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Last week's price spike because of Black Sea supply concerns and confusion over a cap on Russian grain exports seems a distant memory.
The plentiful nearby physical wheat supply is again weighing on markets and whilst Russian exports continue to power ahead, the EU and US are left trailing in its wake. Russia is expected to have its poorest performing month in November since the start of the season, but despite that the country is likely to ship about four million tonnes of wheat as it continues to dominate world trade.
Following an encouraging set of data, the US sold only 176,000 tonnes of wheat last week which is below the trade expectations that ranged from 250,000 to 500,000 tonnes.
Following this week's meeting between the US and Chinese presidents, the trade may have been hopeful after seeing news of fresh wheat sales to China to help boost markets. However, this is yet to materialise. The Chicago Board of Trade (CBOT) wheat futures fell almost 4% from last week's closing prices.
Like the US, EU wheat exports so far have proven to be disappointing in the face of Black Sea competition.
Recent data from Brussels highlights the challenges for EU shippers, with 10.806 million tonnes shipped versus the 13.66 million tonnes this time last year. Morocco remains the primary buyer, with 1.741 million tonnes received so far.
EU wheat imports are up to 3.3 million tonnes - about half the expected total for this season, but already adding to the swollen nearby physical wheat supply. The challenge to ship was made greater as analyst Stratégie Grains increased this season's EU wheat export estimate by 1.2 million tonnes to 32.1 million tonnes, which would see end stocks drop one million tonnes on the year to 12.1 million tonnes.
However, there may be less pressure to export old crop wheat if the wet autumn weather continues across north-western Europe. France, the EU's primary wheat producer and exporter, is in a similar if not worse situation to the UK - with planting behind and crops lying wet.
The French ministry of Agriculture and Food put winter wheat planting at just 71% complete by 13th November, which is behind the 96% achieved last year. Some in the trade suggest that the 2024 French crop may drop below 30 million tonnes which compares with 35 million tonnes this season.
The Agriculture and Horticulture Development Board (AHDB) Early Bird Survey which assesses farmer planting intentions was completed at the beginning of the month. The forecast put the UK 2024 wheat area just 1.3% lower on the year.
However, the adverse weather has resulted in minimal field work since and late planted crops in are poor condition. Without a notable change in ground condition, the UK wheat area is likely to be significantly lower which could lead to a tight balance sheet next season. The market is certainly reflecting this, with November 2024 London wheat futures values £23/t above November 2023.
Crop 2023 malting barley supply has been slow this week, particularly in southern parts of England.
However, export values are down on the week as the UK trade push to compete in the wider export markets. As of yet, the UK hasn't been able to connect with any business.
Domestic malting and brewing demand remains strong both sides of Christmas, which is positive for domestic premiums but is counter-productive for UK export competitiveness.
Farmer selling on feed barley has increased as the week has gone on, with most of the demand coming from trade shorts being covered in. That being said, the barley discount to wheat is wide enough for crop 2023 feed barley to be attractive to domestic animal feed compounders at current levels.
New crop spring barley planting areas will increase this year, both in the UK and across the channel in France.
This is because many growers were unable to plant their full areas of winter crops successfully due to persistent rain. These conditions generally keep maltsters and brewers on the side lines until later in the growing period. Crop '24 feed barley markets have a significant carry from old crop, as sellers are looking for premiums to reflect the increased uncertainty.
Weather in several key regions is a watchpoint currently. Brazil is of particular interest for market participants who are trying to understand what effect persistent drought in central areas and excessive precipitation in southern regions will have on the planting of the Safrinha second corn crop.
Providing more certainty is the significant carry in the feed markets coupled with barley's discount to wheat, with both propping up feed prices for now.
With such geopolitical uncertainty in the market and several weather stories yet to play out, now is a good time to speak to your local farm trader about our various grain marketing options for crop '24.
Rapeseed prices have looked to soya for inspiration this week, as the rapeseed supply and demand picture takes a back seat while there are potential crop development issues for Brazilian soya.
Currently, the soya market is very reactive to the weather forecast in Brazil and this was highlighted this week when an improved forecast took 24 cents per bushel out of the CBOT futures in one day.
In Europe, rapeseed farmer selling remains behind average pace due to dissatisfaction with the current price levels.
Australian farmers are also estimated to be behind average selling pace on the country's five million tonne-plus crop, indicating that there should be high volumes of seed coming onto the market soon to fulfil new year crush demand.
Going forward, the rapeseed market will be working out how and when the huge surplus of rapeseed will be managed logistically to meet with the season's demand. The trade will also keep an eye on whether Brazil can produce the record soya crop they were expecting.
Despite the challenging weather in the UK for winter seed planting, we don't expect to see a reduction in winter bean planting area due to the crops' ability to be drilled as late as January.
Looking further forward to spring planting, we see opportunities for growers to make a premium if for human consumption markets.
In the last seven days, global urea values have softened slightly and this is underpinned by low demand and changes in currency, particularly the pound strengthening against the dollar. The effect on values is expected to be short term though, and as demand starts to pick up through quarter four into quarter one in 2024, levels are likely to increase again.
It's reported that two to three nitrogen-producing plants across Europe are curtailing production or closing indefinitely due to the high cost of production and low demand throughout the supply chain. This will impact the volumes of nitrogen available to the UK market and further tighten or delay the supply in a shortening delivery window.
Currently, ammonia values remain high, contributing to production costs. Producers are also keeping a close eye on the output of their plants.
UAN purchasing remains relatively quiet as the weather continues to have an impact across the UK. However, liquid shippers and manufacturers now turn their attention to spring 2024 offtake planning given the time needed to source, ship and store product dockside in the UK. This will ensure growers' requirements can be met once we move into the post-Christmas position of having product on farm for application.
If you still have a requirement for UAN, we advise you to consider at least a percentage of your planned volume. Try not to leave it to the last minute before making a buying decision.
UAN pricing is at a level today that competes with solid fertiliser systems, especially where nitrogen and sulphur applications are required.
NP/NPK/NPKS solution compound grades are also gaining traction in the UK as growers are looking at finalising cropping for potatoes and vegetables, in addition to cereal and grassland.
If you're hoping to maximise the available nutrients to your crops with high quality fully water-soluble solution compounds, please speak to your local Frontier advisor to see if this range of products could work for your farming system.
Values for TSP, MOP and DAP remain unchanged, still showing price increments for the January/February '24 delivery period albeit still representing the true raw material replacement costs.
The sentiment is that the phosphate market remains firm due to supply restrictions and delays. The UK has seen fresh shipments arrive recently, but this will only be to supply existing order book requirements.
Potash remains stable at present but worth noting that the production could be curtailed if the demand does not increase to meet the supply.
Polysulphate tends to follow the trend of MOP, therefore if you have made the decision to decouple your sulphur from the nitrogen it's worth considering your requirements to ensure product is delivered in a timely manner before the usage period in early 2024.
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