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Frontrunner - 14th April 2023

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LISTEN TO FRONTRUNNER

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 Whiteman.


WHEAT

  • UK wheat prices continue to fall

This week, London wheat futures fell to their lowest since the beginning of 2022. Lower-than-expected use in both the animal feed and bioethanol sectors has created a heavy domestic balance sheet. This, combined with scarce export opportunity, has put pressure on prices and led to a notable discount on new crop.

Mid-week, the November 2023 contract developed a £17/t premium to the May 2023 contract. This provides an opportunity to roll crop forward if cheap funding is available and space is not an issue. A large 2023 crop is expected and the relative cheapness of UK prices could attract export interest in due course. However, buyers of UK wheat have traditionally also had the option of attractively priced Ukrainian grain, which presents stiff competition for UK sellers.

Meanwhile, Romanian farmers are calling for a ban on imports from Ukraine due to the negative impact on domestic prices. Other EU countries, such as Poland, have called for similar bans. It is reported that the Romanian Port Constanta has shipped over 3.33 million tonnes of Ukrainian grain in the first quarter of 2023.

  • USDA cuts wheat and corn stocks

World markets found some element of support this week from a relatively positive World Agricultural Supply and Demand Estimates (WASDE) report from the United States Department of Agriculture (USDA).

Following the Easter break, small cuts by the USDA left world wheat and corn stocks one and two million tonnes lower respectively on the previous month. For wheat, the closing stock was greater than expected at 16.28 million tonnes, which is up from 15.47 million tonnes last month and is a result of slowing exports. EU stocks are similarly up by one million tonnes to a new total of 12.16 million tonnes, but stocks for Ukraine and India have fallen. The USDA maintains its estimate for Russian wheat production at 92 million tonnes, which is notably lower than the official figure of 104 million tonnes.

The Argentinian corn production estimate has been cut by three million tonnes to a new total of 37 million tonnes. However, the Russian corn production figure has been increased by 1.8 million tonnes to a new total of 15.83 million tonnes. World corn stocks are now 11.6 million tonnes down on the year.

The scale of the decline in world wheat prices in recent weeks is further highlighted when compared against corn prices. This week, Chicago Board of Trade (CBOT) wheat futures fell to a 20-cent per bushel premium to CBOT corn futures (representing 3%), which is historically low. On the same day last year, CBOT wheat was $4 per bushel higher and at a 31% premium to the CBOT corn market.


BARLEY

  • Old crop price decline continues

Old crop UK feed barley is down around £3/t this week. This is a reduced rate of decline relative to last week's losses and less than the losses elsewhere in grain markets, which could be due to very low market participation during the Easter break. There has been a 50% reduction in farm selling on last week and compounder demand has fallen in line with farm supply.

Warmer UK temperatures are currently in the forecast and above-average grass growth is being reported by the Agriculture and Horticulture Development Board (AHDB). A combination of these factors may prolong limited old crop demand, especially if livestock can continue to graze in the fields.

With export numbers still well behind last year and what may be a sizeable tonnage of old crop barley yet to come forward from farm, there are very few known domestic factors today that could reverse the decline in barley prices we have witnessed since October last year.

  • Little activity in Crop 2023 this week

This week's farm selling has been extremely slow for Crop 2023. Prices have come down slightly more than old crop, which has reduced the size of the May-August carryover from around £10/t in March to less than half of that today. Compounders have yet to commit to much feed tonnage post-harvest while they enjoy a favourable spring barley sowing season in the UK.

Elsewhere, weather issues are few and far between, with some prolonged dryness in the Iberian regions of Western Europe. Looking ahead to next week, we would expect some more trade activity as the bank holiday week concludes.

Please get in touch with our farm traders if you'd like to discuss your grain marketing options.


OILSEED RAPE

  • Complexity in entire oilseeds complex supresses prices

This week, rapeseed prices have further declined as heavy stocks and slow demand continue to affect the market.

Elsewhere in the oilseeds complex other drivers have contributed to uncertainty, particularly in the soybean market where US demand for beans into biofuel is a key price driver. There are concerns that demand that comes from heavy investment in increasing processing capacity for biofuels may fail to meet the high expectations currently held in the market.

The soybean market is also being influenced by Chinese demand. China's demand was strong in March, so those with a bullish view will look for this to continue.

Global weather conditions are also impacting the oilseeds complex. Drought in Argentina is leading to downgrades in its bean production and contrasting wet/dry conditions in Canada and Australia are affecting the planting process and may lead to a lower supply for new crop rapeseed, although the high carryover tonnage will limit any impact on the market.

Future price direction will be determined by how the crop develops and how much demand arises for oilseeds in the months ahead.


 PULSES

  • Fall from peak values discourages old crop trading

Old crop bean and pea markets have been very quiet for the past few days with minimal volumes trading. It seems that at today's lower levels, which are nearly £120/t down from peak values, there is resistance to sell irrespective of wheat values.

However, there are fewer and fewer parcels currently left unsold on farm, which means that any uplift in values would not necessarily lead to more supply becoming available. The optimum time to drill new crop peas and beans has passed, with any late-planted crops needing perfect growing conditions to succeed. However, any reduction in spring bean acreage will likely be more than offset by a large increase in the winter drilled area.


 FERTILISER

  • Urea/AN

The cold and wet weather this week has not helped increase demand in the UK for urea and ammonium nitrate (AN). This lack of seasonal farm demand has led CF Fertilisers to revise its current UK AN prices downwards to bring them more in line with the limited volumes of imported AN currently available. Meanwhile, the urea market has firmed as a result of last-minute demand seen in Europe and further afield, although it remains to be seen whether this will continue in the longer term.

Gas prices in the UK have remained at around £1/therm for some weeks now but, with a much warmer week forecast next week, the market awaits to see how the gas market will be affected. It seems there is currently more stability in prices, which AN producers will want to see in order to run production at full capacity.

New season offers are still some weeks away, but the current situation in the gas and ammonia markets could encourage some to refrain from buying until we see warmer weather and lower energy demand.

  • Liquid

This week has been a mixed week for growers, with some patchy April showers interspersed with favourable growing conditions. Many are now able to continue their liquid fertiliser applications where conditions allow.

UAN suppliers continue to monitor the markets closely. A full range of products is available for prompt delivery into on-farm storage for those with additional volumes left to buy this season.

  • PKs

PKs have seen similar demand weakness to nitrogen this week as a result of poor weather. Potash and phosphate offers have reset for now, although the market sentiment is that there is more weakness to come. This will benefit the grassland sector or any late arable applications onto spring crops.

With improved temperature forecast for next week, we could see a spike in demand for PKs, which can easily be met by current blending and haulage capacity. Please speak to your Frontier contact 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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