WHEAT

• Weather worries and higher prices 

Wheat prices rallied this week as a result of an increasing number of weather concerns. The Chicago Board of Trade (CBOT) wheat futures rose sharply on Tuesday, reaching a two-week high and registering a near 8% gain in value from the contract low on 13th May. Speculative traders had built a short position in US and Paris wheat futures in excess of 10s of millions of tonnes, leaving them sensitive to crop issues. Traders were surprised to see the US weekly wheat crop condition drop two points on the week to 52% good/excellent, although this is still up on the previous year’s 49%. The French wheat crop condition also slipped one point lower on the week to 73% good/excellent, coupled with concerns for the impact that prolonged dryness had on wheat crops in north Germany, North Poland and Scandinavia. 

There are also increasing reports of crop damage in Russia following extended periods of dryness and spring frosts. The largest grain producing region Rostov declared a farming emergency following Voronezh and Belgorod which had done the same. 

The Southern Hemisphere is not immune from issues. Western Australia remains dry whilst in Argentina corn crops are threatened by excessive May rains. 

Further afield, Chinese weather forecasters issued warnings for heat and high winds, with temperatures set for up to 40⁰C this week in the major wheat producing province of Henan. However significant any yield loss might be and whether that leaves China needing to increase its wheat imports in the 2025-26 season remains to be seen.  

During the 2023-24 season, China imported over 13 million tonnes of wheat, but this season that’s dropped to just 3 million tonnes, and the lack of international trade added to the market weakness in recent weeks. The United States Department of Agriculture (USDA) sees China’s 2025-26 wheat production reaching a record 142 million tonnes, which looks a little optimistic. 

• Analysts upbeat on EU output 

Analysts at Strategie Grains increased its EU wheat production estimate by 1.7 million tonnes, bringing it to 129.8 million tonnes, 14.7% up on the year. Improving output for Spain, Romania and Bulgaria led to the increase. Spain is likely to harvest record crops having experienced weather patterns through the growth cycle more akin to those typically in the UK, meaning plenty of rain. While traditionally the EU’s main grain importer, Spain may need to ship some. There are concerns the dryness could leave lower crops in Northern Europe if rain doesn’t arrive in good time. Strategie Grains made the comment that several million tonnes could be lost if it stays dry, but they did not expect that to be the case.  

• Saudi buys wheat  

Saudi Arabia confirmed the purchase of 621,000 tonnes of milling wheat at prices ranging from $248 to $256, including freight for execution in September and October, and likely to be sourced from the Black Sea area.  

Weekly EU wheat exports, however, were a sobering statistic with just 197,000 tonnes recorded as being shipped in the week ending 18th May, taking the cumulative to 18.454 million tonnes compared to 27.889 million tonnes last year. The numbers may be incomplete and up to 1.5 million tonnes behind, but the pace is still poor with no sign yet of vessels expected in French ports to load wheat destined for Egypt. 

BARLEY

• Feed barley buyers active despite a narrow discount to wheat

Old crop feed barley prices remain supported by a ruminant sector continuing to supplement feeding, as grass growth has been negatively impacted by the recent dry weather. This unanticipated late season support is a welcome bonus for old crop where export business is mostly concluded. Using short-term covering to fill remaining shorts seems to be the strategy of choice for old crop, for both merchants and consumers.

New crop is starting to see an increase in buying interest from consumers this week, despite feed barley prices still being relatively narrow compared to wheat. Feed barley new crop discounts to wheat remain in the £15-17 range today depending on location, and new crop consumer activity is starting to become more widespread throughout most of England, although the East of England and Scotland continue to be quiet.

• Malting market nerves ease with forecasted rains

The recent rally in new crop malting markets has been halted this week. Support was driven by nervousness in the market over a lack of rainfall and declining crop conditions, whereas forecasted rainfall over the UK and Northern Europe has seen buyers gain renewed confidence in the coming crop. Of course, the key watchpoint will be if the rains materialise and if they have the desired effect on crop conditions. Farmers remain nervous and unwilling to commit to new crop contracts whilst question marks remain over yield and quality.

OILSEEDS

MATIF rapeseed rallied to over $490/t again and the persistent dry weather is leading to declining production ideas. Frost impact across Eastern Europe is still a source of uncertainty; many farmers have already sold a high share of their new crop so encouraging further sales will be a challenge.

