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Frontrunner - 25th April 2024

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WHEAT

  • Rally to multi-week highs

In an eventful week for the wheat markets, speculative fund short-covering spurred a sharp ascent, propelling London November 2024 wheat futures past £200/t - their highest level since 10th January. Geopolitical tensions and weather fluctuations initially fuelled the surge, although values retraced mid-week. Escalating missile attacks on the Ukrainian Black Sea port of Odesa by Russia over the weekend, coupled with the US government's proposed $61 billion support for Ukraine's war efforts against Russia, prompted speculative funds to reduce their near-record short positions in global agricultural futures markets.

Despite complications faced by Russian exporters in obtaining essential documentation for shipments, analysts raised their export estimate for Russian wheat this season to a record 53 million tonnes. Meanwhile, Ukraine's resilience amid the ongoing conflict has been notable, with wheat shipments surpassing 15 million tonnes this season, aligning with the recently increased United States Department of Agriculture (USDA) estimate.

  • Weather concerns and crop estimates

Estimates for the 2024 harvest suggest robust Russian wheat production exceeding 90 million tonnes, indicating another season of heavy exportable surplus. However, weather anomalies in southern Russia, characterised by high temperatures and minimal rainfall, are raising concerns about yield potential. Conversely, central EU regions are grappling with freezing temperatures, posing threats of crop damage. MARS, the EU crop monitor, slightly increased its EU wheat yield estimate, primarily attributing it to improved potential in Spain.

  • US crop concerns

US traders observed a significant decline in the condition of the US winter wheat crop, attributed to dryness in the western wheat plains. A notable 5% point drop in crop condition - now at 50% 'good/excellent' - was recorded. Despite this setback, the national crop condition remains significantly better than last year's, providing support to the Chicago Board of Trade (CBOT) market.

  • Planting progress

US corn planting progress stands at 12%, mirroring last year's pace, while spring wheat planting has reached 15%, ahead of both trade expectations and last year's progress.

  • Discrepancies in corn estimates
The USDA's April World Agricultural Supply and Demand Estimates (WASDE) report raised questions regarding Southern Hemisphere corn output, projecting estimates approximately 17 million tonnes above the official crop estimate for Argentina and Brazil. The Rosario Grains Exchange further revised down its Argentinian corn production estimate due to leafhopper damage, raising concerns about potential crop losses.

BARLEY

  • Spring barley planting increases

Sowing progress for spring barley has accelerated across regions, with Scotland leading at over 70% sown. Favourable weather conditions in Scotland have facilitated rapid progress, with other regions also nearing completion. In England, sowing will not happen beyond the weekend now with some farms abandoning the idea of sowing their last fields.

  • Price dynamics

Hedge fund short-covering and concerns about wheat crops in Southern Russia and the USA have spiked feed barley prices across various markets. Hedge funds, historically short since January, have become more aggressive amidst geopolitical uncertainties and weather-related concerns, contributing to market volatility.


OILSEED RAPE

Rapeseed prices continue upwards

As we enter the second quarter, rapeseed prices continue their upward trajectory, driven by a combination of market factors. However, overarching concerns in the broader oilseed sector, particularly surrounding soybeans, may temper rapeseed gains. European rapeseed production estimates for the new crop have declined due to adverse weather conditions, tightening supply and boosting prices. Additionally, a resurgence in crude oil prices has supported the biodiesel industry, bolstering demand for rapeseed.

 PULSES

  • UK bean supply tightens

Tightening supply of old crop beans in the UK has driven prices higher, reflecting increased demand from buyers seeking alternative protein sources.

As mentioned in previous reports, the new crop market is very difficult to value with no demand for export and only minimal levels of buying interest from UK consumers. The ex-farm bean market will initially look to trade at levels reflecting £45 to £50/t over November wheat futures. These are historically high levels and may well not hold, especially if the growing crop performs better than expected.


 FERTILISER

  • Urea/AN

Global urea markets continue to drift lower due to higher supplies and lower demand, especially from the European, Indian and North American markets. Going forward, values look to be indicating

a weaker trend, especially given the expected return of China to the exports market in late May / June.

UK and European ammonium nitrate supplies continue to be tight, with smaller stocks and tonnages running out at varying sites. Supplier appetites for replenishing stocks also seem limited given a typical new season start being only weeks' away in seasons past.

Field work continues at a lacklustre pace in the UK, mainly due to bad weather and poor seedbeds. At the time of writing, the country looked to be 35% drilled for spring cropping on average, with regional variations reportedly ranging from 10% to 100%. Top-up orders are expected to come in once drilling is complete and so it's a good idea to discuss optimising your nitrogen and sulphur applications with your agronomist or FACTS-qualified advisor given the wet winter and current conditions of UK cropping.

  • Liquid/UAN

Liquid applications have continued in most regions across the UK where conditions have allowed.Suppliers are also continuing to offer a full portfolio of nitrogen and nitrogen sulphur products.If you're a grower based in England, keeping within the new urea stewardship rules is paramount. The new regulations are designed to help lower ammonia emissions and increase overall nitrogen use efficiency through the inclusion of inhibitors such as Limus Perform. Available exclusively from Frontier, this particular product has consistently shown benefits in trial and on farm in previous seasons and is well established as the leading option on the market.

We are also seeing steady demand for NPK liquid products as we progress into the spring. Grades are available for grassland, cereals, potatoes and vegetables and can be tailored to fit most systems.

  • Straights/NPKs

The straights / NPKs markets remain stable, with no real change in values for the time being. Stocks of certain products remain tight at UK supplier sites and as we near the end of the season there seems little appetite for replenishment given the size of the remaining market and the cost of vessels being prohibitive, with next season in mind.

DAP is proving particularly difficult to source in the UK, with sanctions on Russian product having a negative impact on the European market by tightening availability. Turnaround times are estimated at two to four weeks, depending on grades ordered, so please consider your requirements at the earliest opportunity.


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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