Last Friday, the United States Department of Agriculture (USDA) published its first World Agricultural Supply Demands Estimate (WASDE) for 2024, presenting a bearish set of data for both wheat and corn. Subsequently, futures wheat prices dropped sharply and both the Paris and London markets established new contract lows.

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WHEAT

  • USDA send markets lower again

Last Friday, the United States Department of Agriculture (USDA) published its first World Agricultural Supply Demands Estimate (WASDE) for 2024, presenting a bearish set of data for both wheat and corn. Subsequently, futures wheat prices dropped sharply and both the Paris and London markets established new contract lows.

The USDA increased Ukraine wheat production by 900,000 tonnes and Russia's by one million tonnes. This adds weight to their respective export potential, with them already dominating world wheat export market share with the most bearish influence on markets.

The EU balance sheet was also given a bearish kick, with changes to swelling supplies. Imports are seen increasing from 8.5 to 11 million tonnes and exports falling by one million tonnes to 36.6 million tonnes - increasing EU year-end stocks to a plentiful 15.32 million tonnes. The export estimate might have to be cut further. Overall, world stocks are up almost two million tonnes on last month to 260 million tonnes, although this is 11.5 million tonnes down on the year.

Changes to the world corn balance sheet added to the price negativity in grains. The USDA increased US corn crop yields beyond the highest trade expectations to 177.3 bushels per acre. Although there was a cut in the harvested area, the production estimate was up 2.7 million tonnes. Increases in feed use have taken up some of the slack, but US end stocks are up 800,000 tonnes on the month and over 20 million tonnes up on the year.

Accounting for China's record 288.84 million tonnes corn crop, world corn production is up 14.7 million tonnes on last month - now 80 million tonnes up on the year. Consumption increases soak up a large part of this increase, but year-end stocks will be up almost 25 million tonnes on the year, more than off-setting the drop for wheat. The USDA cut Brazilian corn production by two million tonnes to 27 million tonnes, but this is still nine million tonnes above the Brazilian National Supply Company, CONAB.

  • A good week for EU wheat exports

EU wheat exports enjoyed a strong performance during the week ending 15th January; at the same time the USDA made cuts. Shipments were up 1.045 million tonnes over the week and official data now sees the season's total up to 16.881 million tonnes, in comparison to 18.171 million tonnes last year. However, the data is deemed incomplete and the year-on-year gap much narrower. The imports pace slowed - up 148,000 tonnes to 5.1 million tonnes - although is still above 4.736 million tonnes last year.

Algeria has switched a large percentage of this season's wheat imports to Russia and made a significant purchase this week. Algeria has traditionally been a primary French wheat buyer and it is thought the supplies could be of French or Baltic origin, amounting to between 6-700,000 tonnes with prices $264 to $265 plus freight. This is encouraging for EU export potential during the second half of the season.

  • UK wheat remains too expensive to ship

UK wheat prices have fallen notably since the beginning of the year, but remain too expensive to compete in export markets.

The lowest feed wheat prices in the south-east of the UK remain around £10 per tonne too high to secure any export trade. With only 130,000 tonnes shipped from the UK so far this season, a carryover of approximately three million tonnes is possible if farmers and commercial operators are afforded the financial benefit to carry stocks into next season.

Current premiums for new crop futures over old crop are about £14-£15/t, but if that fails to be an incentive relative to other origins, UK feed wheat prices are set to fall further. Extensive UK frosts have allowed for field work this week and further winter wheat planting, boosting 2024 harvest production potential. 

BARLEY

Old crop feed barley values continue to come under pressure. With historically large discounts to feed wheat, feed barley is already at the maximum inclusion rate in many animal feed rations, with compounders still to cover the May/June/July period. The UK has a sizable exportable surplus of feed barley still to sell and fresh export demand is limited.

Old crop malting barley values continue to trade at historically attractive premiums over feed barley, especially into domestic homes. Maltsters are well covered for the remainder of the season, with brewing demand especially sluggish. Once again, we would encourage all growers with malting barley still on farm to make sure that they are taking regular samples to monitor quality and to ensure it is not deteriorating.

