Earlier this week, both US and French wheat futures fell sharply again and struck new contract lows.

Wheat futures have nearly lost half their value from their peak in May 2022 and are under pressure from abundant world wheat supplies and cheaper export sales from Black Sea origins. Offers are reported to have fallen below $200/t FOB – the sterling equivalent of £157/t for milling quality on a vessel at a Black Sea port. 

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WHEAT

• World wheat prices fall again

Earlier this week, both US and French wheat futures fell sharply again and struck new contract lows.

Wheat futures have nearly lost half their value from their peak in May 2022 and are under pressure from abundant world wheat supplies and cheaper export sales from Black Sea origins. Offers are reported to have fallen below $200/t FOB – the sterling equivalent of £157/t for milling quality on a vessel at a Black Sea port.

Algeria is thought to have taken advantage of these low prices, securing up to one million tonnes for June delivery at $228/t, including all freight costs. This is almost $40/t below the prices the country paid in its previous tender and is most likely Russian origin.

Russia's aggressive pricing policy is allowing wheat shipments to climb to almost one million tonnes per week and in doing so is putting the country on track to clear its 51 million tonnes exportable surplus. Russia has also exported its highest ever February wheat volume at 4.1 million tonnes. This is up from 3.6 million tonnes in January and just three million tonnes on last February.

• EU wheat Exports catching up

According to official Brussels data, EU wheat exports jumped 479,000 tonnes up on the week ending 28^th February - 20.976 million tonnes in comparison to 21.383 million tonnes last year.

The data may not include all shipments named and it could be the case that actual volumes are ahead of last year. Despite this, there is still at least another 10 million tonnes to ship before the end of the season. Even with this, it's thought French commercial end stocks could be at their highest ever.

EU wheat exporters need to remain competitive and this is why the Paris market has fallen to new lows this week.

Morocco continues to be the EU's primary wheat customer this season, taking over three million tonnes so far. It's followed by Nigeria and Algeria – taking approximately two million tonnes each.

• India presents mixed picture for markets over past 12 months

In the middle of last year, there were market rumours that India was in government-to-government talks with Russia to import up to nine million tonnes of wheat because of a domestic shortfall.

The prospect of the world's primary exporter allocating this away from the general market provided a short term boost to prices. However, nothing ever came of that and India has now reached its next harvest without needing the help of any imported wheat supplies to meet its domestic needs.

This week, the Indian Government said it sees the country's wheat crop reaching 112 million tonnes – only two million tonnes down on last year and ahead of the United States Department of Agriculture's (USDA) estimate of 110.55 million tonnes. However, on the evening of the Indian harvest a spell of widespread heavy rain has flattened fields leading to quality and yield concerns.

BARLEY

• Old crop barley prices relatively static

Old crop feed barley prices have traded in a much narrower range over the last week in comparison to wheat.

Prices struggled to rally because of the on-farm surplus weighing on the market, but they have not fallen this week given that the flow of farmer selling has slowed in comparison with recent weeks.

Old crop exports are continuing at a slow pace compared with last year – by 4^th of March the UK had exported approximately 450,000 tonnes of barley which compares to the 800,000 tonnes shipped in the previous year.

The UK has consistently been too expensive in comparison to other origins to connect on any volume of export trade this season. What will drive prices in the next couple of months is whether old crop stocks come forward or if they are carried over into new crop. 

• New crop feed barley discount to wheat shrinking

Given a lack of farmer selling that is giving the barley market some support, new crop barley prices have not followed wheat futures lower on the week.

The discount to wheat in the last couple of weeks has narrowed by around £6-£8/t. The UK is not competitive on exports on old or new crop but given spring plantings are yet to get underway, there is little pressure on prices to be export competitive, especially as no surplus for crop '24 has yet been planted.

Compounders have been actively looking for new crop pricing due to the drop in global grain prices over the last few months which has also given prices some support. Now we are into March, the market will be focused on spring plantings to try and determine the size of the UK barley crop for crop '24.

​OILSEED RAPE

• Oilseed rape prices increased

In the last week, rapeseed values have appreciated by around £10/t on a UK ex farm basis as the wider European oilseeds complex sees some strength. However, prices remain in a long-term downtrend stemming from the end of November 2023.

High levels of European rapeseed crush have been reported in recent months, although they are required to help reduce the oversupply the world faces this year. Crush margins are also looking slightly better due to vegetable oil strength which has helped prices further over the last few weeks.

As per recent weeks, soybeans are a key focus for oilseeds prices. One of the main drivers remains to be the Brazilian crop conditions where there is much uncertainty over final crop numbers as harvest progresses.

Elsewhere in the market, Chinese demand remains debatably the most important factor. Recently, the Chinese Government has set its total grain output to 650,000 tonnes, with a focus on increasing oilseed areas and yields. This will cause further changes in trade flows for beans from the Americas.

From now until the end of the season, rapeseed traders will be keen to watch what volume of Australian seed trades come into Europe and whether demand can keep up with this.

 PULSES

• Old crop values firm

Old crop bean markets have firmed a little over the past two weeks, as dwindling farm stocks are failing to supply some renewed core demand.

Core demand is where the feed compounder is unable to switch to a more competitively priced product, for example, rapeseed meal having reached its maximum inclusion level for a particular diet.

On top of this, we are also seeing interest for feed beans from Egypt. Usually feed beans are not acceptable there but when they are competitively priced against Australian beans, the more sophisticated cleaning plants can sufficiently improve quality.

This interest may soon dry up though as Egypt has just announced that it will let its pound float - a requirement from the international money fund (IMF) - and in doing so values have fallen from 30.88 to nearly 50 Egyptian pounds to the dollar.

 FERTILISER

• Urea/AN

Global urea prices had steadily increased over the past few months, but now that we're into March they are showing signs of levelling off slightly lower.

European and UK markets are seeing very little new demand as the application period continues. Suppliers in general are opting to sell current physical stocks and shipments instead of entering new contracts, especially with the potential risk of prices coming back again in quarter two.

Global prices are partially underpinned by the expectation of India returning with another tender in March, as well as an increase in traditional buying from the USA and South America.

For growers in England, a reminder that there are only 23 days until use restrictions under the new urea stewardship scheme come into effect on Monday 1^st April. As a result, we recommend including a urease inhibitor alongside any further urea orders in readiness for the new standards.

For ammonium nitrate, supply remains under pressure though the situation has tightened further increasing ammonia costs.

Whilst natural gas prices have been generally stable, it was the ability to import ammonia - limited to a few locations including the UK - that gave producers the opportunity to make ammonium nitrate at competitive values to service domestic markets and fulfil existing order books. Today, it looks like a change in UK-produced AN pricing is likely, with tight supplies continuing to bite. Due to the lack of imports, the window of opportunity to purchase quality AN has the potential to close quickly.

It's therefore worth considering all your requirements this week. Please also remember that photo ID is now mandatory when purchasing products containing 16% AN or more.

• UAN/Liquid

As weather conditions in most locations have improved in recent days, applications of UAN have increased across winter cereals and oilseed rape.

UK suppliers have good levels of stock on a national basis which gives UAN users continued security, especially considering the certainty of supply through the spring season for a full range of nitrogen and nitrogen sulphur grades. Demand for nitrogen phosphate products has increased due to root crop plantings approaching in the coming weeks.

• PKs

Good PK demand from growers continues across the UK and PK blends and straight MOP and TSP/DAP values remain attractive. Markets are stable if not slightly weaker with MOP because stores across certain regions need emptying. However, breaks in supply are likely because shippers are not typically looking to replace stocks at this stage of the season.

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