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Russia's appetite for world wheat export market share continues to be the primary bearish market driver.
The latest estimates see Russia shipping 5.1 million tonnes of wheat in September and although this is 200,000 tonnes below last month, the first quarter of the season will now see a staggering 14.8 million tonnes shipped. On average, this figure is more than one million tonnes each week. There's also a quest for future sales, made evident by the news of intergovernmental discussions with Egypt for the supply of another one million tonnes of wheat.
That said, Russia's approach to sales is somewhat confusing when viewed against other events this week, when an additional public tender for wheat was held by the General Authority for Supply Commodities (GASC). Russia initially held firm on its floor price of $270 before reducing some offers to $260 FOB, but then missed out on any business at all.
Egypt bought two 60,000 tonne cargoes from Romania and one 50,000 tonne cargo from Bulgaria at $255 FOB, with freight costs ranging between $17 and $19. These sales values, which include freight, were similar to last week's to Egypt and Algeria.
Latest trade statistics from Brussels highlight a challenging situation for the EU wheat balance sheet, with poor exports and high imports. Up to the 24th September, EU wheat shipments reached 6.877 million tonnes which is significantly below last year's figure of 9.4 million tonnes in the same period.
The poor export performance is made worse when looking at imports. These climbed to 1.8 million tonnes which is comparable to last year's total of 1.082 million tonnes. Ukraine accounts for two-thirds of EU wheat imports so far this year, demonstrating why countries such as Poland have taken steps to ban Ukraine wheat imports.
Morocco has been the primary EU wheat buyer this season and has taken almost 1.2 million tonnes so far. Earlier this week European markets rose higher, hopeful of fresh business to North Africa. Morocco approved a subsidised import programme for a further two million tonnes of wheat for shipment between October and December.
With the euro at a six-month low against the US dollar, EU wheat prospects were boosted and traders were further encouraged by rumoured French wheat sales to China.
Black Sea wheat export competition in 2024-25 could prove less aggressive, with questions over winter drilling.
Prolonged dryness has been a feature for the majority of Ukraine and Russia; so severe in certain areas of Ukraine that it led some farmers to stop planting winter wheat. The Ukrainian agricultural minister, Mykola Solskyi, said that by the 26th September farmers had drilled 2.18 million hectares of winter crops, 1.024 million hectares of which was wheat. Overall, farmers are aiming to plant 4.4 million hectares of winter wheat to account for 95% of the country's total wheat area.
This week, weather forecasters said the sustained absence of rain - which lasted 30 to 40 days across most Ukrainian regions - presented unfavourable conditions for planting and development of winter crops.
It has been another quiet week for malting barley throughout Europe, with a real lack of fresh brewing demand being the main feature.
Domestic maltsters appear to be well covered in the pre-Christmas position, but they will have more barley to purchase post-Christmas as and when their brewing customers look to fix prices on malting contracts.
With sizable malting premiums available, the need to look after malting quality is imperative. Any barley that is wet should be dried gently as a priority and barley bulks need to be kept cool to maintain germination. We also recommend getting malting barley resampled once it's dried to ensure the barley has not been damaged prior to movement and to reduce the risk of avoidable costly rejections.
The feed barley market continues to lack export demand, with the market totally focused on domestic demand. The UK's feed barley surplus continues to grow at the expense of malting barley, as parcels of it in the South of England are failing on germination and in the south of Scotland some is failing on high nitrogen.
Looking forward, it looks likely that the UK's spring barley area will increase year on year as growers look at strategies to deal with persistent black-grass challenges. Frontier is offering a range of crop 2024 spring malting barley contracts to help growers market crops and manage risk. You can learn more about the opportunities available by speaking to your local contact, or for more information about our wider risk management solutions, visit our website.
Crude mineral oil prices have been on a dramatic rise over the last couple of months - now into the $90 range with the market widely expecting prices to rise to $100 a barrel again. This has provided support for the biofuel complex as processors can afford to increase vegetable oil content at these levels.
In Canada, weather conditions remain favourable for harvest progress. Sellers there are not impressed with current market levels and aren't releasing the amounts of seed we would normally expect.
In Europe, farmers selling outside of the Black Sea are slow, although crushers are well covered in the nearby so this lack of selling is not having the effect it could've had.
Market attention is turning towards South America again, as Brazil looks to make progress with its soybean plantings. It is currently hot and dry over much of the area with forecasts looking to turn wetter and cooler, although market participants would like to see that before making any trading decisions.
Going forward, the main focus for rapeseed will be logistics and whether burdensome global supplies, including Ukrainian and Australian seed, can make its way to demand points in Europe and Asia.
We have seen bean values trade higher this week as the market is continuing to follow wheat, but other factors such as short covering and supply concerns are still supporting values and causing premiums over wheat to edge even higher.
The human consumption market has a steady flow of trade, with small but consistent demand due to the relative high-quality crop in the UK compared to other origins.
Big premiums over feed can be achieved on human consumption beans. If you have this grade available to sell now would be a good time, as the window of opportunity for this trade could close in the latter part of Q4 or early Q1 when Australian beans come to market.
It's been another quiet week in terms of farm demand, as autumn drilling progresses for those lucky enough to have missed the heavy showers. As the drilled percentage grows, so will demand and hopefully this will happen soon. From the supplier side things are starting to firm with gas, ammonia and oil – all of which are on the up this week.
UK ammonium nitrate producer, CF Fertilisers, remains in the market even though ammonia (now imported into the UK for Nitram production) traded $185 up from earlier in September. Pressure will build to move prices higher, especially as European and UK gas is much stronger this week.
The urea markets are slow but with India due back to the market to cover what it couldn't buy in the previous tender, urea suppliers are comfortable for September and part of October.
Currency is also a problem for importers into the UK with the pound versus the dollar which is currently at 1.22 compared with 1.30 back in July. This currency movement alone adds £20/t to a $400/t product.
Shipments of urea ammonium nitrate (UAN) continue to arrive throughout UK ports in Q3. A large vessel was discharged in the North East earlier this month, with another sizeable shipment due in the South East in early October.
With good stock levels either in place or due imminently across the UK, autumn tank fill deliveries continue for growers with on-farm storage available. As drilling winter crops gets underway in certain regions, growers with certainty around their total requirements should look to take advantage of the competitive spring terms available from all suppliers whilst prices remain unchanged from their initial release in the summer.
With the increased demand for spot PKs as land gets drilled, availability of triple superphosphate (TSP) and diammonium phosphate (DAP) is very tight from producers in Morocco and North Africa.
DAP is produced using ammonia, which as mentioned earlier has firmed in price during September by $185/tonne and the pound to dollar exchange rate is also affecting offers to the UK.
Muriate of potash (MOP) production from a Spanish mine of Israel Chemicals Ltd (ICL) is also reduced which puts pressure on the European supply chain.
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