The United States Department of Agriculture (USDA) struck a bearish blow to global grain markets late last Friday, announcing a shock increase in the 2023-24 US corn planted and harvested area. This came following an increasingly optimistic view on yield potential for the crop, with the recent arrival of widespread rain across the US corn belt following a sustained spell of dryness. The USDA now estimates that US farmers have planted 94.1 million acres of corn - up two million tonnes on its previous estimate - and that they will be able to harvest 86.3 million acres, which is up 9% on last year. This, combined with its estimated yield, would see the US corn crop at 10 million tonnes higher than the estimate made in the World Agricultural Supply and Demand Estimates report published in June, which was set at 387.75 million tonnes.
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WHEAT
- US corn acres - shock jump
The United States Department of Agriculture (USDA) struck a bearish blow to global grain markets late last Friday, announcing a shock increase in the 2023-24 US corn planted and harvested area. This came following an increasingly optimistic view on yield potential for the crop, with the recent arrival of widespread rain across the US corn belt following a sustained spell of dryness. The USDA now estimates that US farmers have planted 94.1 million acres of corn - up two million tonnes on its previous estimate - and that they will be able to harvest 86.3 million acres, which is up 9% on last year. This, combined with its estimated yield, would see the US corn crop at 10 million tonnes higher than the estimate made in the World Agricultural Supply and Demand Estimates report published in June, which was set at 387.75 million tonnes.
Concerns over dry weather had been building a potentially bullish picture for world corn and had supported wheat markets. However, following a record Brazilian corn crop, the larger harvested area and more optimistic view for yields in the US have turned the dynamic into a bearish outlook. US Chicago Board of Trade (CBOT) corn futures extended their losses late on Friday to almost $1 per bushel from its recent peak on 21st June, almost 17% of its value.
- Black Sea supply concern again triggers a price rally
In a bid to encourage Russia to renew the Black Sea grain deal, the EU is currently considering a proposal to allow a Russian bank to rejoin the global financial network, under sanctions. This would allow the bank to handle payments related to grain exports. This proposal created some market negativity earlier in the week, with the United Nations pushing for a concession on sanctions to allow the continued flow of cheap grain out of Ukraine. However, Russian officials rejected the proposal and called for an end to the deal when the current extension expires on 17th July. This, coupled with concerns for the safety of the Russian-occupied Zaporizhzhia nuclear power station, saw US CBOT wheat futures produce a sharp rally on Wednesday and prices trade up by 35 cents at their high (5%).
- Romania offers an alternative Ukrainian export solution
BARLEY
- Quiet domestic market
Feed barley has mainly had a flat week, with the north west being the only region to see any gains. Farm selling remains subdued for this stage in the season, compared to previous years. However, low domestic demand from compounders has meant that prices have not been materially affected. A small number of consumers have sought post-harvest cover, but the near-term demand we have seen has been from short covering by the trade. Barley harvest has now started in southern parts of the UK, so increased supply is imminent, adding to a formidable old crop surplus that remains in the UK due to a below average export pace.
- UK still uncompetitive on export
UK feed barley remains uncompetitive against grain from Black Sea origins coming into the EU through road, rail and sea. The Black Sea grain corridor deal, which facilitates this flow of grain, will need renegotiating this month and could cease entirely if Russia and Ukraine cannot agree a way forward. However, as the continuation of this deal has been threatened on numerous occasions, grain is increasingly finding its way into Europe via rail and road. These alternative supply routes may serve to negate any potential supply issue stemming from the ending of the grain corridor, should that be the outcome of this month's negotiations.
With storage options nationwide and prices far below the levels seen last harvest, speak to your farm trader regarding grain marketing options for crop 23.OILSEED RAPE
With this crop year coming to an end the markets attention has turned to new crop harvest. Oilseed rape has given up most of last week's gains, as harvest is now progressing in France which is creating some price pressure. However, we would not expect to see any significant downward move given the relative price competitiveness of European seed on the world market. Early harvest yield reports are showing relatively disappointing yields; however, this isn't unusual at this stage. Yields will continue to be monitored over the next few weeks to determine the eventual size of the new crop harvest.
Increases in domestic demand from Canadian crushes will see a reduction in their available exports to Europe and elsewhere. European stocks remain burdensome going through 2023/24, which will mean fewer overall imports from other exporting countries. In the wider oilseed markets, eyes will be on next week's World Agricultural Supply and Demand Estimates report, which will provide an update on world oilseed demand and how that is balanced. There may be some volatility in the market based on the information contained within the report.
PULSES
The pulse markets have been extremely quiet in the run up to harvest, although there have been a small number of old crop trades valued at £55 per tonne higher than new crop prices. The bean forward market continues to follow wheat futures prices and, with an estimated large UK bean crop this year, we may see these premiums start to fall as we approach harvest. There is an opportunity for early harvested crops to make a premium, so growers who are confident they will have new crop supplies available and dry in August should contact their local Frontier farm trader for more information.
FERTILISER
- AN/urea
New business has been slower this week due to urea producers in Algeria and Egypt having full order books. Independence Day in the US has also influenced a quieter week on world fertiliser markets. Granular urea is approximately $65/t up on mid-June levels.
In the UK, CF Fertilisers announced new terms for Nitram 34.5% ammonium nitrate. There has been a slight increase in value and therefore recent sale volumes have taken another month of available production. The next round of UK-produced ammonium nitrate supply is now expected to be available from January 2024 onwards. Imported ammonium nitrate from European plants in Lithuania or Poland is in short supply, with gas price volatility continuing to make production and sales difficult from these regions. Currently, the gas prices expected for the winter months makes it uneconomical to produce ammonium nitrate when compared to granular urea, so the nitrates market remains tight both in the UK and further afield.
- UAN/NP clear solution compounds
Current urea ammonium nitrate terms are still available. However, these will soon come under pressure as the ammonium nitrate / urea markets have established higher forward pricing over the past few days. It is advised that growers should consider tank fill volumes to lock into some certainty in a volatile and unpredictable market environment. While business remains steady, there is a belief that the urea ammonium nitrate market sector will continue to grow, so forward planning of volumes will be an important part of any discussions in the coming months. This will give shippers and suppliers the opportunity to discuss the volume requirement for the whole season with producers.
Nitrogen phosphate clear solution compound values are now available for the late summer/autumn market, with an increasing level of interest in the placement of nutrients, especially when establishing oilseed rape. Please speak to your Frontier contact regarding the full range of products available.
- NPKs/PKs
As we head into harvest '23, spot demand (or forward interest) is very low on MOP/TSP, with a slight increase in interest on DAP type grades for oilseed rape establishment. If you require DAP for oilseed rape then it is important to start discussions now, as potential smaller orders will need to be arranged in a timely manner to allow delivery onto farm ready for early August sowing.
After months of falling prices, it will be difficult to buy at the bottom of the market. As with grain markets, once prices turn and given stocks are low, suppliers will cast aside offers. It is suggested that you keep in contact with your Frontier contact over next few weeks and maybe begin to take some cover at these current levels.
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.