WHEAT

• Short covering gives a boost 

The backdrop to the current bearish world wheat market is one where managed money traders sit with huge, short positions in world wheat futures markets. This leaves them vulnerable to unexpected events that potentially impact of the supply trade industry, and we saw an example of that early this week. The weekend attacks on Russian airfields by Ukrainian drones triggered a wave of short covering and helped lift futures prices. London wheat futures climbed £4 up from last week’s contract lows but made no more than that and quickly slipped lower again.  

There seems to be no negative impact on Black Sea supply chains and Russia is on the eve of another significant wheat crop. One trade estimate is as high as 90 million tonnes, although most seem to think just above 80 million tonnes is most likely. Russian wheat exporters no longer have controls or limits on prices for the next international tender and their enthusiasm for market share is likely to see very competitive offers. 

Ukraine is pushing back on the new quota on its wheat exports imposed by the EU but said it would aim to extend food processing and reduce exports of raw materials as those preferential EU trade terms end. The Ukrainian agriculture minister, Vitalii Koval, said that according to the most pessimistic estimates, the Ukrainian total grain harvest could be 10% down on the year at 51million tonnes compared to 56.7 million tonnes in 2024/25. However, wheat production is seen in the range 20 to 22 million tonnes versus 22.7 million tonnes last year. Temperatures in eastern Ukraine and southern Russia are set to rise to 35° Celius into the weekend which, if prolonged, could prove damaging.  

• US prospects turn upbeat 

Last week, US traders were surprised to see a step back in crop condition for US wheat. However, this week the crop progress report presented a more encouraging picture for output. Winter wheat condition jumped two points on the week to 52% good/excellent and is ahead of last year’s 49%, with 3% of wheat harvested. Spring wheat at 95% planted five points ahead of average jumped five points on the week in condition to 50% good/excellent, although it remains well below last year’s 74%. Corn at 93% planted was the same as average and a point up on condition on the week to 69% good/excellent compared to 75% last year. Overall, the encouraging picture saw the Chicago Board of Trade (CBOT) prices fall lower. 

President Trump was due to have talks with China’s President Chi regarding the ongoing trade dispute. US farmers will welcome tariff-free access to China, with large crops coming. Parts of China have endured record high temperatures, damaging yield and leaving the United States Department of Agriculture’s (USDA) record China wheat production estimate of 142 million tonnes unlikely. Whether there is future scope for imports remains to be seen.  

• EU shipments continue to drag 

The official EU weekly wheat exports were up 318,000 tonnes and reached 19.13 million tonnes. The pace on these numbers is almost 10 million tonnes behind last year’s 28.76 million tonnes, but the official number is way below actual and reportedly 900,000 tonnes behind on France alone. A shipment of French wheat for sales to Egypt made in April appear to be delayed and fresh trade is thin as the old crop season ends this month. The Balkan region new crop wheat harvest looks set to start around 20th June. Wheat production in this area is expected to be heavy, and it is traditionally cheap harvest sellers of its exportable surplus. 

BARLEY 

• Old crop feed barley demand remains 

There is currently an east/west split in the barley market, with demand into the M5 area remaining good, chasing the limited supply left. In the east of East Anglia, barley is only worth around £140 ex-farm; £20/t less than the M5 corridor. In the west, barley is only £7-8/t under feed wheat prices. If growers have anything left down there, it is recommended to sell any balances left in store, as new crop values are under pressure. 

• Harvest approaches 

There should be new crop supplies of feed barley in East Anglia in useable volumes from 7th July, in southern and western England from 14th July, and in South Yorkshire and North Lincolnshire from around 20th July. In the Scottish borders from 25th or 26th July, we think we will see barley cut. Its maybe worth sampling six-row hybrid winter barleys for kg/hl weight as moisture at grain fill has been more of a challenge than normal. 

• Prices for new crop feed barley limited by wheat. 

Wheat futures seem to be unable to rally much over £180/t for November at present, capping the prices feed barley can make. At only a £15/t discount to wheat, barley is not attractive in chicken diets and is being removed. It remains interesting in cattle diets but in a more limited way than crop ‘23 and crop ‘24. Only with pigs does it remain at full inclusion. With more failures likely this season on malting barley parcels due to quality, there will be more supply of feed coming from this direction. Growers are advised to think about fixing the feed base on their Laureate and Planet crops in England based on a proportion of their tonnage, as if feed wheat struggles to rise, so the downside risk of feed barley increases. 

