WHEAT

• Global oversupply weighs heavily on futures markets

Chicago wheat futures extended their decline this week, with the benchmark July contract closing at $5.80 per bushel, marking six consecutive sessions of losses and a fresh two-month low. Abundant supplies from Northern Hemisphere harvests and weak demand for US exports remain the dominant bearish drivers. The US winter wheat harvest is gathering pace, with improved rainfall in drought-hit areas further depressing price sentiment. Despite the smaller US crop, global markets are focused on surpluses elsewhere, including Russia and Ukraine, where production forecasts have been revised higher. Russia’s wheat crop is now pegged at 91.5 million metric tonnes (mmt), up from previous expectations of 90 mmt, while Ukraine’s harvest estimate has risen to 21.7mmt.

European markets mirrored the bearish tone, with Euronext September wheat futures briefly dipping below the €200 per tonne mark before recovering slightly to close at €201.50. Improved weather conditions across Western Europe and the UK have bolstered crop confidence, reducing the weather-related premium that supported prices earlier in the season. Against this backdrop, speculative funds have continued to liquidate long positions, contributing to the downward pressure across global wheat contracts.

• Geopolitical risks offer limited support amid harvest pressure

Geopolitical developments in the Black Sea region provided only fleeting support to wheat markets. Reports of a sea drone detonation at Romania’s Constanta port raised concerns over potential supply chain disruptions, but these fears were quickly overshadowed by the advancing harvest and rising Black Sea export capacity. French wheat ratings have also declined from 78% to 76% ‘good/excellent’ following late-May heat stress, but rainfall across Europe has stabilised the outlook for the coming harvest. 76% ‘good/excellent’ is still up from 69% last year.

China’s excessive rainfall has reportedly damaged between 4.8 mmt and 10 mmt of wheat, potentially increasing import demand. However, muted Chinese buying of US wheat has kept the market subdued with Brazil continuing to hold a pricing advantage in key export tenders.

• UK pricing follows the bearish sentiment

Improved crop conditions following recent rainfall are easing domestic price strength as harvest approaches. UK growers face increasing competition from export surpluses in the Black Sea and South America, particularly with global replacement costs under pressure from falling futures markets. In the past week, LIFFE’s Nov 2026 contract fell back to April 2026 levels, hovering around the £180/t mark with the carry to the May 2026 contract approximately +£10/t.   

As Northern Hemisphere crops flood the market, UK wheat values will continue to be shaped by regional logistical dynamics and the competitiveness of Black Sea exports. Growers should remain vigilant as the supply-led slide continues to dominate global sentiment, with little evidence of near-term price recovery.

OSR

• Strong biodiesel demand and Black Sea processing tighten supply

Paris rapeseed futures (August 2026) rose to €533/t (£460-465/t) marking 13-month highs and up over 9% year-on-year. This rally is underpinned by robust EU biodiesel demand, which accounts for two-thirds of rapeseed oil consumption and geopolitical support from Middle East conflict. The Black Sea region, particularly Romania and Ukraine, has shifted toward domestic processing and biodiesel production, reducing raw seed export availability to the UK and EU. Romania posted record rapeseed output at 2.6mmt, while Ukraine’s export duty has incentivised domestic crushing. This tightens global supply chains and supports UK domestic prices.

Sterling’s strength at GBP/EUR 1.15-1.16 continues to limit the translation benefit of these Paris futures gains for UK growers, capping upside potential. However, with Canadian exports redirected toward China following tariff reductions from 84% to 15%, competition from Canadian canola in European markets is reduced. This structural shift further supports UK rapeseed markets heading into the 2026 harvest.

• UK crop ratings remain firm despite weather stress

UK winter OSR crop ratings stood at 78% ‘good/excellent’ as of late May, a significant recovery from last year’s 52% despite recent weather challenges. Dry conditions and high temperatures exceeding 30°C in late May caused visible crop stress, with leaf rolling observed. Yield forecasts remain firm at 3.3-3.7 t/ha, supported by improved autumn establishment and lower cabbage stem flea beetle pressure. The planted area for harvest 2026 rebounded 24-30% to 285-316 thousand hectares after hitting a 42-year low in 2025.

