Frontrunner - 2nd June 2023

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WHEAT

• Wheat prices remain at seasonal lows

For most of this week wheat values have remained on the defensive with London International Financial Futures and Options Exchange (LIFFE), Chicago Board of Trade (CBOT) and Marche A Terme International de France (MATIF) all falling to their lowest point in over a year. Without much bullish news traders continued to add to their short positions after the small bounce in prices last week.

• Russia impedes Black Sea grain export deal

A UN spokesman announced yesterday that Russia is again delaying the Black Sea grain exports, which throws some uncertainty into the mix. Russia is accused of halting the registration of ships at Ukrainian ports, citing it will do so until all parties allow the movement of Russian ammonia through Ukraine.

The UN is trying to mediate by seeking an agreement between Turkey, Ukraine and Russia. With Russia needing cash reserves, the country is using the grain corridor deal as leverage as it looks to add additional exports to the list of embargoed products.

Currently, reports put the average daily inspection rate of departing ships down to just three, with the number of vessels leaving the Black Sea getting considerably lower than in recent months.

• Weather across the globe impacting crop potential

Weather in Europe, although mixed, is typically favourable. However, there are regions that will need to be watched which have seen lower rainfall. In Russia and Ukraine, winter wheat crops are under a little stress due to the unseasonably cold temperatures but there is little concern over crop prospects at this time.

Argentina is forecast to receive more rain over the next week, covering the country's main crop production areas. Weather in the US is mixed with the Northern Plains receiving lots of showers, but moisture is struggling to reach some parts of the Central/Southern Plains with only patchy rainfall reported. The same is also forecast in the Midwest, where temperatures are higher than normal though not excessive. 

BARLEY

• Domestic feed barley downtrend continues

This week domestic old crop feed prices have resumed their downward trajectory following what was previously a flat week, albeit in an uneven fashion. Regionally, the biggest losses were seen in the Northwest, where prices have come down as much as 3% - almost mirroring the decline in the futures markets. In comparison, the Northeast has been more resilient, with losses closer to 1.5%.

• UK exports cannot compete with Black Sea origins

Even with feed prices falling in the UK, current export prices remain uncompetitive in comparison to the cheap Black Sea grain that has been flowing into Europe and North Africa as a result of the grain export corridor previously agreed. Spain has endured severe drought conditions up until this week which should translate into increased export demand. However, it remains to be seen how much demand will persist once large European old crop surpluses have been exhausted.

• New crop barley looking well, yet farm selling slow

We have seen some compounder demand coming forward for new crop feed barley this week, amidst the backdrop of almost non-existent farmer selling. Farmers remain undersold in comparison to other years. With UK winter barley now in ear and conditions looking favourable throughout the country, an increasing tonnage will need to be marketed within an ever-decreasing timeframe. This dynamic is likely to add further pressure to harvest prices. Combine the UK situation with no material climate issue in any of the global grain exporting regions and we could see new crop prices continue lower in the near-term. 

OILSEED RAPE

• Volatility prevails in OSR markets

The last few weeks have been turbulent in the rapeseed market, with any price gains wiped out in proceeding trading sessions. Currently, the key driver in the oilseeds complex is slow demand as a result of the current economic situation and pressures on household budgets. Coupled with this, crude oil has lost 5% in value this week, which has seen rapeseed prices follow suit. Approximately 60% of European rape oil is used for biodiesel manufacturing and there remains concerns in the EU that reductions of vegetable oil inclusion in biofuel mandates will occur. Currently, margins for biodiesel processors are also weak, further weighing on demand levels and trends for lower inclusion.

With old crop oilseed stocks remaining ample we will likely see a sizeable carryover into the next year's crop, adding to what is currently looking like a larger European crop at 21 million tonnes - some one million tonnes higher than last year. Other main producers Canada and Australia are estimated to produce 18 million tonnes and six million tonnes respectively, with Australia being down one million tonnes from last year. However, crops there are still to develop.

 PULSES

With old crop bean supplies drying up, values have risen sharply again this week – unlike other commodities. At today's levels, old crop beans are now worth a premium of £35/t compared to new crop values. Therefore, our advice is to sell any balances into this strong market.

With the weather suitably favouring bean development, we have seen several customers selling new crop beans. Values of £200/t available for feed beans in some areas represent a fair value, especially when compared with new crop wheat prices. Hopefully we can also achieve an early premium for human consumption beans but that may be short-lived given the ongoing economic concerns in Egypt and the Middle East. 

 FERTILISER

• AN/Urea

Last week saw the release of the UK 'new season' ammonium nitrate (AN) price which was pitched just below £350/t. This was a result of weakening gas prices in the UK, therefore reducing the cost of production. The gas price in the UK currently sits at 56.6p/therm at the time of writing and the forecast for gas prices into the winter months is more than 50% higher than today.

AN volumes remain very tight with imported offers still few and far between. Present stocks of AN in the UK for current applications are at an all-time low. If you have demand for product, please speak to you Frontier contact for advice.

The urea market remains relatively quiet globally and in the UK due to a greater focus on the AN market. We are, however, anticipating more activity for urea/treated urea type grades in the coming days and weeks. India has tendered for more tonnage; the initial volume suggested is approximately 800,000 tonnes closing on the 12^th June, with a shipment deadline of the 17^th July. Suppliers will remain vigilant during this time with regards to pricing levels and the impact of this tender.

• Liquid/UAN

The last few days have seen an increased interest from growers buying foliar products for crop '23, either for immediate application post-petal fall on OSR or for planned applications in the coming weeks on milling wheats. Looking ahead to crop '24, shippers and producers are finalising their offers and it is anticipated that volumes from all suppliers will be available to the UK market imminently. A full portfolio of grades, both nitrogen and nitrogen sulphur, will be available for tank fill from the first offering this season.

• PKs

The PK market is quiet and as reported in previous weeks, the sentiment is that there is still weakness to come in MOP, TSP and DAP for autumn buying. Polysulphate will also follow the potash market in terms of pricing. Our advice is to continue to discuss your requirements for crop '24 and contact your Frontier representative for more information around the market before purchasing.

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.