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Frontrunner - 12th August 2022

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Frontrunner is also available as a podcast, so you can hear the latest from our traders while you're on the go. Listen below or subscribe to the report on Acast, Spotify, Apple Podcasts and Google Podcasts. The report this week is read by farm trader, Sophie Powell. 


WHEAT

  • EU wheat exports continue to support prices

By the 7th August, EU wheat exports reached 2.49 million tonnes; this is marginally ahead of last year. However, Brussels state the data is incomplete and private analysts see shipments 30% ahead of last year. French shipments alone are thought to be at least half a million tonnes understated. Major world wheat importers have all sourced a significant proportion of their purchases from freely available EU supplies due to the continued challenges and restrictions on Ukrainian and Russian origins. The agreement between Russia, Ukraine, Turkey and the United Nations (UN) for safe Black Sea port shipments from Ukraine has had a notable negative impact on wheat futures prices in recent weeks. However, to date only 12 grain ships have sailed from nominated ports and none of those have been loaded with wheat. This would suggest that, in the short-term, EU wheat will be favored in export markets and support values.

  • EU maize in decline

The persistent heat and dryness across Europe has damaged yield potential for later drilled crops and, in particular, maize. This week, analysts Stratégie Grains highlighted the scale of the crop damage by cutting over ten million tonnes from its previous EU maize production estimate of 65.4 million tonnes down to 55.4 million tonnes - this will be 14.4 million tonnes below last season. This leaves an incredibly tight balance sheet, even with three million tonnes of additional imports and five million tonnes less usage. End year stocks will almost halve on the year to 4.5 million tonnes. With less maize available for domestic use, wheat use is predicted to rise to replace the lost maize - this leaves less wheat available for export while shipment pace is strong.

  • Russian wheat production continues to rise

Increasing yield data from primary wheat-growing regions of Russia has led analysts to increase their Russian wheat production estimates up to 95 million tonnes. This compares with last year's figure of just over 75 million tonnes. The southern region of Krasnodar is reporting record winter grain yields and is ideally placed for export markets. However, Russian export sales are hampered by economic sanctions, challenges for Black Sea shipments and a confusing system for export taxes. July shipments are thought to be just over two million tonnes and may be a little more than that for August. The weight of the record harvest, if realised, is yet to be felt by the markets and presents an interesting challenge for the United States Department of Agriculture's (USDA) August World Supply and Demands Estimates (WASDE) report, which is going to be published later today, Friday 12th August. The USDA July wheat production estimate was 81.1 million tonnes with exports set at 40 million tonnes, and there is no evidence to yet suggest wheat shipments will reach this estimate let alone increase due to the larger crop.


BARLEY

  • Feed barley prices rise in line with wheat futures, but exports are slow

This week, domestic prices to feed compounders have risen by £5/t as livestock farmers place orders. The rises are perhaps due to lack of grass in the short term, but are cheaper than April/May prices. Less positive is the slow pace of feed barley exports and the lack of forward orders from our usual importing countries. Competitively priced maize from North and South America that is buyable all the way through to Christmas is more attractive than paying higher prices to UK barley exporters for the October/December period. With an exportable surplus of 1.3 million tonnes of malting and feed barley combined, the UK will need to be competitively priced at some point in the marketing year to shift its stocks.

  • Spring barley yields impressive

Data suggests this year could be one of the highest yielding spring barley years on record. Regular yields in excess of 7t/ha are coming in from mainstream arable farmers. Mixed farms with a low input regime will likely be lower but compared with a normal year the indications are for an output of spring barley that is significantly more than expectations back in April/May.

  • Malting premiums drop on good sample results but still attractive

The majority of UK farmers have grown barley to a very useable quality according to latest data. Nitrogen levels are seen to have increased when compared to the results of earlier samples. Additionally, there will be suitably sized volumes of most ranges for UK malting, brewing and distilling customers. Premiums have dropped around £20/t over the last week as feed prices rose and more malting growers locked in what premiums they could. Malting premiums are still around £30-45/t depending on grade and location. Growers should continue to take what prices and premiums they can, as results from Scandinavia suggest equally promising production prospects.


OILSEED RAPE

  • Markets relatively stable

Some stability has come back into the European rapeseed markets over the past couple of months. Paris futures markets have traded within a €70/t price range over this period which, by historic standards, would be considered to be a spell of high volatility - but it is all relative. During the November 2022 contract, there has been a trading range of over €500/t and prices are currently 25% lower than they were in the middle of May.