Looking forward to new crop, it is clear the UK will have a sizable increase in spring barley in all areas – although the extent of this increase currently remains uncertain. As a result, crop '24 malting barley premiums are at risk of being under pressure and buyers are understandably reluctant to enter the market.

Having a marketing strategy for your crop '24 spring barley looks to be more important this year, so considering the options available to you to help manage risk and secure the best returns will be more important than ever.

OILSEED RAPE

  • Oilseeds values retreat off the back of bearish USDA report

In the USDA's WASDE report, US soybean yields were increased which offset a lower area. South American production was reduced but less than expected, resulting in a reduction of combined American production of less than one million tonnes. This added downwards pressure to an already declining soybean market.

In the rapeseed market, farm selling remains mostly absent in the UK, Europe and Australia as current values are not deemed attractive enough. However, in nearby positions the crushers have ample cover with the long term supply and demand picture being weighted heavily towards the supply side. For now slower supply routes from Australia due to the current Red Sea issues and lack of farmer selling is helping to keep values from dropping further - these key market drivers will determine rapeseed values over the coming months.

World rapeseed crushing is estimated to have hit a record of over 75 million tonnes in 2023. This is due to high production levels across the world, as well as rapeseed oil being very price competitive and therefore increasing demand. This could slow slightly in 2024 as world logistics become more challenging and other vegetable oils become more competitive.

 PULSES

Old crop bean values have fallen slightly over the past two weeks. Feed compounders are well covered through to April and growers continue to sell at values that compare very favourably with declining wheat prices.

Values are likely to fall further over the next few weeks, as beans will need to be more competitive compared to other mid-range proteins such as rapeseed meal to maintain their place in feed rations.

The Australian human consumption crop is now starting to arrive in Egypt at very competitive prices, but this is changing due to rising freight costs through the Red Sea. We may soon see some renewed interest for Grade 2 UK human consumption beans.

 FERTILISER

  • Urea/AN

Business has improved over the last week, as farmers have been able to get on the land in some areas of the UK due to the better weather.

The latest Indian tender passed without much impact to the market and concluded on urea at the end of last week. 650,000 tonnes were purchased instead of the initial requirement of one million tonnes, meaning another tender could be due sometime before the end of March 2024. Russian product was the main supply, with very little other product offered due to suppliers not liking the low values tendered.

Egyptian urea firmed last week by approximately $40, with suppliers covering off shorts. However, the demand for Egyptian product seems to have cooled, with little activity this week.

In the UK we have seen the urea price firm this week, on the back of global buying. This reflects a more realistic value on replacement cost of urea into the UK, but whether the price holds at higher numbers remains to be seen. One thing to consider is the urea consultation date deadline - untreated urea shouldn't be applied after 1st April and time is running out to purchase, take delivery and spread untreated urea in time for this looming date. Sustain is a good alternative to urea and removes any deadline issues.

Due to earlier low demand, nitrogen factories are still currently halted or mothballed in Europe. Even though business in Europe has also picked up in the last week there are no signs that these factories will restart. This means that supply to the UK remains tight and will remain so as demand picks up - this could also firm up prices.

CF Industries issued new Nitram terms this week, which are very good value against imported AN and urea values. It does, however, seem inevitable that there will be very little nutrient in the soil to feed the growing crops, so additional fertiliser will be needed to get the most from them.

  • Liquid

UAN will remain competitive against solid fertiliser values. You should review your spring requirements based on revised cropping at the earliest opportunity. A full portfolio of grades is available whilst suppliers remain well stocked of raw materials across their portside locations.

  • PKs

DAP and TSP values look firm and supply is tight for the UK over the coming months. MOP values, however, look softer today than in previous months and have fallen in comparison to this time last year, due to global oversupply. Suppliers are reluctant to overstock on all P & K products. Growers are therefore advised to purchase requirements for P & K sooner rather than later, as we could see availability issues on both these raw materials due to increased freight rates and longer journey times avoiding the Red Sea.

Polysulphate works nicely alongside the new Nitram offer to cover crops' sulphur requirements. One thing is for sure: crops will be hungry once established, so it's worth securing your requirements in good time for the spring usage period.


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