Frontrunner - 9th June 2023

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WHEAT

• Wheat futures rally

The world's wheat futures fell to new multi-month lows last week, with London wheat dropping to its lowest value since mid-January 2022. However, a combination of weather-related factors and concerns for the security of supplies from the Black Sea helped deliver five consecutive days of positive closing prices and an overall gain of around 9% from this low.

The potential for weather issues impacting crops is affecting numerous areas around the world. The US corn belt has seen dryness and drought conditions build and weekly crop ratings saw a five-point decline in US corn crop condition to 64% now rated 'good/excellent'. This is well below the 73% achieved this time last year, which brings into question the trend yield estimates from the United States Department of Agriculture (USDA).

In China, wheat in the primary producing region Henan has endured persistent heavy rain, which has led to flooding and evidence of sprouting. As well as a loss of milling quality, some crops could be abandoned, leading the government to provide multi-million-dollar aid packages for affected farmers.

The Australian Bureau of Agricultural and Resource Economics (ABARES) has released its latest crop estimates and made further cuts to Australian 2023 wheat production prospects despite recent rain. It sees the El Niño weather pattern impacting on crop potential and has subsequently reduced estimates to 26.2 million tonnes, which is a 2.1-million-tonne drop on its previous prediction and almost 13 million tonnes down on the previous year's record 39 million tonnes. Meteorologists say there is a 70% chance of El Niño developing this year.

Concerns for future Black Sea supplies have again been in focus with Russia limiting ship registrations under the export corridor deal. Ukraine has accused Russia of blocking ship registrations to all Ukrainian ports. On Tuesday, concerns were heightened following an attack on the Kakhovka dam in Eastern Ukraine. Ukraine's Ministry of Agrarian Policy and Food said millions of tonnes of crops could be lost as a result of the extensive flooding caused by the explosion. This could affect tens of thousands of hectares of agricultural land in southern Ukraine.

• Markets fail to hold on to their price gains

The Ministry of Agriculture of the Russian Federation said this week that it expects its country will produce a wheat crop of 78 million tonnes, although this is well below estimates from other analysts. Increasing heat and dryness is a potential issue for recently drilled spring wheat, but this isn't stopping exporters offering Russian wheat cheaply.

The Russian government has advised traders not to sell wheat below $240/t FOB, as observed in this week's tender to Egypt where 765,000 tonnes was offered. However, one seller offered a lower price of $229/t FOB which was quickly taken up by Egypt's General Authority for Supply Commodities (GASC). However, the volume of cheap offers brought an end to the price rally and prices fell again mid-week. Rain in the forecast for the US corn belt has added to the negative tone.

• Kazakhstan ships wheat to China

This week, Kazakhstan has announced a wheat production estimate of 16 million tonnes, which would be down on last year's 16.4-million-tonne crop. This season Kazakhstan will ship up to 9.5 million tonnes and looks set to boost future export prospects by renewing wheat sales into the Chinese market.

The country's agricultural minister said the country had signed a deal with China to export one million tonnes, some of which will be from the 2022 harvest. The USDA is less optimistic for Kazakhstan's production prospects and has reduced its estimate by 200,000 tonnes in response to dry weather, bringing its new estimate to 13.8 million tonnes.

The USDA will publish its June World Agricultural Supply and Demand Estimates (WASDE) report later this afternoon, Friday 9^th June 2023. 

OILSEED RAPE

• Rapeseed market moves upwards on weather and politics

This week, UK rapeseed values have gained £20/t in a break from recent trends, initially as crude oil prices rallied on the announcement that Saudi Arabia would decrease oil production.

However, the sharpest rise in the market this week came following the explosion and destruction of the Kakhovka dam in Ukraine, which has caused widespread flooding and increased tensions in the area. Whilst the flooding is unlikely to affect rapeseed production, it did spark fears that an escalation in the conflict would follow and could threaten the continuation of the export corridor deal which is key for supplying Europe with early season rapeseed.

Meanwhile, developments in the biofuel sector continue to impact the market as touched upon in last week's report. This week, Germany initiated an investigation into biofuels from Asia over suspicion of fraud. A new EU supply chain database that is set to be in operation by the end of the year was also announced this week – this would help track the components of biofuel content. It is anticipated that this measure should increase demand for EU feedstocks, i.e. rapeseed oil, if correctly priced.

In soybeans this week, the market has been remarkably static with three consecutive days of moves below five cents per bushel, which hasn't occurred in recent history. This has happened in the context of a market that is nervous about US weather conditions, although prospects were seen starting to improve towards the end of the week.

 PULSES

• Focus turns to new crop

With supplies of old crop peas and beans now virtually exhausted, it's a good time to focus on new crop markets. As with other commodities, forward demand for physical beans has been very limited and, to date, only a few small cargos have traded. The positive news is that the value of new crop beans represents a good premium compared to physical wheat prices and early in the trading season these premiums often decline as the volume of sales builds. The Frontier bean pool has started to trade into these premiums, representing strong values for our harvest bean pool customers. 

 FERTILISER

• AN/urea

On 24th May, the UK new season ammonium nitrate (AN) price was released and then withdrawn a few days later due to good uptake. However, there was little activity on the market last week while suppliers took stock of their available products.

New values for December to February delivery were issued this week, showing a small increase on the first prices released. The main cause for the increase is likely due to the anticipated rise in gas prices during the winter delivery period. Spot availability remains tight as some suppliers are waiting for vessels of imported AN to arrive in the UK. However, Frontier will have stocks of UK AN available within the next two weeks. Please speak to your Frontier contact for more information.

After a couple of weeks of price volatility, gas prices have now fallen once more. However, it is anticipated that they will rise over the winter period both within the UK and Europe, which raises questions over the viability of European production later in the year as costs increase. Consideration must also be given to the ongoing Russia-Ukraine conflict, which could affect fertiliser values as it continues.

The urea market both domestically and globally remains relatively quiet following the initial flurry of purchasing. We advise growers to be mindful of the Urea Stewardship Scheme deadline when purchasing urea products - these need to be used with an inhibitor after 31st March 2024. You can find out more about the Urea Stewardship Scheme in our blog 'Urea Stewardship Scheme – everything you need to know'.

Frontier also has options on nitrogen sulphur and Polysulphate. Please speak to your Frontier contact for prices.

• Liquid/UAN

As expected, this week saw the release of UAN terms into the marketplace from all UK suppliers. Terms offered allow liquid fertiliser users the opportunity to secure tank fill volumes for Crop 24 at competitive values compared to the UK AN pricing released late last month. Frontier has a full product range of nitrogen and nitrogen sulphur grades available with delivery terms through to autumn. As the window for applications of foliar nitrogen approaches, which is aimed at protein uplift on milling wheat, growers continue to have both bulk and IBC products available for prompt delivery in the marketplace.

• PKs

The PK market is still quiet and, as reported previously, we have seen a price correction on potash and phosphate of approximately £90-100/t depending on product with the possibility of slight further correction later in the year. Polysulphate has already followed the potash market in terms of a price correction. Our advice is to continue to keep in touch with 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.