Frontrunner - 10th June 2022

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WHEAT

  • Markets ease on Ukrainian export talks

Recent market weakness has been driven by expectations that a solution will be found for releasing trapped Ukrainian grain for shipment through Black Sea ports. This week, meetings took place in Turkey with Russian officials to secure safe routes for grain exports. Russia said that Ukraine must demine approaches to ports and that Russian forces would check ships entering Ukrainian ports which could then load grain and proceed to international waters. In addition, the Kremlin said that for Russian grain to be delivered to international markets, sanctions on the country must be lifted. It is estimated that over 20 million tonnes of grain remain stuck in Ukraine and President Zelensky said millions might starve because Russia is blockading ports. So far, despite talks failing to deliver a tangible solution, speculative traders have been liquidating long positions and wheat futures prices sank to their lowest level since early last month. Meanwhile Ukraine is using every other option available to export grain. Since the Russian invasion on 24th February, over 601,000 tonnes have been sent by rail and barge to the Romanian port of Constanta.

  • Smaller EU crops

The uncertainty over Black Sea supplies will increase future demand for EU wheat exports although this season's estimates proved too optimistic. Analyst group Stratégie Grains cut its 2021-22 export estimate by 1.9 million tonnes from its previous estimate to a new 28-million-tonne estimate with high prices curbing demand. 2022 production estimates have been cut following periods of yield-damaging weather. Primary EU producer France experienced extreme storms last weekend and the French National Federation of Agricultural Workers said weekend hail, strong winds and torrential rain had caused considerable damage to wheat and other crops. This comes on the back of already falling crop ratings. French winter wheat is rated 67% 'good/excellent', compared with 80% that achieved this rating at the same stage last year. Stratégie Grains has cut its monthly production estimate for the block by 1.8 million tonnes, bringing the total figure 6.1 million tonnes down on last year. An increased stock carry in and reduced domestic demand will allow 2022-23 exports to increase to 30.3 million tonnes; 2.3 million tonnes up on the year.

  • Smaller Southern Hemisphere crops

The Australian Bureau of Agricultural and Resource Economics (ABARES) sees the 2022-23 Australian wheat crop at 30.3 million tonnes which would be the country's fourth largest on record but sharply down on the 2021-22 crop which reached over 36 million tonnes. Argentina will also see a sharp decline on its 2021-22 record 23-million-tonne wheat crop. The Rosario Grain Exchange said farmers will cut their planted area because of dry weather, bringing the total area down to 6.2 million hectares - the lowest it has been for 12 years.


BARLEY

  • Low demand on old crop barley

Demand for old crop barley has been limited as harvest draws closer, although stocks left on farm are minimal considering old crop has traded at a significant premium to new crop until recent days.

  • New crop values strong

With wheat markets well down from contract highs, the market has seen some domestic interest in feed barley with compounders looking forward to winter at these lower prices and wider discounts of barley to wheat. Most regions of the UK have received good rains in the last 7-10 days which has encouraged farmers to keep selling new crop; its value is currently around £90-95/t higher for harvest than at this time last year. Premiums for malting barley also remain high and combined with recent rains has stimulated the farmer to start marketing new crop malting barley.

  • Harvest starts in France

On the continent, there are reports of harvest starting in southern regions of France. Spring barley crop ratings fell once again this week but only by 1% from 54% to 53% rated 'good/ excellent'. Recent rains have alleviated some drought pressure on crops. Spain and Portugal have not had similar rainfall and as a result have purchased some imports including from the UK. These areas did not have good rains at the end of March/early April but since then have seen some limited rainfall. 


OILSEED RAPE

  • Pressure on soy and rapeseed

Oilseeds have come under significant pressure this week as world vegetable oil markets retreated sharply. The expectation of increased exports of Indonesian palm oil to the world markets pressured both soy and rapeseed oil.

The major market focus remains the ongoing conflict in Ukraine and the discussions around allowing safe passage of wheat and other crops. It's still unclear how such a flow will be possible given the current diplomatic and practical situation.

  • Promising outlook for global oilseed production

Global oilseed production should rebound from last year given normal growing conditions in the major oilseed producing countries. Canada is expected to produce up to 20 million tonnes of canola this coming year, even after delayed plantings due to abnormally high rainfall this spring. This would compare to less than 13 million tonnes last year.

The World Agricultural Supply and Demand Estimates (WASDE) report from the United States Department of Agriculture (USDA) will be published later today, Friday 10th June, and will provide a further update on global crop production and stock levels.


 PULSES

  • Excellent weather benefits all pulses

The ongoing weather pattern has been excellent for all pulses crops. Beans are now flowering well with the outlook for an excellent pod set. The only area of concern is where the crops may be too thick to allow light to penetrate thus preventing the pod from filling properly. It may also be very difficult to control diseases such as chocolate spot as any spray will not penetrate the lower crop.

There has been some European consumer buying interest over the past week at lower levels and this has been matched by a little more farmer selling which shows there is more confidence in the crop potential. The Frontier bean pools remain open; please contact your local Frontier farm trader for further information. 


 FERTILISER

  • Nitrogen

This week we have had confirmation of CF Fertiliser's plans to permanently close its Ince plant in Cheshire. It intends to restructure and improve efficiencies at its Billingham site, but in the short-term it puts pressure on availability of compounded NPKs and nitrogen sulphur compound availability.

Thoughts within the industry calculate that the UK could have a deficit of nitrogen, and whether this can be supplied from imports remains to be seen given the sanctions on Russian product and strong pricing on the continent.

  • Liquid UAN

Suppliers have released autumn delivery values for October and November. These reflect a price increase of £20-30/t over summer tank-fill values. It's important to stress that the pricing of liquid UAN is very much geared towards the ammonium nitrate market currently and not underpinned to urea values in the same way as in previous years. This is mainly due to the makeup of the ingredients involved.

Frontier recommends that any tank space not already purchased should be completed at the soonest opportunity. There is currently no firm date as yet on when spring fill values will be released.

  • Phosphates/potash/PKs

Markets remain firm on potash grades in particular, with high demand on exports still leading the way especially within the South American market which is currently trading at around €100/t above UK levels.

Frontier continues to advise the inclusion of Polysulphate and Potash Plus based systems to replace the loss of nitrogen sulphur compounds this year. These products offer a simple and efficient means of getting potassium, sulphur, magnesium and calcium into crops and, more importantly, they are UK products with both being mined and produced in the northeast of England, ensuring good supply. Please speak to your Frontier contact for recommendations, which will be advised based on your cropping.

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. 


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