WHEAT

The Black Sea remains the key supply story, with attacks on commercial vessels and grain infrastructure continuing to restrict exports. Russia has rejected calls for a pause in hostilities, while Turkey continues to push for safe navigation. Ukraine's current export routes are estimated to provide only around 50% of previous deep-sea capacity, with rail, road and Danube routes under significant pressure.

Ukrainian August wheat exports are expected at just 600,000 tonnes, taking season-to-date exports to around 1.7mmt (million metric tonnes) versus 2.6mmt last year. While Russian shipments are sharply lower. Q1 exports from the region could be around 7.8mmt below last year, increasing the need for alternative origins.

The disruption is beginning to filter through global physical markets, with Asian buyers reportedly securing at least 500,000 tonnes of Australian and Argentine wheat to replace delayed Black Sea cargos.

EU export volumes are stronger than official figures suggest. Reported exports stand at 4.3mmt. Although understated French volumes could take the total closer to 5mmt. European cash markets remain supported, particularly for 12.5% protein, as buyers replace lost Russian supply.

• Weather risk building

Weather remains supportive in several key wheat regions. Key US areas remain hot and dry, with limited rainfall forecast over the next 10 days. Southern Europe, the Black Sea and Argentina are also expected to remain warm and dry, while Northern Europe is wetter.

El Niño is becoming an increasing weather risk, with the US's leading weather agency putting the probability of a very strong event at over 90%, potentially lasting into early 2027. Australia and parts of Asia are the key areas of concern, with Australia recording its warmest winter on record and India forecasting below-normal rainfall for September.

Despite this, Australia's crop outlook has improved, with Australian Bureau of Agriculture raising its wheat estimate from 26.7mmt to 29.9mmt, although this remains below last year's 36mmt.

BARLEY

• Feed prices remain supported amid good demand

Barley continues to price attractively into the feed ration for much of the UK, helping to support demand in nearby and forward markets. Scottish markets have started to see support in the last week as a combination of strength in Northern English markets and sturdy haulage flows influence previously discounted markets North of the Border. Discounts to wheat in the Scottish feed ration remain wide, whereas Southern English barley discounts to wheat are extremely tight. In Southwest England winter feed stocks were being fed on farm in August in some cases as a lack of grass growth limited grazing. Suppressed and declining forage stocks are driving on feed demand in the Southwest as a result, with barley a key component of that into ruminant and pig compounds.

• Black Sea shipments remain disrupted despite peace efforts

It seems any attempt for peace or the resumption of Black Sea grain exports will continue to be knocked back. This week Turkey were the latest to attempt to revive the Grain Corridor Agreement from 2022, but their efforts were unsuccessful. Both Russia and Ukraine are attempting to export via other means such as road, rail, river or (in Russia's case) Baltic ports. Despite these alternative means, the export pace from both is significantly suppressed without their Black Sea outlets. During the first 22 days of August, Ukraine managed to export just 61,000 tonnes of barley, compared to 247,000 tonnes for the same period last year, a 75% decline. Both Russia and Ukraine have produced large barley crops. The United States Department of Agriculture (USDA) forecasts the Russian barley crop at 19.5 million tonnes and Ukrainian 6.1 million tonnes. However, without the export market their own domestic prices have slumped while prices elsewhere rise in their absence.

FERTILISER

The much-needed rainfall across many parts of the UK last week and over the Bank Holiday weekend appears to have stimulated welcome buying interest. At the same time, escalating tensions in the Middle East and increased hostilities between Russia and Ukraine have continued to support global fertiliser values. Prices for ammonium nitrate, urea and nitrogen sulphur products have all strengthened as a result.

The Strait of Hormuz remains heavily disrupted, while European gas prices have risen to levels not seen since late 2022, once again increasing fertiliser production costs. Conversely, grain markets have also strengthened due to concerns surrounding the Russia-Ukraine conflict. Reduced Black Sea export activity, combined with contract highs in both European and US wheat futures markets, has supported UK grain prices. This is positive news for UK farmers, improving crop values and making fertiliser-to-grain ratios more attractive. Combined with recent rainfall, stronger farm economics have led to an increase in enquiries and farmgate purchasing activity.

Egyptian urea values have continued to rise with each successive purchase, reflecting ongoing supply concerns. Looking ahead, European gas storage levels are below seasonal norms as we move towards autumn and winter. Any further disruption to liquefied natural gas (LNG) supplies from the Middle East could lead to increased volatility in energy and fertiliser markets once colder weather arrives.

There have been numerous reports in the agricultural press recently highlighting the tightening global fertiliser supply situation, which inevitably impacts the UK market. Both major geopolitical conflicts show little sign of resolution, reinforcing concerns that Frontier has been highlighting for many months. Despite these risks, fertiliser purchasing remains behind year-on-year levels across both the UK and Europe. With Carbon Border Adjustment Mechanism (CBAM) approaching, supply is likely to become increasingly constrained and potentially resulting in further price increases. Although the finer details of CBAM are yet to be finalised, it is a factor that UK buyers should be considering when planning procurement strategies.

While there is currently no shortage of physical fertiliser, other logistical challenges remain. Limited port storage capacity and ongoing haulage constraints mean the supply chain could face significant pressure if the majority of buying is delayed until spring. Suppliers are also cautious about committing to additional imports while demand remains subdued, even where storage capacity exists. Consequently, today's market is increasingly about securing product availability rather than simply chasing price opportunities. Delaying purchasing decisions may carry greater risk than in previous seasons.

Although spring application may still seem some way off, there are only around 50 working days remaining until Christmas. If buying activity accelerates suddenly, the industry could experience the bottlenecks that many are predicting, with supply chains struggling to cope with concentrated demand. Growers who have already purchased fertiliser should take delivery as soon as possible. Product on farm removes logistical risk and ensures it is available when needed.

In the liquid UAN market, the recent rainfall and the commencement of OSR drilling mean growers should now be reviewing their Crop 2027 nitrogen requirements and considering opportunities to secure UAN for Autumn 2026 tank fills and Spring 2027 applications. Maximising available storage capacity and securing a proportion of forward requirements at current price levels can help reduce exposure to future market volatility while ensuring product availability when required. Growers considering a transition to liquid fertiliser systems, particularly where tank installations can be completed this autumn, may wish to revisit the opportunity, with current UAN programmes offering competitive cost-per-hectare economics compared with solid nitrogen and sulphur grades.

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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