Late last Wednesday, the United States Department of Agriculture (USDA) published its February World Agricultural Supply and Demand Estimates (WASDE) report and there were very few changes from January's numbers. Year-end stocks for both world wheat and corn will be less than estimated in the previous month's report, but the cuts made were insufficient to halt the slide in wheat prices seen since the beginning of 2024.

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WHEAT

• Wheat markets continue their slide USDA trim world stocks

Late last Wednesday, the United States Department of Agriculture (USDA) published its February World Agricultural Supply and Demand Estimates (WASDE) report and there were very few changes from January's numbers. Year-end stocks for both world wheat and corn will be less than estimated in the previous month's report, but the cuts made were insufficient to halt the slide in wheat prices seen since the beginning of 2024.

The only notable change was a cut for Brazilian corn output, down three million tonnes to 124 million tonnes, taking world production to 1.23 billion tonnes. Year-end world corn stocks will be three million tonnes lower at 322.06 million tonnes. Changes in the world wheat balance sheet were minimal and stocks edged 600,000 tonnes lower to 259.44 million tonnes. Despite this being almost 12 million tonnes down on the year the futures markets found no support and by the end of the day prices were 2% lower.

• European futures drop to new contract lows again

Heavy balance sheets and a lack of fresh demand for most major wheat producers (US, Russia, Ukraine, the EU, Australia and Argentina) continues to push wheat prices lower and both Paris and London fell to new contract lows mid-week.

In international trade, Jordan bought 60,000 tonnes of optional origin wheat at $253 including freight, $10 below last week's purchase. Egypt and Algeria are both holding tenders for corn this week, but there is no sign of any wheat buying interest.

Russia shipped 720,000 tonnes of wheat last week - a slower pace than is needed to clear its 51 million surplus – and as a result prices are reported to be falling to compete for increased export market share. The Institute of Conflict Studies and Analysis of Russia (IKAR) reported that the Russian 12.5% protein wheat export price had fallen to $224 - $4 lower than the previous week. Russia's Agriculture Ministry has proposed to increase the grain export quota in 2024 to 28 million tonnes, up four million from the current quota. Russian authorities are rumoured to have reduced the semi-official export floor price to $235/t FOB from the previous price of $250/t. Analysts SovEcon see Russian wheat exports down to three million tonnes in February, compared to 3.6 million tonnes in January.

Official Brussels EU wheat exports now sit at 18.647 million tonnes, 8% lower than the 20.175 million tonnes at the same time last year. EU wheat imports are already at 5.77 million tonnes, with most of this coming from Ukraine. Farmers in neighbouring countries, particularly Poland, have accused Ukraine of flooding local markets and depressing their wheat prices. Polish farmers are expected to completely block all Ukraine border crossings on 20^th February in protest.

Of the major exporters, Canada's end of year stocks reflect strong demand for high quality milling grades. 31^st December stocks were 20.681 million tonnes in comparison to 23.062 million tonnes last year. Aside from the drought year of 2021 this is the lowest stock since 2016. This does not carry enough weight to change the world wheat market trend as yet, but Canada has dryness issues that could impact on its 2024 output.

• Lower 24 wheat crop in France

The French Ministry of Agriculture and Food sees the French wheat area at 4.36mha, a 7.7% decline on last year. This is in-line with estimates made by analysts Strategie Grains and if correct will be the second lowest cropped area to wheat over the past 30 years. It signals a smaller EU 2024 crop, although there will still be a surplus. Current season EU export numbers are expected to reach 31.7 million tonnes and will result in a heavy carry out stock of 13.6 million tonnes. French wheat ending stock will reach 3.5 million tonnes, up 37% on the year. 2024 EU exports still have the potential to be up to 30 million tonnes and the EU market will need to be competitive to reach that.

Strategie Grains estimates that the UK 2024 wheat crop will be 12.8 million tonnes - arguably two million tonnes ahead of what is most likely. The UK will need to carry out high levels of stock from this season to help meet the domestic demand next season, coupled with a higher import programme than this season.

BARLEY

• Old crop feed barley continues to slide

UK feed barley prices have fallen once again, although only £2/3 down over the week. Farm selling remains slow due to the lower prices, as growers get used to the fact that feed barley is worth anywhere between £135/t ex-farm and £150/t ex-farm, depending on location.

