Frontrunner - 8th July 2022

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WHEAT

  • Egypt import purchases

The General Authority for Supply Commodities (GASC) adopted a change to its method for wheat import purchases this week, entering into direct talks with exporters in preference to where it usually holds a general purchase tender. Egypt bought around 444,000 tonnes, adding to the 815,000 tonnes it bought last week, split between Russia with 214,000 tonnes, France with 170,000 tonnes and 60,000 tonnes from Romania. Shipment will be between September through to the end of October and contrasts significantly to last season, where early imports were dominated by Russian and Ukrainian supplies. The EU has dominated the sales, securing two thirds of the 1.2 million tonnes made in recent days. This highlights the attraction and importance of competitive grain, free from taxes, quotas or sanctions. Egypt has subsequently bought a further 63,000 tonnes from Germany at $420 including freight and it is rumoured further sizeable German sales have been made to Iran.

  • Wheat futures fall sharply again

US markets - which were closed on Monday for the 4th July Independence Day public holiday - opened on Tuesday this week with sharp losses reacting to significant US dollar strength. Gains of almost 2% against the euro took the dollar towards parity, with the euro at its highest level since the end of 2002. This left US commodities less competitive in global export markets, hence the need for US commodity prices to fall. Fears of recession and demand destruction encouraged the futures sell off, combined with continued reports on news wires of intensified efforts to free up trapped Ukrainian grain with new exports initiatives.

Adding weight to the selling were the latest planting estimates from StatsCan, showing the Canadian wheat area up two million acres on last year at a total of 25.4 million acres. US wheat futures continued to fall midweek to its lowest since the middle of February prior to the Russian invasion of Ukraine, before staging a notable recovery on Thursday.


BARLEY

  • Barley price slides slow following the wider grains complex

It has been another volatile week for grain prices and feed barley prices have followed the wider grains complex lower. There remains no export demand for UK feed barley, and stronger sterling at the end of the week following the news of prime minister Boris Johnson's resignation will not help the UK's competitiveness against other origins. Malting barley prices have also fallen during the week. However, malting premiums remain at historic highs, held up by lack of liquidity across Europe as the market waits to assess spring malting quality. Towards the end of the week, maltster interest declined with many now opting to wait until harvest commences rather than trying to bid into a market that lacks sellers.

  • Harvest 2022 barley harvest commences

Harvest has started in parts of the UK this week, although it remains very early days. Initial reports are encouraging with above average yields, and good specific weights are a feature from many winter barley crops. It remains too early to form a view on winter malting barley quality. However, to date, screenings look to be good and nitrogen levels are within a good manageable range for maltsters.

  • European harvest progress

The barley harvest has also advanced throughout Europe, and like the UK, the forecast for the next week looks conducive to good harvest progress. In France, after initial nervousness regarding poor quality, barley yields and winter malting quality have improved significantly as harvest has progressed north. French autumn-sown spring barley results also look to be of good quality. A smaller European malting barley crop and low stock levels carried into this season will continue to keep the malting barley market nervous until UK, French and Scandinavian malting barley is safely harvested.


OILSEED RAPE

  • Rapeseed prices see rebound on the week after recent lows

After a negative end to last week, the oilseeds complex has seen a rebound from the recent lows this week. Much of the negativity from last week was caused by fund selling and lack of news rather than fundamentally negative news. This week, fund activity was more reserved so weighed in less on markets.

Biofuel remains a large price factor in the rapeseed and wider oilseed markets this week. With conflicting mandate policies across the globe, Europe seems set on reducing mandates to increase food oil supply, whereas countries in South America and Asia are raising their vegetable oil content in fuel due to fuel shortages. Overall, the demand for biofuel in 2022 is seen as rising by around one million tonnes more than last year's levels.

Weather for rapeseed crops generally remains beneficial in the key areas of Canada and Australia, whilst the heatwave passing through Europe in the coming weeks could take the edge off the crop. However, effects will be limited at this late stage of development.

  • Rapeseed planting levels lower than initially expected

In both the UK and Canada, planting levels were revised down versus expectations this week by StatsCan. Canadian planting intentions were pegged down 4.7% to 21.42 million acres, whilst weather conditions there are much better than last year resulting in anticipation of a bigger crop. Domestic rapeseed plantings here in the UK for harvest this year have also been revised lower by the AHDB, whilst the 336,000 hectare level it came out with was 9% higher than the previous year. This is far lower than its previous estimate and where much of the trade expected plantings. The accuracy of these numbers is always to be challenged and the actual numbers will be more tangible as harvest nears progresses. 


 PULSES

  • New crop bean values follow the wheat market

New crop bean values continue to follow the wheat market, although there are very few trades taking place either from the farm side or the end consumer. Currently, it seems that there is a standoff with both buyers and sellers waiting for some more harvest news. Crops in the Baltic Sea area have certainly appreciated the cooler wetter weather, and with more rain this week it looks like there will be a good crop there this year. Closer to home, the hot weather in the UK will undoubtedly affect poorer spring bean crops on lighter land. However, the majority of winter sown crops seem be standing quite well and will soon start to ripen. There should be an early harvest in the South and East of England this year.


 FERTILISER

  • Nitrogen/urea

A very quiet week in the UK in terms of nitrates and urea, as there is little demand currently from growers for fertiliser as harvest looms large. This week, there was another sharp rise in the UK gas price, back to similar levels experienced in the spring. This caused one UK supplier to withdraw its ammonium nitrate price. The gas price in Europe is still firm, with a fresh threat from Russia to cut further supplies to some European countries. Europe could see further gas price rises for some countries as once current stocks are used up, there are fears of not being able to secure further resources which could potentially see European factories think about halting production once again. A firm and restricted supply of fertiliser going forward in an already tight market should be expected.

The world granular urea price has risen since last week and that translated into a slight rise in the UK. This is mainly due to currency, however, there are still some deals to be done. Sustain - a treated urea - looks good value at the moment in comparison to straight ammonium nitrate.

As harvest gets under way in some parts of the UK this week, the focus will turn away from nutrition to getting this year's harvest in the barn and dry. Please keep in close contact with your Frontier representative, as this market could change very quickly with current gas volatility. Also, now is the time to book in fields with our new Field Grain Analysis service. You can learn valuable lessons from this year's harvest to adjust and improve fertiliser programmes for next seasons crops.

  • Liquid

New spring UAN terms are currently available for a limited volume of product. Although much of the early momentum has gone from the market, the fundamental drivers are still in play. Locking into some forward certainty with UAN values and grades does give growers some comfort in the knowledge they have secured a known value and known product.

UAN terms are still available for the autumn tank fill position. Growers who haven't yet covered any volume, should at least consider filling their tanks while offers are available for all nitrogen and nitrogen sulphur grades.

Any growers using liquid fertiliser (not including the OMEX N P grade) to establish oilseed rape this summer should include Limus Clear within this UAN application. With warm temperatures, exposed soils and low crop cover, this application is at high risk of volatilisation and Limus Clear can minimise any risk of nitrogen losses.

  • Phosphates and potash

There is very little interest in the straights market at present, mainly due to the current prices on TSP and MOP. DAP prices remain high, and availability will remain tight as importers do not want to commit to new cargoes at current values. Frontier's Oilseed Start (24-24-0+8%So3 +boron) is a good value alternative to DAP, and for cereal requirements there's the option to omit the boron content (24-24-0+8%So3) which is also a good alternative to TSP.

If you have any questions about ammonium nitrate, Limus Clear (available from our crop protection stores) and/or Oilseed Start, please speak to your local Frontier contact for further information.


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. 


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