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Frontrunner - 4th April 2024

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Frontrunner is also available as a podcast, so you can hear the latest from our traders while you're on the go. Listen below or subscribe to the report on Acast, Spotify, Apple Podcasts and Google Podcasts. The report this week is read by agronomist, Alex Pope. 


WHEAT

  • USDA see lower US crops

The United States Department of Agriculture (USDA) presented a bullish set of data before the Easter weekend and sent futures prices higher.

On 1st March, US wheat stocks were marginally higher than average expectations at 1.087 billion bushels versus 1.044 billion bushels. This was also up on last year which was 0.941 billion bushels.

The surprises for the market didn't come from the stocks though, rather it was the lower-than-expected 2024 US corn and US winter wheat prospective planted areas. Winter wheat is seen down to 34.135 million acres which is at the bottom end of trade guesses - these ranged from 34 million acres to 38.37 million acres and notably the Ag Forum estimated 34.425 million acres.

The 'all wheat types' area, including higher spring area, was above average trade guesses - 47.498 million acres versus 47.33. However, it's the smaller winter wheat area that had the market rattled.

The US corn area was also seen falling to just 90.036 million acres, 1.776 million acres below average trade guesses and one million acres below the Ag Forum estimate. The 2023-24 planted corn area was 94.6 million acres.

The US weekly crop condition and planting progress is now published every week on Monday evenings (UK time). The initial report from 1st April sees the wheat condition rated 56% "good/excellent"; this is significantly ahead of the 28% this time last year which adds pressure to US prices even with a smaller winter drilled crop. Corn is just 2% planted, one point ahead of average.

  • Markets start April weaker

Saudi Arabia bought almost 790,000 tonnes of wheat over the weekend for June to July arrival.

Prices for the wheat sale were $245/t including freight and suggested Russian supplies would take all the business, which wasn't great for other markets. Russian exporters signalled their aggressive approach to any potential old crop business.

Last week, Russian milling wheat with 12.5% moisture climbed to $210 FOB and looks to be moving back towards $200, leaving EU wheat less than competitive. March Russian wheat exports are put at 4.9 million tonnes which is a new record high volume for the month.

Comments from Chinese customs were an additional catalyst to send markets lower. They asked traders to limit deliveries of foreign corn in to bonded areas - a move aimed at easing domestic oversupply to support prices for their domestic farmers.

Traders use bonded areas to blend corn for animal feed rations which allows them to bring in grain at cheaper rates. The country has an official corn-import quota of 7.2 million tonnes, which benefits from a tariff of just 1%. Above that, cargoes are subject to duties of 65%. The USDA sees China importing 23 million tonnes this season, up from 18.71 million tonnes last season so the impact could be notable for corn.


BARLEY

  • Prices continue to rise during short trading week

This week, old crop feed barley moved conversely (gaining £2-3/t) to wheat futures markets (down £2/t).

This small price increase in the physical market may be attributed to both merchants and consumers having to pay more to bring supply forward while prices are close to the lows for the season.

As recently as mid-February, ex-farm prices had been around £130/t - particularly in east and central England - which proved too low for any meaningful grower engagement. However, a sizable feed barley surplus remains in the country as Russian grain continues to be supplied at price levels that the UK cannot compete with. Until this weighty supply of feed barley is exported it will be difficult for UK values to mount a sustainable rally.

  • Spring barley plantings behind the pace

England has experienced up to twice the amount of average rainfall during the spring barley planting season, particularly in the central and southwest regions.

This has led to delayed planting progress in most parts of the country. Parts of the south coast have seen some meaningful progress this week, but areas with higher concentrations of spring barley, such as East Anglia, have not enjoyed the same levels.

These dynamics have tentatively increased values this week, as bids continue to outnumber offers.


OILSEED RAPE

  • The European rapeseed market witnesses increased volatility

After a strong upward trajectory at the beginning of March, prices experienced a correction towards the end of the week.

The rapid exit of funds from record short positions contributed to upward price momentum in agricultural markets, particularly rapeseed markets where around a 40,000 lot short position was reduced to zero in a matter of weeks - the speed of which has not been experienced in this market.

Rising oil prices allowed biofuel producers to pay more for rapeseed products and a rumoured EU tariff on Russian products also helped values increase.

As these market drivers started to subside, particularly the end of fund activity, markets retreated quickly to close out the short week.

Before the end of this season, the supply and demand picture will be key in determining prices. A large carryover is also expected to dampen prices if the anticipated Australian imports and domestic farmer-held seed arrives to crushers at the right time.

New crop rapeseed markets will be very reactive to crop prospects in Europe, Australia and Canada where there is plenty of growing left to do.

In soybeans, the US planting intentions report was released on Thursday and numbers were aligned with general expectations – 35 million hectares; 1.2 million hectares above last year's reduced area at the expense of corn and other grain areas.

Last week, US export inspections were also below expectations and season pace remains around 15% lower than this time last year.

The Brazilian bean harvest is now nearing completion and should give the trade a better idea of the actual crop size which has been up for debate for a while now.


 PULSES

Old crop bean markets continue to tighten up, with only small parcels now left on farm. Over the past week, values have risen by £5-10/t as consumers and merchants chase the last few parcels on farm.

Overall demand has fallen in response to high prices, but the remaining core demand still needs to be covered.

Even more challenges lie ahead, with new crop being difficult to value due to the uncertainty over the winter planted area and so little spring beans planted. There are only a couple of weeks left before it is too late and too risky to sow the crop.

It will be interesting to see if the recent Defra statistics are correct. It's stated the area of peas and beans for harvest 2024 is only going to decline by 14% from 275,000 to 236,000 hectares.


 FERTILISER

  • Urea/AN

Global urea values have been declining slowly over the past few months, with values now below $330/t. This is akin to the values seen back in April 2023 and mainly due to lack of demand and plentiful supply.

The current Indian tender volume is reported to be half the tonnage that was initially expected, as pricing levels are lower than anticipated. The suggested volume is around 750,000 tonnes for shipment by 20th May.

Domestic demand remains slow despite the new urea application rules in England having started from 1st April.

Ammonium nitrate pricing levels remain unchanged as we move into April. However, supply is still limited and delivery timescales are under pressure due to the hand-to-mouth buying approach on the back of continued wet weather.

  • UAN/Liquid

As catchy conditions prevail across the UK, UAN applications continue at a steady pace.

Those with tank capacity and a requirement for additional product this season can be assured of prompt delivery, with suppliers well stocked across UK sites.

A full portfolio of grades - from N, N/S to NPKs - are available for requirements on cereal and root crops.

With the aforementioned urea stewardship scheme now in place in England, urease inhibitors like Limus Perform are available for delivery to ensure compliance with the legislation requirements.

  • Straights/NPKs

Values on straights remain unchanged and because of the tightness in supply of raw materials, prices remain stable. Suppliers are also reluctant to replenish stocks at this stage due to low demand and high replacement costs.

In addition to liquid NPKs, physical stocks of high quality solid NPK compounds are available for timely delivery.



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.

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