Frontrunner - 6th October 2023

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WHEAT

• Extra US wheat triggers sell off

Late last Friday the United States Department of Agriculture (USDA) updated the markets with its latest US wheat production estimates. The data showed a marked increase over its previous figures, ahead of the most upbeat pre-report trader estimates, which resulted in a sharp fall in wheat futures.

The total for US wheat production is now estimated to be over two million tonnes up on the September World Agricultural Supply Demands Estimate (WASDE). The USDA sees the US wheat crop reaching 1.812 billion bushels, the equivalent of 49.3 million tonnes, which is 4.5 million tonnes up on last year. US wheat export sales are already running 14% behind last year and with another two million tonnes now to sell, the speculative funds were only too keen to push prices down sharply again.

The Chicago Board of Trade (CBOT) quickly dropped 37 cents - over 6% of the contract value. Paris followed, closing €4/t lower, as did London, closing £4.25/t lower. The total 1^st September US wheat stocks were marginally lower than expected, but this was over-shadowed by the production news.

• Ukraine exports slip behind

The end of the Ukrainian Black Sea export corridor deal has left the country's grain exports since 1^st July lower, with figures down to 6.68 million tonnes which compares to 8.99 million tonnes that was achieved in the same period last season. 3.3 million tonnes of these shipments have been wheat.

Russia has more than ably filled the gap, shipping wheat at a record pace. Analysts highlight a fall in Russian on-farm stocks as of 1^st September - 9% down on the year at 28.8 million tonnes. This is the result of the record wheat export pace and a smaller crop which is down to 91.6 million tonnes from 104.2 million tonnes last year.

Stocks are still 21% up on average. One analyst suggests that October wheat shipments could be one million tonnes lower than September because of the falling prices. Russian ex-farm wheat prices have fallen as low as $100/t, despite the government's instruction to maintain and export at the floor price of $270/t.

Despite Russia's withdrawal from the Black Sea export corridor deal, an increasing number of cargo vessels are heading to Ukrainian ports which could boost shipments. However, a Turkish cargo vessel came in to contact with a sea mine this week and although able to continue its journey to a port on the Danube River, this was a reminder of the potential hazards around Black Sea shipping.

Dry weather could limit Ukrainian wheat production in 2024-25. The Ukrainian Ministry of Agrarian Policy and Food said farmers had planted 1.7 million hectares of winter wheat, but the total area may fall from the intended 4.4 million hectares because of the dryness.

• China buying wheat

Markets found some support mid-week with reported sales of US wheat to China and talk of further French wheat sales.

US exporters concluded business with China for 220,000 tonnes, with more expected to be announced. It is suggested that French wheat sales could amount to one million tonnes.France is also expected to be the primary supplier of a further two million tonnes of wheat to Morocco by the end of the year.

This business is essential to get EU exports back on track and although last week's shipments exceeded half a million tonnes, the cumulative total of 7.4 million tonnes is still 2.4 million tonnes behind last year.

Adding to the current EU wheat supply glut are imports which top two million tonnes – this is 50% ahead of last year. 1.3 million tonnes of this EU-imported wheat came from Ukraine, whilst the UK managed to ship just 100,000 tonnes.

BARLEY

• UK domestic feed barley market goes quiet

This week buyers were absent in the market and therefore values have dropped by around £5/t for the small amounts that needed to be sold. Fortunately, there was not much on offer as farmers were concentrating on drilling next year's crop - values may have been pushed lower otherwise.

UK export trade has stopped as Baltic supplies are more competitive into Ireland and Spain. Black Sea supplies cover the North African market as they are even cheaper than Baltic Sea supplies.

Parcels of malting barley that are failing are also starting to appear, which keeps supplies coming forward in the spot position to fill merchants' October feed barley requirements.

• English and European malting markets largely inactive

There are no particular trades to report this week due to the ongoing assessment of barley supplies in Scandinavia and maltsters being wary of beer demand, due to the cost of living tightening the appetite of consumers.