EU rapeseed meal imports fell sharply by 71% year on year in the last quarter, reaching just 54,000 tonnes. Since the introduction of a 50% import duty on Russian and Belarusian shipments on 1st July, cumulative rapeseed meal imports have declined by 500,000 tonnes. Sunflower meal arrivals also dropped significantly, down 26% year on year to 960,000 tonnes in January-March. In contrast to the declines in rapeseed and sunflower meal, EU soya imports have risen sizably so far this season.

The Argentine government has confirmed that effective 1st July, export taxes will increase as previously signalled. The soybean export tax will rise to 33%, while soya oil and meal will be taxed at 31%, up from the temporary reduced rates of 26% and 24.5% respectively, which were in place from mid-January to the end of June.

The outlook for US biodiesel demand remains hopeful, contingent on political support for the implementation of Z45 tax incentives.

PULSES

• Feed beans

Export feed bean demand is now relatively complete for old crop. There hasn’t been the demand we expected from the fish food industry this season, mainly due to beans being expensive against other sources such as high protein wheat.

Looking towards new crop export, there are no serious buyers as UK expectations continue to be more expensive than what that the Baltic will offer. This is typical for this time of year, and as we get closer to harvest this is sure to change as beans discount themselves for the export market.

Domestically, there are still opportunities for the July-August period, however, there are no supply worries. This has caused the bean price to spike in previous years. There are ample beans to cover the last of the old crop demand. Looking towards new crop, very few beans have been sold. They continue to look expensive against other protein sources, so will not feature in the winter run if the home doesn’t need to rely on them.

Like with other commodities, we continue to be on weather watch, although beans are still looking okay today despite the dry weather.

FERTILISER

• Urea/AN

News has come through this week that Chinese exports will resume after a two-year absence on a limited capacity, albeit full details have yet to filter through. This story, as well as cuts to production in Egypt due to gas shortages, has given urea producers a firmer market to work on with sales rising by $20 over the past week. UK urea offers have dissipated for the time being as we digest the fall out, as well as look for some direction in terms of where ammonium nitrate offers for the new season will land.

Gas values continue to remain firm both here and in Europe and are indeed higher than 12 months ago. Dry weather, stressed crops and lower grain values have perhaps lessened any appetite to issue terms from domestic suppliers. This weekend's forecast for some much-needed rain will no doubt improve crop prospects and may tempt some offers to come into the market over the next two weeks.

• UAN/Liquid

With the welcome news of unsettled weather conditions in the short-term forecast, growers are reviewing on-farm stocks and purchasing requirements ahead of final nitrogen and nitrogen sulphur top up applications on cereals and oilseeds.

Demand for foliar products - either aimed at targeting yield at pod fill in oil seed rape, or quality specifications in milling wheats - has increased in recent weeks. Products are available for prompt delivery to meet crop demand in either IBC or bulk depending on farm storage capacity.

As the final soil-applied UAN applications are completed and foliar applications are planned, at this point in the season many growers will begin reviewing their current crop nutrition systems ahead of purchasing for crop ‘26. Those looking to apply a wide range of products to full bout widths have access to an extensive portfolio of NPK, N and NS grades, along with independent fertiliser storage. To discuss the Frontier liquid fertiliser offering and how it would suit your farming business please contact your local representative.

Purchasing at present is primarily focused on the spot UAN market, with suppliers biding their time before coming with firm offers for next season.

• Straights/PKs

Potash values continue to remain firm, mainly on tight supply into the UK but also record sales globally. Forecasts going forward would suggest that potash products could firm further as we enter the third and fourth quarter. Phosphates also remain firm on strong demand, but one glimmer of hope is China’s possible re-entry to phosphate exports. News filtering through regarding proposed EU tariffs on Russian product will certainly keep a firm sentiment on P&K. It's expected that if ratified, they will be implemented on 1st July this year and increase in value each year after. UK Russian sanctions will remain in place for the foreseeable future unless a political breakthrough is managed on the Ukraine war. Our imports will be limited to other global producers without Russia and Belarus for the time being. On the plus side, sterling, dollar and euro exchange rates favour our imports short term**.**

Please speak to your local Frontier contact or email us at info@frontierag.co.uk  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 to ensure you always have the latest market insights - just complete the form below.