Important updates and advice regarding coronavirus (Covid-19)

Market report - 4th June 2020

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Cooler, wetter weather in the UK has brought some welcome relief to crops which, as a result, has brought out a few sellers. However, the UK will still need to import substantial quantities of rapeseed into the UK next season.

For 2019, rapeseed markets were mainly supply driven but, since the Covid-19 crisis, we've seen the collapse in demand for mineral oils and rapeseed oil as a result of the lockdowns imposed on industries that would ordinarily need these products. Typically, in the EU, 60% of the demand for rapeseed oil goes into biofuels, with the rest into the food service industry.

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Frontrunner - 29th May 2020

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Damaging heat and prolonged dry weather coupled with a fall in the value of sterling versus the euro have driven wheat prices higher again this week. Since the beginning of May, London 2020 wheat futures have gained almost £15/t. This is a particularly impressive performance when compared to French wheat futures, which, over the same period, have increased by little more than €3. Unfortunately, not all farmers will benefit from this. The prolonged wet drilling conditions throughout the autumn and winter period prevented planting in vast areas of the country and will result in the smallest UK wheat crop since the 1970s.

You can also listen to Frontrunner - press play to hear the latest report on SoundCloud.

Read this week by Farm Trader, Luke Cox.

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Frontrunner - 22nd May 2020

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World wheat markets had a poor start to the week as traders digested the bearish United States Department of Agriculture (USDA) World Supply and Demand report published last Tuesday. The report signalled ample grain supplies for the coming season and US wheat futures fell to lows not seen since last September. However, prolonged dry weather is adversely affecting the wheat production prospects for some of the primary producers across the Northern Hemisphere and leading officials and analysts to lower their crop estimates. This triggered a wave of buying mid-week and wheat futures rallied sharply.

You can also listen to Frontrunner - press play to hear the latest report on SoundCloud.

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Frontrunner - 15th May 2020

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This week, the United States Department of Agriculture (USDA) published its World Supply and Demand Estimates for May, which included its first look at the 2020/21 season. An increase in supply exceeding demand is anticipated, which will lead to increased year-end stocks for both wheat and corn. 

Corn production in the US - the world's largest producer - is predicted to jump significantly. By the end of last week, US farmers had drilled over two-thirds of the planned corn area. The area planted is expected to increase by over seven million acres on last year and yields should increase by over 6%.

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Market report - 13th May 2020

Grain

Weather in the Northern Hemisphere continues to underpin grain prices, particularly ongoing dryness in some of Europe's key wheat-producing regions. Much of Northern Europe, the Baltics and Southern Russia have seen very little rainfall with the latter receiving just 5-20mm this week, so crops are continually being stressed. Consultancy, SovEcon, said on Friday that despite some recent rain, the extended drought period left irreversible damage to some crops which will result in lower output.

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Frontrunner - 7th May 2020

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Following a period of beneficial rain for much of the UK, northern Europe and countries in the Black Sea region, world wheat markets continued to fall earlier this week. London wheat futures lost all gains made during March and April as wheat crop production worries reduced. Improved supply prospects weighed on prices as well as freshly published estimates for reduced demand due to the impact of coronavirus. The latest EU balance sheet from Brussels cut approximately two million tonnes each from both feed and non-feed demand.

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Frontrunner - 1st May 2020

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Prolonged dryness has been adversely affecting wheat crops in the UK, northern Europe and the Black Sea region. This has helped support world wheat prices in recent weeks. This week, however, saw a change to weather patterns as low pressure systems sweeping in from the west brought much needed rain and relief to stressed winter and spring wheat fields. Confidence that notable yield losses may have been avoided triggered a wave of selling on futures markets. Buyers stood aside and prices dropped to eight-week lows. It remains to be seen how beneficial this rain has been.

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Market report - 30th April 2020

Oilseed

World consumption of oils is forecast to decrease by up to 500,000 tonnes compared to that seen in 2019, due to less biodiesel and food demand.

In the UK, vegetable oil demand remains weak due to the reduced requirements from restaurants and the wider food industry. With lockdown and social distancing guidelines still in place, it is not known when this demand may pick up or return back to 'normal' levels, although it is thought to run through until the second half of 2020 at least.
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Frontrunner - 24th April 2020

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Wheat markets rallied sharply earlier this week, recovering much of the previous week's losses. Attention turned away from loss of demand due to the impact of Covid-19 to problems with supply, especially in the ethanol sector.

The Ministry of Agriculture of the Russian Federation stated that grain exports would cease once the seven-million-tonne quota they set for the last quarter of the season was reached. It is thought that 3.5 million tonnes of that has already been shipped. Over one million tonnes is being loaded at Russian ports each week, meaning the quota will be surpassed early May.

The Ukraine is also close to meeting its wheat export quota of 20.2 million tonnes, having now shipped 18.5 million tonnes. It is also reported to be considering limiting corn exports to 29.3 million tonnes while the United States Department of Agriculture (USDA) has targeted 32 million tonnes.

