WHEAT

London’s November 2026 wheat contract has dropped over £10/t this week on the back of news that Ukraine and Russia are open to renewing peace talks. London opened at £204/mt (metric tonne) on Monday 19th October and is now trading around the £192 marker. Ukraine are reportedly open to discussions on a peace deal that sees retainment of 75% or more of their country’s territory. Time will tell whether this will materialise into a solid lasting peace deal or see talks break down as has been the case before. Both sides are attacking each other still.

It’s not a surprise that markets have reacted significantly to this news but lots of questions remain around how quickly Black Sea ports can be repaired and brought back online ready to resume grain exports. Traders will be keen to resume export operations as soon as possible and it’s expected great efforts would be made to resume ‘normal operations’ as quickly as possible. What normal looks like remains to be seen, 70% of export capacity could be repaired within a month or so of an agreed peace deal but 100% capacity is likely to take months to reach. Russian free on board (FOB) prices in the Black Sea port of Novorossiysk for 12.5% protein milling wheat are some $100/mt below the European FOB price at the moment but it’s inaccessible.

Whilst lots of focus will be on the Black Sea region, markets aren’t sheltered from other pressures and influences. A large Southern Hemisphere wheat crop is still on the cards with 33mmt (million metric tonnes) production forecast in Australia and 25mmt in Argentina, both of which are above average. Harvest is arriving in Western Australia where dry weather is forecast but harvest in the Eastern side where the larger percentage of their crop production comes from will be delayed by rainfall.    

Overall markets will closely watch the peace talks between Ukraine and Russia over the coming days/weeks, then global wheat markets could come under further global pressure as on paper, there’s plenty of wheat to go around still.

BARLEY

• Australian harvest starts on their bumper barley crop

Australia is set to have a substantial barley crop once again, and harvest is underway earlier than usual in the West but is delayed by rain elsewhere. The Grain Industry Association of Western Australia (GIWA) issued their October crop report late last week and reported an estimated 6.8 million tonnes for their barley harvest. This is an increase on their September report by 190,000 tonnes and, while a 6.8 million tonne crop from Western Australia would be a considerably smaller than last year’s monster 7.64 million tonne crop, it is still more than 12% higher than the five-year average. The market will be watching the Australian harvest progress with interest as it seems to have escaped any influence El Niño may have and locally there is talk of the crop having potential to increase further yet.

• Old crop comes under pressure amid smallest UK barley crop since 2011

UK barley markets have come under pressure in the last week from the wider grain complex. Global wheat markets subsided amid substantial corn crops in North and South America and yet another potential set of peace talks between Russia and Ukraine. Fresh consumer demand has started to pick up at lower prices, although a drop in farmer engagement is meaning nearby markets in particular remain supported above futures market declines. Feed demand has been strong so far this crop year, and the AHDB’s Early Cereal Supply and Demand figures confirm this. The figures released on 22nd October see an increase in feed barley demand year-on-year, despite an 867,000 tonne decline in production year-on-year following a reduction in the barley area and disappointing spring yields. Malting barley demand on the other hand is seen as declining 3% year-on-year, with further declines very possible, although the AHDB’s figure is already 22% below their five-year average.

OSR

• Bearish

November MATIF weakness reflects Rhine logistics and fund positioning: The November MATIF fell sharply in October, with low water levels on the Rhine disrupting physical rapeseed movements and increasing transport costs. Fund positioning has also been a factor, with speculative selling contributing to the wider oilseed market correction. The decline should be viewed partly as a nearby-contract and positioning issue, rather than a straightforward deterioration in the underlying European supply balance.

Global oilseed availability remains a significant limiter: Expectations of ample global oilseed supplies are limiting the potential for a sustained recovery in rapeseed futures. Although European availability remains relatively tight, competing oilseeds provide crushers with alternative sources of supply, limiting the extent to which regional shortages can drive the wider market higher.

Soybeans and Canadian canola are weighing on sentiment: Weakness across the US soybean and Canadian canola markets has contributed to the recent correction in rapeseed futures. The availability of competing oilseeds is an important bearish influence, particularly as the market asses the implications of new-crop supplies and global processing demand.

