Frontrunner - 9th April 2020

COVID-19

• Frontier's response

We're working hard to ensure that we comply with all Government guidance and continue to deliver good service to our customers. You can always find the latest information on our response to Covid-19 on our website.

Everyone who can work from home is now doing so. Even so, Frontier, SOYL and Kings are still delivering a full service to customers including deliveries of vital inputs, technical advice, crop walking, soil sampling and grain marketing support. This is being aided by our team's widespread use of technology, such as video conferencing and well established IT systems to stay connected with each other and customers.

Many growers are finding the MyFarm farm management platform useful to check their account details, contracts or payments due and received, etc. It also enables users to keep a close eye on grain market prices or trade grain outside usual office hours if they wish to do so.

All Frontier customers have a free of charge MyFarm account.

WHEAT

• Wheat posts modest gains

The UK wheat market has been less volatile than it was last month, making small gains and recovering some of last week's losses. French wheat futures rallied €6 to highs not seen since August 2018. This has been encouraged by the fast EU export pace, which reached almost 25 million tonnes – 67% up on last year and closing in on the season's target of 31 million tonnes.

France had its biggest March soft wheat export programme to countries outside of the EU for ten years, despite the logistical challenges brought by the coronavirus. UK wheat prices were capped by firmer sterling and the weight of the old crop surplus that is unlikely to be shipped and will need to carry into next season. New crop prices are supported by the continuing dry spell and increasing temperatures, not just in the UK but across western Europe and extending into eastern Germany and Poland. Crops will become increasingly stressed without rain.

Russia is also dry, but the cool temperatures are not deemed damaging. The Ministry of Agriculture of the Russian Federation stated that 94% of its winter wheat crop was in a satisfactory condition.

• United States upbeat on wheat prospects

US 2020 wheat prospects look more promising than Europe; the US wheat futures markets have remained flat trading in a narrow range this week.

The United States Department of Agriculture (USDA) published its first national crop ratings on Monday, outlining the condition of the US winter wheat crop. It rates 62% of the crop good/excellent compared to 60% this time last year. The 2019 crop achieved above-trend yields and the current ratings are notably higher than the average of 47%. The expected jump this spring to 97 million in US corn plantings sent US corn futures to three-and-a-half-year lows. Yet, the prospect for this being achieved must be in doubt, given the collapse in ethanol production which has dropped to the lowest level on record.

• Russia sells wheat to Saudi Arabia

After considerable time trying to access the Saudi Arabian market, the two nations finally agreed on terms seven months ago. Russia concluded a sale to Saudi Arabia for 60,000 tonnes of wheat.

The Saudi Arabian market has traditionally been supplied by Germany and the Baltic states. Russia has historically been excluded because of the market's zero-tolerance for pest damage. Perhaps co-operation between the two counties over energy matters has helped encourage this change in specification terms to allow up to 0.5% pest damage.

• USDA update

This afternoon at 5pm, the USDA will release its World Agricultural Supply and Demand Estimates for April. In line with recent reports, the market does not expect any notable changes to the wheat and corn balance sheets. Just as well, given the limited amount of time London wheat futures will be open before the Easter weekend. When it is published, however, traders will be focused on the May report when the USDA gives its first estimates for the 2020/21 season.

BARLEY

• Strengthening sterling leads to a summer decline in exports

UK trade data released by HMRC today shows UK barley exports at 1.4 MMT for this season to date (to the end of February). This includes a further 97,000 tonnes that left the country in February. Over half the February tonnage left on two vessels; one to Tunisia – our most regular non-EU destination – and the other, the first to Israel this year. Further export activity was recently made possible due mainly to the weakness in sterling. However, strengthening currency now sees these opportunities dry up and volumes leaving the UK will decline as we move towards summer.

• Dry weather continues in UK and across Black Sea region

As UK spring drilling draws to a close with a large spring barley area in the ground, thoughts now turn to the weather again and when the spring area will see significant rainfall. It only seems very recently that we were waiting for soils to dry so spring work could begin.