As feed barley prices have dropped away, malting premiums have increased again in all areas. As a result, maintaining the quality of malting barley stocks is even more important. It's worth asking for malting barley to be re-sampled as time has passed since the harvest analysis, as this could help to avoid unnecessary rejections.

• Low nitrogen distilling grade supplies finding buyers and sellers

Low nitrogen distilling grade supplies are finding active buyers and sellers as farmers and maltsters tidy up their requirements, both north and south of the border. With only limited quantities of low nitrogen barley available across Europe and little demand for brewing grade barley, this market doesn't look likely to develop much interest. Please speak to your local Frontier farm trader to discuss what can be done for your Scottish or eastern low nitrogen barley, specifically the Laureate variety.

OILSEED RAPE

• The market looks for certainty around supply and demand before it makes its next move

Oilseeds markets find themselves in a state of flux at the moment, with diverging supply and demand factors leading to uncertainty and a surprising lack of volatility.

In UK rapeseed terms, we are seeing single digit price moves over weekly periods which is a reminder of the markets we saw before Covid-19 and the Russia/Ukraine conflict.

In Europe, the focus is on keeping crushes supplied with seed. The markets know the supply is available globally but will need detail on how and when seed can get to plants. This includes Black Sea seed, which is slowly making its way out of the area, as well as new crop Australian seed, which will start being offered in volume in the coming months as the country's harvest commences.

Some increasingly tangible soybean data is starting to affect the global oilseeds market. The US harvest is well underway and progressing at good pace, although - as expected - yields aren't looking positive there. There are also dry conditions in Brazil starting to cause concern for plantings and this will become more of a market mover if there isn't an improvement in oil moisture in the coming month. Another focal point for US soybeans is how much domestic demand can be created by the recent investments, which have aimed to increase the production capacity for biofuels.

 PULSES

• Beans

Farm selling volumes remain consistently high, with growers eager to take advantage of the increasing values over wheat which is at risk of falling when shorts have finished filling their needs.

We're still seeing harvest progress in the north of the UK, with some growers only just cutting their crop. Historically, this is where the best quality beans come from and the opportunity to make a £10- £20/t premium over feed beans continues as the UK remains competitive in the human consumption market. The Australian bean crop outlook is one of good quality but low in yield, which will eventually compete with UK quality beans when available in the new year. 

 FERTILISER

• AN/Urea

With drilling continuing across the regions, the UK market remains subdued around demand from the farmgate. We have seen no change in values for ammonium nitrate and urea in the last seven days.

Globally, the market eagerly awaits the outcome of the latest Indian urea tender, which is due to close on 20^th October with a shipment deadline of 10^th December for the agreed tonnage.

Despite the current flat market, producers are keeping a close eye on the volatility of the gas and ammonia markets. There have been increases of between $150-$200 for ammonia over the last seven weeks and the pound has been weak against the US dollar - up to 4% lower in the month.

UK ammonium nitrate (Nitram) values are still available for spring 2024 delivery and offers are at a good price when compared against replacement imported ammonium nitrate for delivery pre-Christmas.

• Liquid

It's been a quieter week within the urea ammonium nitrate (UAN) trade, as growers wait for a settled spell to either continue or start the winter drilling campaigns.

Required UAN volumes for the coming season will be confirmed once crops are in the ground and established. Those with the appetite and a firm understanding of their requirements for the 2023/24 season can be assured that current UAN values remain competitive against solid systems, on both nitrogen and nitrogen sulphur grades.

• PKs/Straights

Like the nitrogen market, demand is still relatively low for phosphate (P) and potash (K) at present and it is believed that the PK market will remain stable to firm over the coming months.

It is worth noting that the supply of phosphates to the UK is limited (especially diammonium phosphate (DAP)) and that the increase in ammonia values will influence the cost of production.

It's reported that replacement values for triple superphosphate (TSP) could increase by up to £30/t over the next few months. Muriate of potash (MOP) is currently stable in the UK market and is trading at lower values than Europe, and it's anticipated that any price rises will be gradual through to the end of the year.

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.