The early part of this week saw global grain markets fall sharply, led lower by weak Chicago Board of Trade (CBOT) wheat and corn. US President Trump confirmed 25% tariffs for imported goods from Canada and Mexico - which will take effect from Tuesday 4th March - as well as a 10% increase on tariffs for imported goods from China. The negative impact for US agriculture could prove significant, with Mexico being the largest buyer of US corn exports this season, as well as buying US wheat. China said it would retaliate with a 15% tariff on imported US corn and wheat, as well as various other goods. The move will no doubt see Chinese importers switch to produce from other origins, such as wheat from Australia and corn from South America, potentially leaving the US with heavier than expected carry out stocks and lower farm gate prices. Wheat demand to China is already in doubt, with talk of purchases from Australia being rolled forward or even cancelled.
WHEAT
- Markets lower on President Trump tariffs
The early part of this week saw global grain markets fall sharply, led lower by weak Chicago Board of Trade (CBOT) wheat and corn. US President Trump confirmed 25% tariffs for imported goods from Canada and Mexico - which will take effect from Tuesday 4th March - as well as a 10% increase on tariffs for imported goods from China. The negative impact for US agriculture could prove significant, with Mexico being the largest buyer of US corn exports this season, as well as buying US wheat. China said it would retaliate with a 15% tariff on imported US corn and wheat, as well as various other goods. The move will no doubt see Chinese importers switch to produce from other origins, such as wheat from Australia and corn from South America, potentially leaving the US with heavier than expected carry out stocks and lower farm gate prices. Wheat demand to China is already in doubt, with talk of purchases from Australia being rolled forward or even cancelled.
US CBOT wheat and London futures both fell to new contract lows and CBOT corn dropped to its lowest since 19th December last year. CBOT corn had previously risen to a 14-month high, peaking on the 20th February. Speculative funds had built record long positions given the tight global balance sheet, concerns over delays in planting of Brazil's second corn crop and extended dryness in Argentina damaging newly planted corn crop. Subsequently, beneficial weather has boosted production prospects for each country. US corn exports have surged, with shipments running 32% ahead of last year up until the end of last week. Has this good run now come to an end? The US trade war looks likely to continue, for now.
- Australia boosts global wheat output
Early expectations for Australian 2024-25 wheat production had been relatively modest given mixed weather conditions. However, yields have proven to be beyond expectations leading to a higher revised official estimate. The Australian Bureau of Agricultural and Resource Economics (ABARES) see the crop being up from its previous estimate of 31.9 million tonnes, to 34.1 million tonnes. This is now well above last year's 25.96 million tonnes, although trails behind the 2022-23 total of 40.55 million tonnes. However, it is a strong crop, beating the ten-year average by 28%. Argentina also had a better than expected crop of 17.7 million tonnes, almost two million tonnes up on the previous year.
The next United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) is published on 11th March and will no doubt add the extra Australian tonnes to its world supply, doing little to help price potential.
- Indian wheat imports?
In recent years, concerns over Indian wheat production have often led to talk about a need for imports. However, once harvest is complete domestic supplies seem to provide sufficient wheat to meet demand and enthusiasm for any potential trade fades away.
The Indian millers are forecasting a crop of just 110 million tonnes, which would be below domestic consumption, creating a potential import need of between two to three million tonnes. Other recent estimates put the crop between 115 and 116 million tonnes and therefore with harvest just underway it would seem likely that any potential import need will take some time to be established.
India is the world's second largest wheat producing country after China and generally manage to produce enough wheat to meet demand. However, after a poor crop in 2022-23 the country's strategic stocks halved to just 9.5 million tonnes. India avoided any meaningful imports then, but stocks are barely sufficient to meet five weeks usage.
BARLEY
- Old crop feed barley prices under pressure
With global grain futures tumbling, old crop feed barley prices have come under significant pressure this week, initially due to concerns over the Brazilian corn crop easing and then on President Trump's tariff news. Export demand for feed barley has evaporated as rains in Iberia have resulted in more old crop barley coming to the market, with Spanish farmers releasing barley being held as a hedge against new crop.