Today, many areas would benefit from a drink – especially those where crops were drilled into heavy and rapidly drying soils. Weather watchers across Europe are also drawn to conditions in the Black Sea region, where dry conditions persist after a dry winter. This region is usually a big supplier of world export barley early in the season and sets trends for new crop prices.

• Uncertainty in demand and production

With plenty of uncertainty across many markets globally, the barley market is no exception. Demand remains unclear for barley with regards to the malting and brewing industries but today is somewhat balanced by production uncertainties with regards to the weather. With the volatility and uncertainty we have seen recently, the Frontier barley pool is an excellent tool to manage the risks of growing barley, as it has a feed and malting barley pool still available. As a low-risk option with a proven track record over several years, this should be worth considering in these difficult times.

​OILSEED RAPE

• Attention switched from supply to demand

Vegetable oil markets came into 2020 very much focused on the supply side of the market. Global carryover stocks were projected to be tight in all sectors going into the 2020/21 campaign. Europe was faced with a likely increased import requirement at a time when the regular Black Sea supply route was starting to look problematic. Following this, the coronavirus crisis hit markets with a sharp reduction in economic activity, lockdowns in many countries and a plummeting crude oil price as key producing nations failed to find a way of limiting output. In a few weeks, we have transitioned from a market worried about supply to a market now very worried about the destruction of demand.

• Carryover stocks building

In Europe, a drastic fall in demand for biofuels has been coupled with a vegetable oil off-take for the commercial food sector that has plummeted to near-zero. Some plants have ceased crushing altogether and it is estimated that consumption in UK crushing plants is running at about 50% of the levels seen a few weeks ago. Nobody knows when the lockdown in the UK might be lifted but it feels unlikely that we will see a rapid bounce back in demand for vegetable oils into commercial outlets.

Health concerns and restrictions on disposable incomes could likely mean that a rapid mass return to the nation's restaurants will not happen. With crushers unable to sell back import cargos, a larger carryover stock now looks inevitable and we are faced with the prospect of an old crop market that will need to trade at a discount to new crop for the rest of this season.

• Concerns over European crop conditions

However, there have been a few stories circulating this week that have managed to lend some support to prices. The Brazilian real has firmed by 4% over the past ten days, which is helping to slow port activity and has given a boost to the competitiveness of US soybeans. There are also reports of frost damage to rapeseed crops in France, Germany and Poland, which helped to firm Paris futures levels to a five-week high. We also need to be aware that much of the news on the demand side has already been factored into prices, so attention may now switch back to assessing conditions in the Northern Hemisphere as crops come out of the winter period.

 PULSES

• Falling values for old crop feed beans

Enquiries for old crop feed beans have virtually dried up now as we approach the end of the available supply from farms. Values have fallen back £1-2 /mt and we expect to see this continuing in the coming weeks. New crop bean planting continues but into relatively dry seedbeds and there will soon be concerns over the lack of rain. Unfortunately, this is unlikely to be reflected in any increases in value, as the Australian autumn planting is well underway now into seedbeds that have had plenty of rain. Growers in Queensland, a region that has exported very few beans over the past two years, are already selling new crop beans to Egypt at very competitive levels. 

 FERTILISER

• Nitrogen

Conditions have been good again this week with high demand for nitrogen (N) and nitrogen sulphur (NS) products. Prices remain unchanged; however, terms are likely to be withdrawn today as we head into the bank holiday. A lot can change in four days given the current global situation.

Logistics remain difficult and according to a recent survey, the Road Haulage Association (RHA) estimate that around 43% of trucks are currently off the road.

Growers that require N/NS products over the next four weeks are advised to take cover. Please discuss options with your Frontier contact.

• Blends/compounds

Supply of raw materials required for blending is causing some delays during this traditionally busy period. Products due into the UK from other European countries are late due to restrictions on haulage to ports and also on the availability of physical ships.

CF Fertilisers and Yara compounds should be considered, as products are available to move and competitive to blends.

Get in touch

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.