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Frontrunner - 30th May 2024

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WHEAT

  • Russian wheat crop decline spurs price surge

French 2024 wheat futures have hit their highest levels since November 2022, driven by further downgrades in Russia's 2024 wheat harvest potential.

While UK and US markets observed a public holiday on Monday, the Paris market surged by nearly 3%. The Russian Grain Union reported frost damage which affected potentially two million hectares. The Institute for Agricultural Market Studies, IKAR, further reduced its Russian wheat production estimate to 81.5 million tonnes, down from 83.5 million tonnes.

This is now ten million tonnes below the United States Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (WASDE) report for May. Additionally, the exportable surplus was cut to 44 million tonnes, eight million tonnes below the USDA estimate.

Ukraine's grain and oilseeds output was also downgraded, with the Ukraine Grain Association reducing its forecast to 74.6 million tonnes from 76.1 million tonnes.

  • Inaccurate data masks export performance

Despite a slow EU export pace, Brussels suggests EU wheat exports have performed better than official data.

Wheat shipments up to 26th May increased by 1.57 million tonnes from the previous week - totalling 27.83 million tonnes which compares to 28.98 million tonnes at the same time last year.

Private estimates indicate French wheat exports are over nine million tonnes, surpassing Brussels' data of eight million tonnes and potentially putting the EU total ahead of last year.

Morocco remains the top EU wheat customer, importing 3.78 million tonnes. There are even greater needs anticipated next year as the country's grain output is forecasted to drop by 43% to 3.12 million tonnes.

  • US markets less enthused

While French wheat futures reached an 18-month high, US Chicago Board of Trade (CBOT) wheat futures were less impressive, though they did rise to their highest since last August.

The US wheat export pace remains disappointing, with total shipments expected to be 19.6 million tonnes, down one million tonnes from last year. This will result in an increase in US wheat, ending stocks to 18.7 million tonnes.

Despite this, US crop prospects for 2024-25 are encouraging. Winter wheat crop condition slipped by one point to 48% rated 'good/excellent' which is still well ahead of last year's 34%.

Spring wheat planting is 88% complete which is ahead of the 81% average. 61% of the crop has emerged which compares to 52% last year. Corn planting reached 83%, just above the 82% average.


BARLEY

  • Old crop feed barley nears endgame

As we approach the end of the season, most consumers are now covered and good grass growth is not sparking fresh demand. If you have unsold feed barley on the farm, it's crucial to prioritise sales before the harvest.

This week as feed wheat futures have firmed, the discount between feed wheat and feed barley has widened to around £30/t, making feed barley attractive in all rations, including poultry. However, feed barley compounder interest remains modest, with some buyers still open for September onwards.

On the export market, cheaper offers of Baltic, Ukrainian and Russian origin feed barley are available for the harvest position which are significantly undercutting current UK levels.

  • Quiet week for malting barley

The malting barley market has been quiet, with the focus now on rainfall and sunshine throughout Europe.

Some spring barley crops in the UK are showing excellent potential, while late-sown crops are understandably poor. Maltsters are cautiously sitting back but may need to engage in an illiquid market if their brewing customers seek to cover barley needs.


OILSEED RAPE

  • Quiet trade in rapeseed markets

Physical trade in rapeseed markets has been mostly quiet this week, with caution prevailing due to variable crop conditions in Europe. MATIF futures are encountering resistance around the key €500 level.

Values have slowly appreciated, with over £400/t now available for most of the UK in the new crop position. European rapeseed values are establishing strong premiums to encourage imports for the coming season, as the crop is expected to be lower than last year.

  • Chinese demand for soybeans

Chinese demand for soybeans remains a focal point, as weak crush margins are causing concern for US exporters who lack sufficient domestic demand.


 FERTILISER

  • Urea/AN

Last week brought further increases on urea values out of North Africa, mainly due to tighter production, gas restrictions and better sales.

Over the course of May, we've seen pricing move up by around $55/t on Egyptian values alone.

UK domestic offers have shown similar increases in values, with many suppliers reluctant to offer to the UK market until some stability ensues. Additionally, with news on Chinese export business being delayed, any short term respite may be some way off.

In the UK, AN spot values remain on offer for domestically produced material. However, importers are reviewing which purchases they can get, meanwhile higher European gas values and ammonia are having a big effect on available offers from European producers.

This past week, one producer has increased Extran and calcium ammonium nitrate (CAN) offers by €30 into the French and German markets.

  • Liquid

Final UAN applications are being completed across arable cropping and the later ear wash applications on milling wheats are planned for the coming weeks. This means the focus for liquid fertiliser markets is split between the current season and looking ahead to crop '25.

As previously referenced, in recent days varied offers have been released in the solid market for spot movement for crop '25. One national UAN supplier has come to the market with values on a limited tonnage, whereas the other remains POA.

There are indications that a full portfolio of grades will be available for the coming season in early June for summer tank fill. Those with a requirement for product for immediate application - whether it be grades targeted at protein increase or nitrogen sulphur grades for applications on grassland -should discuss the terms available.

  • Straights/PKs

Potash and phosphate values look stable to firm on renewed interest elsewhere. This, and the fact that the UK can't import Russian product, means any signs of weaknesses have dissipated for the time being. Meanwhile, spot pricing for late grazing, silage and potatoes remains robust with decent orders coming in.

Importantly, supplier stocks look tight for June. Therefore, we urge you to act on any requirements to ensure quick delivery.

To finish on a positive note, exchange rates have firmed in sterling's favour so this will counteract any rises to come across all imports.


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.

To be notified each time this report is published in the future, you can also subscribe at www.frontierag.co.uk/blog/subscribe to ensure you always have the latest market insights.


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