  • Better prospects for Canada and Ukraine

Part of the reason for markets being calmer in recent weeks has been the growing realisation that the supply availability of all oilseeds in general is looking good for 2022/23, particularly for soybeans but rapeseed is also looking at a more robust position than in the 2021/22 campaign. Canada is on course to bounce back from its disastrous 2021 crop and traders are now factoring in a much better supply from Ukraine. Clearly the resumption of shipments through the Black Sea ports is one factor but the size of its crop is also better than expected. Ukraine is expected to produce a crop of close to three million tonnes this year, which would be close to last year's figure of 3.1 million tonnes. This is based on an average yield of 2.68 t/ha which is considerably better than feared a few months ago.

  • USDA report out this week

In the short term, any volatility is also likely to be driven by demand and the outlook on global oilseeds stocks. The August USDA WASDE report is going to be published later today; previous August reports have provided a few bombshells. The projected US soybean crop number will be keenly anticipated, which will feed through to the critical year ending stock figures. There may be something to learn about South American crop prospects and, as always, Chinese demand will be a key swing factor in markets. It will be interesting to see how prices react when the report is made public.


 PULSES

  • Winter beans excelling in comparison to spring beans

In the south, plenty of beans have been harvested and the winter crops are still yielding well with ranges from 3.5-5.2 t/ha. The story on spring beans is not so good, with many of the beans failing to mature properly, meaning the very small seed size is leading to significant reductions in yields. However, there will still be an exportable surplus with further sales to Europe and possibly Egypt needed.

There has recently been a renewed buying interest for green peas, both in the UK and overseas. However, whilst there is still a carryover of old crop stocks and there are generally good quality and yields from this year's harvest, values are not expected to rise significantly. Yellow and white peas, e.g. feed peas are particularly difficult to market with minimal UK demand, as compounders will not include them due to their limited bin space and the uncertainty of an even supply.


 FERTILISER

  • Urea/AN

Ammonium nitrate prices in the UK remain unchanged from last week. Gas prices remain volatile, with values ranging between £4.23/therm on the 27th July to £3.85/therm on the 10th August. However, despite the range in values, the forecast still looks firm with continued gas price rises into the fourth quarter. Manufacturers will not be able to sustain these high prices and plant shutdowns could be possible. Ammonium nitrate values are therefore not expected to show any signs of weakening.

European gas prices are close to record high levels, although there has so far been little activity in the urea market in North Africa/Europe during the August period. Producers have shown no willingness to lower offers to entice demand.

The current urea and treated urea grades remain the best buy for nitrogen sources in the domestic market. Prices remain relatively stable at present, but there could be an increase in values as the momentum in enquiries and purchasing picks up.

  • Liquid

UAN terms are currently available for both autumn tank fill and spring 2023 delivery. For those growers confident on the coming season's crop and their total requirements, there is the opportunity to commit to product for delivery through the 2022/23 season. Terms are available for a range of nitrogen and nitrogen sulphur products, although tonnages are limited.

For those committing area to planting oilseed rape in the coming weeks who are using an application of UAN to provide 30kgs/ha nitrogen to establish the crop; it's important to note that with warm temperatures, dry soils and low crop cover, this application is at an increased risk of volatilisation. Limus® Clear should be included to minimise nitrogen losses as ammonia. Stocks of Limus® Clear sit across Frontier's store network. Please contact your Frontier representative to order product. Nitrogen phosphate products are also available for those looking to apply fresh phosphate for oilseed rape establishment with a liquid product.

  • PK

Phosphate markets remain stable with no change in prices, and enquiries on DAP and oilseed starter fertilisers have eased off slightly whilst growers make decisions on whether to plant oilseed rape with the continued dry spell. There's the potential for last minute purchases on these grades.

Potash enquiries have slowly started to increase as harvest across the UK continues and in some areas is now complete. There has recently been an increase in potash prices in the UK and further increases in the coming months are expected. Therefore, it is advised that growers look at their requirements to replace the nutrients lost through straw removal, particularly by pink straw. There have been reports of pink coloured straw, which is associated with the premature senescence of crops caused by the drought conditions. The potash removal in pink straw is significantly higher than average, but this isn't just associated with pink straw – all straw will be affected unless the crop matured completely and there has been significant rainfall between senescence and baling. Please speak to your Frontier representative for more information.

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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