OILSEEDS 

The rapeseed market is currently lacking clear direction. Traders continue to assess the impacts of a potential reversal in Trump’s tariffs and what effect current weather is having on global crops.  

In Europe, recent rains have provided much needed moisture for Northern European and UK rapeseed crops, whilst Ukraine has remained dry. Lack of rain is also true for Australia, inhibiting the expected level of canola plantings there. Globally, production levels for new crop should be like the current crop thanks to an increased area grown in Europe. Canadian canola is currently too expensive for European markets as it is finding enough demand closer to home, with biofuel markets in the US feeling more confident with future regulation.  

In the UK, new crop sellers have been found when £400 ex-farm at harvest has been available. Although we are currently around £15 lower than that value, the feeling now is that remaining selling will come much closer to harvest. The crop condition here is generally regarded as good and set for a slightly earlier harvest than normal, all factors remaining the same. 

FERTILISER – NEW SEASON FOCUS 

• Turbulent market dynamics continue 

Over the past three years, the global fertiliser industry has faced significant disruption, driven largely by energy price volatility linked to geopolitical instability. This situation has now been compounded by the introduction of EU sanctions on Russian fertiliser imports. 

In the lead-up to the 2024 season, market expectations for ammonium nitrate (34.5% N) hovered between £250-280 per tonne. However, prices were released at £330 per tonne and the entire market sold out within 48 hours. Over the following 12 months, ammonium nitrate prices rose by £60/tonne, while urea surged by over £120/tonne. 

A downturn in demand during the fourth quarter of 2024 triggered widespread production cutbacks across the UK and Europe. Once production is curtailed it is not restored, and this resulted in significant supply pressure when demand rebounded in spring 2025. 

• Trade and tariffs 

On 22nd May 2025, the EU approved sweeping new tariffs on fertiliser imports from Russia and Belarus, effective 1st July 2025. These included ammonium nitrate (at €40/tonne in year one and escalating to €315/tonne by year four), and phosphates or DAP (at €45/tonne in year one and rising to €430/tonne by year four). Both categories remain subject to the existing 6.5% import duty.  

Russia previously supplied over 30% of the EU’s fertiliser needs. These sanctions will reshape supply chains dramatically, causing product shortages, particularly for straight nitrogen and nitrogen-sulphur grades.  \ EU producers are now re-evaluating export commitments, favouring domestic and EU countries with stronger returns. As a result, exportable volumes to the UK are expected to decline, further tightening domestic availability. 

Parallel tariff policies in the US are also reshaping global trade flows, increasing competition and limiting availability in traditionally well-supplied regions. 

• Energy and production constraints for AN/urea 

Persistent energy uncertainty in Europe has led to permanent shutdowns and production suspensions across multiple EU facilities. For example, Achema in Lithuania, a key ammonia producer, has halted operations. With 120,000 tonnes typically destined for the UK, this poses a direct risk to UK supply. While ammonia imports are possible, high logistics costs and local prioritisation will limit availability. 

The Middle East is also seeing similar pressures when it comes to production. Egypt, a major urea supplier to Europe, is now seeking emergency liquefied natural gas (LNG) imports to cope with extreme energy shortages. In the past 10 days, six of Egypt’s urea plants have halted production, with the remaining two operating at 70% capacity, the minimum viable level. Natural gas is being redirected for domestic cooling demand amid peak summer conditions. 

Internationally, prices have firmed due to reduced production and added demand pressure, particularly from India. China has announced it will export 2 million tonnes of urea over the next 12 months for the first time in two years. However, this volume, mostly prilled and restricted from Indian markets, will have little impact outside of Asia. 

The UK fertiliser market remains highly exposed due to its reliance on imports. Domestic production is minimal, with CF Fertilisers (Nitram) and ICL (Polysulphate) being the only significant producers while all other key nutrition products are being imported. As an island nation, the UK must now compete more aggressively with international buyers to secure adequate supply, at a time when trade flows are being rapidly redirected for maximum financial return for producers. 

• Overall market outlook 

Based on the above market influences, the outlook for fertiliser markets remains challenging, with multiple compounding factors driving volatility and supply uncertainty.  

Those buying fertiliser in the UK should expect a tight supply, elevated pricing and an increased competition for product in the 2025/26 season. Forward planning and proactive procurement strategies will be essential on farm.  We advise not to leave buying until the new year, as the situation could be worse than spring 2025. If demand drops off, plants will turn down and more pressure will build on supply. 

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. 

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