Australian canola crop approaching 8mmt adds to global supply pressure: The Australian crop is forecast to reach around 8.1mmt according to Rabobank, potentially a record harvest and well above the five-year average. This would increase export availability, adding competition for export demand and limiting the potential for a sustained recovery in rapeseed futures.

• Bullish

European rapeseed availability remains relatively tight: EU rapeseed supplies remain a key source of support, with reduced import flows limiting the availability of imported seed. EU rapeseed imports were reported to be around 11% below the same period last year. This reinforces the importance of imported supplies in balancing European crushing requirements.

The outlook for 2027 harvest is becoming a concern: Dry conditions across parts of central and south-eastern Europe have raised concerns over the establishment of the crop. Although the eventual impact on production remains uncertain, adverse establishment conditions could create an additional weather premium in forward prices if concerns persist.

Crushing demand continues to underpin the market: Demand from European crushers and biodiesel producers remains an important source of support. European import requirements and the continued need for rapeseed oil and meal provide an underlying demand base, particularly while domestic and regional seed availability remains constrained.

Black Sea supply flows remain vulnerable: Reduced Ukrainian export flows are contributing to tighter European import availability. Continued geopolitics and logistical uncertainty in the Black Sea region present a risk to the movement of rapeseed and other vegetable oils into European markets.

FERTILISER

• The risk of delayed purchasing

One of the defining characteristics of the current season has been exceptionally low forward purchasing both here in the UK and in the European market. Many growers have remained on the sidelines waiting for lower values, encouraged by the expectation that global nitrogen supply would remain plentiful. However, the market is now entering a phase where the combination of firming urea values, elevated TTF gas pricing, increasing ammonia production costs and the shortening purchase window are beginning to change supplier and buyer sentiment. Historically, fertiliser markets often experience their sharpest price movements not when supply is critically short, but when a large proportion of buyers attempt to cover requirements simultaneously. With many UK distributors and farm businesses still carrying limited cover into 2027, the market could become vulnerable to periods of rapid upward price correction.

AN production remains heavily influenced by European production costs and with exceptionally high gas values going into winter all we are seeing is curtailment of both ammonia and AN manufacturing. Gas values are unlikely to subside given we are going into colder temperatures across the European continent and the UK. Current domestically produced AN values offer a real opportunity to buy at below replacement costs but it is worth pointing out that November tonnages are becoming increasingly committed as mentioned in last week’s Frontrunner. 

Urea is now starting to show the strongest upward movement on pricing and indeed has firmed $70 over the past 10 days after a sharp correction downwards to kick start sales ex North Africa. Recent tenders and strong buying activity particularly into Indian and European markets will only provide even greater support over the coming weeks and with lower AN tonnes available, urea will begin to fill these sales opportunities. Current UK offers on urea are well below replacement values, so it is just a matter of time before we see higher pricing coming in the lead up to Christmas. UAN also continues to follow movements in both ammonia and urea markets with demand and costs increasing as we head in Q1 of 2027.

PKs and straights sales are also down year on year and with availability issues all too obvious from last season, it is critical that growers cover in a percentage of their requirements ahead of usage. Having product on the floor in the shed will offer up more reward for our buyers knowing that they have secured their product and have taken delivery rather than trying to predict any price going into the run up to spring. 

Precision soil sampling has also shown a large deficit on farm PK indexes this year largely due to lower phosphate applications and early senesced crops carrying off large amounts of potash. If we are to achieve optimum yields in 2027 then these shortfalls will need to be addressed.

Frontier’s recommendation remains to cover in 75% of all spring product and have it delivered prior to the Christmas break. Even then, we should expect delays on cargoes and the possibility of delays of up to 4 weeks thereafter.

• Carbon Border Adjustment Mechanism (CBAM)

The UK government's CBAM announcement on Friday 16th October provided further clarity on the carbon costs that will apply to imported fertilisers from January 2027, through the publication of illustrative CBAM rates and default emissions values. The measures are expected to increase transparency around future import costs and may favour suppliers able to demonstrate lower embedded carbon emissions. These figures are currently a provisional example so we must be careful not to second guess what the final figures will look like from 1st January 2027. Final drafts are expected over the coming weeks.

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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