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Frontrunner - 17th April 2020

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Prolonged dry weather in parts of Europe, Russia and Ukraine has resulted in dry soils that are well below average. This has been a strong supporting factor for wheat markets in recent weeks. However, rain arriving in the western side of Europe, as well as Russia and eastern Ukraine, has eased concerns for crop development in those regions. Meanwhile, analysts have been assessing the impact of coronavirus on wheat demand in the milling, animal feed and ethanol sectors and have adjusted their balance sheets accordingly. Last Thursday afternoon, the United States Department of Agriculture (USDA) cut both world wheat and corn use by approximately five million tonnes each. This raised year-end stocks for each commodity by the same value. European analyst Stratégie Grains published its EU balance sheet this week, cutting two million tonnes from last month's estimate of EU wheat use this season and almost three million tonnes for the 2020/21 season.

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Market report - 16th April 2020

Grain-2

With the Covid-19 pandemic still impacting trade around the world, grain prices remain volatile. The Frontier pools are the ideal vehicle to help growers manage their risk and, with spring drilling completed by many in good time following the dry weather, now is a sensible time to consider available end markets for your growing crop. This is especially true for spring barley; with a record crop looking likely this season.

The pools are set to close Friday 17th April. Read on for the latest market developments and for help with committing a proportion of your 2020 crop.

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Frontrunner - 9th April 2020

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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.

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Market report - 8th April 2020

Grain-2

European markets have steadied this week following a period of considerable price volatility seen last month.

Futures rallied €20 to 18-month highs in March as, amidst the pandemic, panic-buying gripped consumer markets and shoppers cleared supermarket shelves of bread, pasta and fresh meat. However, supply chains responded to the challenge and with supermarkets now restocked, demand has eased and markets are looking at their basic fundamentals for new direction.

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Frontrunner - 3rd April 2020

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We're working hard to ensure we comply with all Government guidance and continue to deliver good service to our customers. This week we published three updates on our website to provide information related to Covid-19 for customers and suppliers, including updates on social distancing and customer service, additional information on payments, invoicing and administration, and information for third party hauliers. 

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Market report - 2nd April 2020

Grain-2

Since last week's global rally, UK futures and physical prices have shed around £8/t due to a downturn in domestic demand and strengthening sterling. Consumers in all sectors continue to weigh up the impact of Covid-19 on their businesses but, with sterling firming and old crop becoming too expensive to export, it feels as though time is on their side.

Supermarket demand for bread, meat and eggs is supporting wheat inclusion for feed compounders around the UK, but industrial flour usage demand has crashed as the public no longer require pre-packed flour based products. 

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Frontrunner - 27th March 2020

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Frontier's number one priority will always be the health and safety of our colleagues, customers and those with whom we have contact during our normal business operations. We are actively and continuously monitoring the situation and basing our actions on the very latest advice from the Government. These actions currently include a range of measures such as minimising the number of people at our sites, colleagues working from home where possible, implementing social distancing measures and self-isolating when necessary. We have also implemented service contingency plans in order that we can continue to deliver a service which is 'business as usual', albeit with some changes to the way we operate. Read the full statement from Mark Aitchison, Frontier's Managing Director, here.
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Frontrunner - 20th March 2020

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The impact of coronavirus continues to be the primary driver for financial and commodity markets. World wheat prices saw significant volatility this week, driven by exaggerated moves in foreign exchange rates and high nearby consumer demand. The Bank of England cut UK interests rates to a record low of just 0.1% and, with the British government introducing other financially supportive measures for the UK economy, sterling fell by 6.5% versus the euro. As a result, London wheat futures rallied to new contract highs for November 2020 and, from the lowest to the highest, achieved a spread in prices of £12/t. The euro also fell versus the US dollar, adding value to European wheat prices. Demand for bread products increased as panic buying cleared supermarket shelves, brought millers back to the market, and added weight to the increase in old crop wheat prices.

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Market report - 18th March 2020

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​Currently, the underlying issue for the market is nervousness around global trade execution due to Covid-19. Buyers are still out there (Tunisia and Algeria for example), but usual offers are down in volume by circa 50%.

The kill rate in the broiler (chicken meat) market has increased drastically on the back of shoppers panic buying. The same is also now true of bread; supermarket shelves are empty and the demand for wheat is significantly higher than first forecast. However, this could be the short-term picture. Due to so many individuals stockpiling products, and with the hospitality and leisure industry likely to be heavily impacted by the recent government advice around social distancing, medium-term demand for meat and cereals could be much lower.

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Frontrunner - 13th March 2020

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The impact of coronavirus on global economies has been the overwhelming factor driving wheat prices this week. The widespread panic-selling seen in stocks and shares and crude oil spilled into all commodities, pushing world wheat prices down. 

US wheat futures fell to lows not seen since last September and their losses since mid-January rose to 15%. However, the impact of this on UK wheat futures was reduced as sterling lost ground to the euro following the Bank of England base rate cut of 0.5%.

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Frontrunner - 6th March 2020

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Despite the increasing spread of coronavirus and concerns surrounding its potential impact on demand, world wheat markets have managed to tread water this week with overall minimal change. International trade does not appear to have been affected yet, with importing countries such as Tunisia, Korea and Thailand continuing to make wheat purchases.

​Although Friday morning saw price volatility, US wheat futures were trading within one cent of last week's closing prices. Concerns may be greater for supply rather than demand. Furthermore, a Chinese government working group stated that farmers must not let grain output decline this year despite coronavirus ensuring food security.

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