This week the UK has traded a number of vessels to Europe which, combined with recent trades, is starting to reduce the exportable surplus produced from harvest 2023. However, the lack of trade on the export market, since harvest, does mean that there is a large surplus on paper still to be traded, for the time of year.

Domestically, compounders are in no rush to cover positions on old or new crop as they continue to see prices slide. Discounts to wheat do look attractive, especially on new crop, which bodes well for higher animal feed demand for new crop. As a result, we are starting to see some more conversations regarding new crop feed barley, especially for October 2024 onwards.

• Wet February stifling any early spring plantings

Wet weather has again prevented any further spring barley planting in England this week. As it is still early the market is currently relaxed, but this will become more of a watchpoint as we move into March. It remains difficult to forecast the size of the crop '24 barley harvest. We already know that the winter barley area will be lower year-on-year and what has been planted has, on average, been completed in poorer conditions - we'll know more in the coming weeks as spring edges closer and closer.

Demand for malting barley is compromised in the short-term, but not on new crop. With new crop prices also moving lower - at discounts to which high volumes of old crop malting barley have traded - food and drink deflation could be on the way.

​OILSEED RAPE

​Rapeseed values have continued to slowly depreciate over the last two to three weeks, losing around £15/t. This is due to EU farmer selling and crushers becoming more comfortable with their supply, making the most of increased farmer selling as target levels were reached.

At the start of the season oil meals were the supportive part of the product mix, but protein is now becoming discounted globally – soymeal, for example, has recently been trading at 15-month lows.

In other oilseed markets, demand for soybeans in the US biofuel market and into China continues to disappoint against expectations. Strong domestic/US demand for Canadian canola has helped keep a lot of this seed off the export market, so it doesn't currently factor in EU markets, however, it is now becoming cheaper versus EU origin canola, as Canada needs to find a home for its remaining exportable surplus.

 PULSES

​Old crop beans are still failing to find buying interest into UK compound feed mills as they are still relatively expensive compared to wheat, trading at a premium of over £70/t. More importantly is the value compared to a mid- level protein such as rapeseed meal, where beans are trading at parity yet the protein level is 36%, compared to beans at 23%.

The on-going issues in the Red Sea are helping to hold up bean values as Egyptian buyers need short-term cover and the stronger dollar is making UK beans more competitive to Egypt, rather than selling UK beans to Europe.

Core demand for beans will continue into new crop for use in animal feed and, given uncertainties over both winter and spring planting, we expect new crop premium values to remain strong, compared to wheat. 

 FERTILISER

• Urea/AN

The market has been lively for nearly a month, with urea firming $60-70/t and demand for Nitram increasing after CF Industries came back into the market in mid-January, with limited stocks for March/April.

However, the recent spell of heavy rain has reduced interest in nutrient planning in the absence of fully cropped farms. The market is also lacking direction, with replacement values for most imported nitrates and urea products higher than the current UK prices. Even with a declining European gas price, interest from regular imported AN producers - such as Poland and Lithuania - is very low due to greater netbacks from their local markets. Most European producers are still running plants at around 40% capacity, monitoring low stocks as we hit the summer months.

In other news, CF Industries has this week amended its offer for Nitram to April/May delivery rather than just April, signalling that availability for that month may be tighter even with slow sales.

• Liquid UAN

Liquid UAN values and availability will remain consistent for the whole of spring 2024, with shippers and suppliers keeping a close eye on demand as we head into the usage period over the coming days and weeks.

Application of product has begun in some regions of the UK, however this has been very limited due to ongoing weather issues. Where farm storage space becomes available, it is advisable to re-stock at the earliest opportunity if required, in order to avoid any pinch points as we head into a spring period where workloads could all come at once, putting a strain on logistics.

• PKs/straights

Even with the recent rains, P and K demand remains good to steady. We are seeing greater demand for potash, but phosphate availability from the soil pool will be limited due to cold and wet soils. Fresh phosphate applications in the spring have always shown a yield response over autumn dressings, so make sure to consider both P and K when creating nutrient plans for the spring.

Lime is also a major limiting factor in nutrient availability, so it is also advised that you check any lime requirements. Granular lime is a great way to apply lime using your own farm equipment, without the need for heavy spreaders, given the current soil conditions. 

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