- Muted malting barley demand
It has been another quiet week in the malting barley market, with demand to both domestic and export destinations being muted. Old crop malting barley premiums remain historically low and some full specification barley is moving as feed. Malt demand is sluggish, with demand for both brewing and distilling sectors facing headwinds. Uncertainty regarding potential US tariffs is also not helping confidence in the sector. Drilling of spring barley has progressed well this week and with a settled forecast we anticipate this progress to continue at good pace into near ideal seedbeds.
- Looking forward
Looking forward to new crop, although the forecast UK spring barley area will be lower than harvest '24, the uncertainty regarding malt demand remains. As a result, crop '25 malting barley premiums are at risk of being under pressure and buyers are understandably reluctant to enter the market. Having a marketing strategy for your crop '25 spring barley looks to be more important than ever this year. Frontier is offering a range of marketing tools to help growers market their barley and manage risk, including fixed price contracts, guaranteed minimum premium contracts, feed and malting barley pools and wheat futures related contracts.
OILSEED RAPE
Rapeseed prices are currently subject to high volatility as the trade tries to fathom a tricky supply and demand picture. This is being dictated by European biofuel demand, US world trade policy and oilseed import progress into Europe.
Crude oil markets have been weak over the last month, with President Trump vowing to boost US oil production and flood the market with supply. In turn, this is not helping biodiesel margins for producers resulting in stronger prices for the vegetable oil part of their ration.
US tariffs on China have led to retaliation, with China now putting tariffs on US soybeans and needing to switch most of their source to South America. This is causing weakness in soybeans and consequently the rest of the oilseeds complex, which were all considerably lower w/c 3rd March.
Old crop crusher cover for rapeseed remains decent, although outstanding demand is going to have to be filled by dwindling domestic supplies and imported goods, which could cause some bottlenecks. Across Europe, prospects for new crop production remain higher than last year with area and yield ideas positive today. In the UK, traders are hoping for higher yields to offset the low planted area
PULSES
- Pulse markets remain quiet
UK pulse markets remain relatively quiet, with prices moving by tiny margins, if at all. There are some indications of increased demand for feed beans into the aquaculture industry, but the domestic animal feed demand is still low. This is due to beans remaining expensive versus cereals, which have been further declining in price. f the export pace of feed beans doesn't increase, there may be a carryover of beans into next season.
Human consumption markets are nearly done for the year, with Australian beans filling the demands of the Egyptian market, which is normal for this time in the season. Demand for human consumption peas for export remains quiet, with Canadian peas both cheaper and better quality than UK origin.
FERTILISER
- AN/Urea
Demand and requirement are now higher than available supply volumes, as the delayed purchase of physical product by UK importers is now holding up arrival to farm. Although the demand for UK ammonium nitrate product is following the same trend, there are some offers still in the market for March delivery, while almost all other supply options are now for April only.
Recent ammonia trades have shown slight weakness owing to short-term global oversupply of ammonia. This is not likely to affect UK and European ammonium nitrate markets due to low physical stocks and a prolonged period of restricted production and supply.
Urea trade continues across the globe, but with little to no change on pricing and a lack of fine detail on trade completion. Given that Europe and the UK are now within their main usage period for nitrogen fertiliser, it is likely to be physical availability that commands pricing trends rather than global trade variables. It would therefore be wise to keep in touch with your Frontier contact about what is available and more importantly for when.
- UAN/Liquid
UAN continues to show its advantages over a solid fertiliser system, especially where growers are now calling off their deliveries for additional requirement and product arrives a few days later. The cost of a liquid system continues to be directly comparable to an ammonium nitrate system. There has also been an increase in the purchase of urease inhibitors, such as Limus Perform, in preparation of their required inclusion from 1st April.
- PKs/NPKs/Straights
Physical availability is the key within the UK today, as new vessels of MOP/TSP/DAP entering the UK are causing delays in blended materials and straights getting onto farm. A later demand from UK buyers has also caused a bottle neck with particular grades - such as polysulphate – as the UK producer and suppliers try to maintain stock to keep up with existing orders and increased demand. You can speak to your Frontier representative about alternatives to supply sulphur.
NPK compound options are now extremely limited due to an already restricted list being bought by regular buyers – be aware of blended alternatives, their comparable quality and potential later delivery.
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