Frontrunner - 25th February 2022

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WHEAT

• Global supply chain impact of Russian-Ukrainian conflict

Russia's invasion of Ukraine this week triggered unparalleled price movements in commodity markets. US Chicago Board of Trade (CBOT) wheat futures posted gains of almost 20% on last Friday's close and, at their peak, were at their highest level since 2008. Fear, panic and speculative trade exaggerated futures price gains but the world's wheat importers have lost access to a primary supplier of wheat and corn as military action brought a halt to commercial shipping and Ukraine's ports shut down. Egypt's General Authority for Supply Commodities (GASC) held a tender to buy wheat on Thursday which highlighted the market chaos and uncertainty. There was only one offer from French exporters at a price including freight just below $450/t. Egypt has sourced most of its wheat this season from Russia and Ukraine and bought 180,000 tonnes last week from Romania at less than $340/t. Other major wheat importers tried to maintain some calm by assessing their stocks and supply chain options. Iraq has said it currently has sufficient strategic wheat supplies and Tunisia has said it has already secured the imports it needs until the 2022 harvest. Ukraine is thought to have shipped almost 18 million tonnes from its 24.5-million-tonne surplus this season, but it seems highly unlikely that the remaining balance will be accessible in the short term. Russian officials said their ports were operating normally but how sanctions might impact on the Russian wheat export programme remains unclear.

• US wheat prospects worsen

US winter wheat crop ratings were updated this week and paint a sorry picture, although the United States Department of Agriculture (USDA) has an upbeat view on 2022 production prospects. In its outlook forum, the USDA said it sees the US wheat area up to 48 million acres from 46.7 million acres in 2021 and yield rising by over 10% to 49.1 bushels per acre. This would see production rising by eight million tonnes on 2021 to a total of 52.8 million tonnes. However, crop ratings suggest yield estimates are very optimistic. Kansas is down to only 26% rated 'good/excellent' from 30% at the end of January, Oklahoma is down from 16% at the end of January to just 9% of its crop now rated 'good/excellent', which compares to 48% last year. 52% of the Texas crop is seen as very poor and six points worse than it was at the end of January; last year, only 12% received this rating.

• French crop ratings slip

The French winter wheat crop has been in excellent condition since planting, in contrast to US crops. However, the French winter wheat crop rating has slipped two points this week to 93% rated 'good/excellent'. However, the EU crop monitor, Monitoring Agricultural ResourceS (commonly known as MARS), highlighted this week that not all of the EU was doing as well.

Persistent rain deficits in the Mediterranean regions, which have led to drought, are damaging wheat and barley crops. Southern Spain, Portugal, southeast France and northwest Italy are the worst affected and the forecast isn't encouraging, with conditions drier and warmer than average expected through to May. MARS also commented on how dry it has been for North Africa, with Morocco in particular having 64% less rainfall than average. This has been damaging for crops and subsequently there will be a need for higher imports to these regions.

BARLEY

• Barley markets volatile

The Russian-Ukrainian conflict has been the dominant focus of the barley market this week, with Thursday morning seeing Russian troops moving into Ukraine. As a result, UK grain markets saw one of their most volatile days of trading in recent times with London wheat futures seeing a £15/t trading range on old and new crop. Barley markets experienced similar volatility with some farmers selling at the higher market levels but, ultimately, compounders sitting out of the market given the extreme volatility. Markets fell back from their highs in the afternoon and have moved lower again on Friday morning, although the volatility of these markets is unlikely to end in the short term with the situation in Eastern Europe incredibly unpredictable.

• Rainfall delays spring drilling

Rainfall over the last two weeks has paused further early spring drilling with any field activity unlikely in the next 7-10 days. Winter crops remain in a good condition in the UK and Northern Europe as the Northern Hemisphere prepares to enter the spring. 

​OILSEED RAPE

• Concerns over Russian-Ukrainian impact on Black Sea exports

Current circumstances are seeing market activity change drastically at a fast pace, making it difficult to deliver a market report as events are likely to result in further updates in a short space of time. Markets usually develop gradually based on weather patterns, farmer decisions on plantings, changes in consumption patterns and shifts in government policies. However, current circumstances make these usual market drivers almost irrelevant, with the Russian-Ukrainian conflict being the absolute primary driver in the market. As a result of the conflict, markets have taken a huge jump higher and it is impossible to predict how this will develop over the next few weeks.

Ukrainian crops account for 73% of global agricultural output and Ukraine is currently the world's fourth-largest exporter of barley and corn and the sixth-largest shipper of wheat. Typically, it is the second-largest exporter of rapeseed and is a critical part of the supply chain into Europe during the early-season deficit. The current conflict raises questions as to how agricultural exports through the Black Sea ports will be impacted and whether Ukraine will be able to maintain its usual agricultural production.

 PULSES

• Static UK pulses market

The old crop bean market is still not responding to the volatility seen in other commodities. The UK still needs to find demand for a further 80,000-100,000 tonnes of feed beans before any major price movement can be expected. Demand typically falls off towards the spring, which means it is unlikely that UK consumers will increase their usage at this time. For the same reason, export demand is also limited.

New crop beans are likely to closely follow wheat values and are subsequently anticipated to be highly volatile over the coming weeks and months. This may settle once cropping areas are established and growing conditions nearer harvest become known.

 FERTILISER

• Nitrogen and sulphur

The Russian-Ukrainian conflict has certainly changed the nitrogen fertiliser market overnight. The global granular urea price had taken a further dip; however, upon reports of Russian troops entering Ukraine, all granular urea suppliers have pulled out of the UK market.

The movement of Russian troops into Ukraine and the subsequent sanctions imposed on Russia have brought European energy prices into focus, pushing gas prices significantly higher. The situation may well change again in the coming weeks but, currently, Egyptian granular urea prices have firmed over $100/t.

The UK nitrogen market had seen little business being executed over the last week due to recent storms delaying first applications, but the conflict in Ukraine has now renewed buying interest.

• UAN

UAN trade remains relatively quiet due to slow application and, with further inclement weather set to arrive across parts of the UK this weekend, it seems many growers will be delayed into next week before any volume of nitrogen or nitrogen sulphur can be applied.

The Russian-Ukrainian conflict is impacting on some UAN supplies to the UK market as we await further news from the Government on what sanctions will be imposed.

• PKs

Since late autumn, demand for PKs has been low but we are now seeing growers purchasing their requirements for this season. MOP, TSP and DAP prices have risen further on news of conflict between Russia and Ukraine. There are still major concerns over how the conflict will impact the Belarussian-Polish potash supply to Europe via the Ukrainian rail network.

Recent figures published suggest deliveries of all fertiliser products are down in January 2022 when compared to the five-year average. This is no doubt the result of current high prices and logistical issues. However, a pinch-point may be expected in the coming days and weeks as first applications are made and growers look to fulfil their remaining requirements.

The rise in gas and oil prices is a key consideration for growers as far as planning any further product requirements for the current season. Please discuss any outstanding product requirements with your Frontier contact.

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.