While June’s unsettled weather is expected to provide much-needed moisture, prolonged rainfall risks delaying harvest timing and reducing seed quality. UK production is forecast to exceed 1mmt, up from 896kt last year, but remains structurally below the 10-year average by over 40%. This import dependency continues to support domestic prices, which are quoted at £400-450/t ex-farm.

•  Global production records temper price gains

The United States Department of Agriculture (USDA) May World Agriculture Supply and Demand Estimates’ (WASDE) report projects record global rapeseed production at 97mmt for 2026/27, with significant increases in India, Russia and the EU. EU production is forecast at 21mmt, its highest in a decade, while India is expected to exceed 12mmt. These record outputs create downside price risk if favourable weather persists globally.

Despite ample global supplies the EU crush margins remain firm, driven by biodiesel mandates and energy market linkages. The recent US Environmental Protection Agency (EPA) expansion of renewable fuel obligations for 2026-27 has boosted North American oilseed demand, adding structural support to global vegetable oil complexes. However, with the UK market still reliant on imports and domestic supply constrained, prices remain well-supported barring further adverse weather shocks.

FERTILISER

• Market Overview

Fertiliser markets remain firm but volatile, with pricing continuing to be driven primarily by energy costs and global disruption rather than seasonal demand. Nitrogen values are supported by elevated gas prices and ongoing supply uncertainty, while phosphate markets remain tight and potash largely stable.

Imports into the UK remain a key area of uncertainty, with product often arriving from mixed or unclear origins. This leaves shipments potentially exposed to disruption or delays linked to ongoing conflict in the Middle East and associated shipping routes.

Global demand remains subdued, with many regions significantly behind typical purchasing patterns and large volumes still to be covered.

• The Current Situation

The ongoing conflict in the Middle East continues to be the primary driver of fertiliser markets. Disruption around the Strait of Hormuz is still restricting global trade flows, with vessel movements below normal levels and shipping risks remaining high. While limited tanker movements have resumed, these are operating under heavy security and the situation remains fragile. This instability is keeping freight costs and insurance premiums elevated, adding further pressure to fertiliser delivered into the UK.

At the same time, the Russia–Ukraine conflict remains an important underlying factor. Ongoing attacks and damage to Russian infrastructure and production facilities are creating additional supply risk, limiting availability from a key global exporter, and adding further uncertainty into the market.

Energy markets remain critical. European gas prices (TTF) have eased slightly but are still elevated compared with historic norms, continuing to support nitrogen production costs. As a result, ammonia values remain firm underpinning the wider nitrogen market.

Urea markets have steadied following recent volatility, supported by ongoing demand from key importers such as India. However, overall global demand remains subdued, with many regions holding back on purchases despite significant forward requirements still to be covered.

China has been a key feature this week. Producers briefly lowered urea values to floor level in an attempt to stimulate demand, but these have already edged back up again. Despite this, little meaningful business has been concluded, highlighting a continued gap between seller expectations and buyer appetite. While availability is increasing, it has yet to translate into any real downward pressure on the market. Some softer numbers have started to circulate in the UK, but these remain limited and have yet to shift overall market sentiment.

There is also a growing concern that large volumes of deferred demand are building globally. Should buyers return to the market at the same time, there is a risk that prices could move higher quickly as suppliers react to a sudden increase in demand.

In the ammonium nitrate (AN) market, supply remains relatively tight across Europe. Production continues but availability is limited and producers are maintaining firm positions, due to sustained gas costs and a lack of surplus tonnes. This continues to support AN values and reduces the likelihood of any significant short-term easing.

Phosphate markets remain firm due to tight sulphur availability linked to conflict in the Middle East, while potash continues to trade steadily, reflecting weak demand across the UK and European markets.

• Summary

For UK growers, the key takeaway is that the market remains driven by external factors rather than fundamentals. Nitrogen prices are holding rather than falling and there is currently no clear driver for a significant drop in the short term.

While China is signalling increased availability, the lack of confirmed business shows that additional supply is not yet translating into price pressure. At the same time, ongoing geopolitical risk, elevated energy costs and high freight rates continue to provide strong support.

With ammonium nitrate supply relatively tight, the overall nitrogen market remains well supported heading into the next buying window.

A phased purchasing approach remains the most practical strategy, managing exposure in a market that remains highly reactive to global events.

Please speak to your Frontier advisor 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.

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