contrasting fortunes for US and EU exports
EU weekly wheat exports were 453,000 tonnes higher this week - now up to 4.38 million tonnes. This is 22% behind last year and only 16% of the surplus has gone in the first quarter, highlighting the need to be competitive at some stage or face a burdensome carry out.
Agricultural commodity market analysts, Argus, see shipments outside the EU by France - the EU's primary wheat exporter - down by 60% on the year, reaching only 4.1 million tonnes compared to an average of 10 million tonnes. It also estimates the smallest French wheat crop for 41 years, at 25.15 million tonnes.
US weekly wheat export inspections were again at the top end of expectations, reaching 578,000 tonnes and have taken the season's total so far to 5.736 million tonnes. This is 32% ahead of last year, although the USDA estimate for the exportable surplus is over three million tonnes higher than it was last year.
- Upbeat Australian prospects
Beneficial rainfall has made Australian 2024-25 wheat production prospects more encouraging. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has increased its estimate to 31.8 million tonnes, which is up 2.7 million tonnes from its previous estimate. In August, the USDA estimated the crop reaching 30 million tonnes and is likely to follow the official estimate increase in its September report.
BARLEY
- Barley discount continues to narrow
Barley markets have been very quiet this week, with farm sales slowing down following the harvest movement period. This has further reduced barley's discount to wheat to between £15-20 (region dependent).
- Spring barley quality looking good
Spring barley harvest is entering its final stages in England, with quality looking generally very good across the board, significantly reducing malting barley premiums. If these dynamics continue as malting barley harvest progresses in other major producing countries, such as Denmark, then we are likely to see more spring barley finding its way into the feed supply. How much and what pressure that exerts on the feed barley price remains to be seen.
- Feed barley exports remain uncompetitive
The UK is unable to compete on the export market due to ample Black Sea origin supplies. This could change if we see further price decreases in UK feed barley due to supply from malting varieties and locations where the premiums are not viable versus the risk of rejection and Russian stocks for export decrease further.
OILSEED RAPE
- China retaliates on Canadian markets
Rapeseed markets have been extremely volatile over the past week. We initially saw values trend upwards from six-month lows as vegetable oil values increased and we moved away from rapeseed harvest pressure. Wider demand sentiment in the oilseeds sector also helped add some positivity to global oilseeds markets.
The biggest story of the week, however, was news that China would be launching an anti-dumping probe on imports of canola (OSR) from Canada. This was announced as a retaliatory measure, due to Canada implementing tariffs on Chinese electric vehicles and metals. If implemented, these tariffs would cause large re-directions of global oilseeds trade flows and would likely cause a bearish Canadian canola market. The Canadian market reacted violently to this news and remains around 7% down. European values followed for a short period of time but have regained all losses at the time of writing. It is likely that this situation will continue for some time, whilst political differences are negotiated.
PULSES
- Little change as harvest progresses
There has been little change in the feed bean market this week. Harvest has continued to progress with some impressive yields being reported, however the majority range between four and five tonnes per hectare. Values continue to hold a £40/t premium to London wheat futures. Demand remains limited, as beans continue to be viewed as expensive in the mid-range protein market.
Premiums for human consumption beans have now started to fade as high-quality beans from the Baltic region become available to the market. However, there are some questions regarding the quality of Baltic beans, especially an increase in the amount of insect damage, so we may see buyers returning for better quality UK spring beans for human consumption.
Pea values remain very strong, with green peas suitable for micronizing valued at around £380 ex farm. If you have green peas with low levels of bleaching, please send them promptly to your local Frontier lab for assessment, to determine their specifications and suitability for premium market pricing.
FERTILISER
- AN/Urea
UK nitrogen buying attitudes appear to be picking up, with a continued steady buying interest being seen as harvest progresses in some areas and finishes in others. Only regular urea buyers seem to be coming to the market, which is likely due to a potential firming following the announcement of the Indian tender results. The values offered were not too dissimilar to those from the previous tender, which shows how static (but firm) the market has been. The final booked volumes will be the deciding factor on the supply/demand of urea over the coming months.
Ammonia continues its trend, with levels remaining firm. Given that any potential variables which could cause a price rise in nitrogen at this stage now outweigh any future weakness, we would recommend that growers assess their existing percentage purchase versus likely requirement and continue to buy based on risk mitigation for crop '25.
- Liquid
Following a very stable and competitive market offering from liquid suppliers, there are now some references around price increases. This is most likely to impact spring price offerings, rather than those for pre-Christmas delivery. This comes as no surprise given that the
spring liquid offer is very competitive versus any solid nitrogen offers available. We would therefore suggest following the same approach as above and that growers assess their existing percentage purchase versus likely requirement.
The NP and NPK liquid market continues to grow with the seasonal spike in demand for OSR establishment. Although phosphate has risen in price, this has not yet impacted pricing on NP liquids for OSR but will almost certainly impact NPK pricing for spring demand.
- PKs/Straights
As PK buying increases to cover autumn requirements, suppliers are now replacing stock at higher levels. We are therefore seeing regional price differences across the UK, as some importers are incrementally moving PKs up by £5-10/t to reflect this increased replacement cost. Following several years of significantly lower PK buying in the UK, it is likely that growers will need to replace the PKs removed from the previous harvested crop, otherwise they run the risk of having deficient soils and negatively impacting yields.
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