WHEAT

The ongoing conflict in the Black Sea region continues to dominate global wheat market sentiment, with intensified fighting between Russia and Ukraine disrupting grain exports from this key supply corridor. Ukraine's agriculture minister has reiterated that alternative export routes won't reach sufficient capacity until the end of August, and even then, they are expected to handle only half the volume typically shipped through Black Sea ports. This bottleneck, alongside rumours of potential Russian port closures, sent ripples through the market yesterday, briefly buoying prices before traders tempered expectations.

Meanwhile oil market volatility, driven by fluctuating geopolitical developments in the Middle East, is adding complexity to the broader commodity landscape, with energy prices influencing agricultural markets due to their linkages to biofuel production. Crop-specific data in the US reveals mixed conditions. The United States Department of Agriculture (USDA) reported a slight improvement in spring wheat ratings, now at 55% ‘good/excellent’, up from 53% last week. However, 42% of the US spring wheat crop remains affected by drought. On the other hand, forecasts for timely rains across the Midwest have pressured corn and soybean prices, with StoneX projecting a robust US corn yield of 184.8 bushels per acre. This contrasts with the tighter wheat supply scenario globally, particularly as Black Sea disruptions coincide with logistical issues in Argentina, where a recent strike by maritime pilots temporarily paralysed grain exports.

Market prices on Wednesday 5th August, reflected these dynamics. Chicago Board of Trade (CBOT) September soft red winter wheat closed up 3 and three quarter cents at $6.42 quarter per bushel, while Kansas City hard red winter wheat gained 6 and a half cents to settle at $7.13 and a half. In contrast, Minneapolis spring wheat slipped one cent to $6.83 and a half, as better US crop ratings weighed on prices. Over in Europe, Euronext December wheat rebounded from a three-week low, closing up 1.3% at €231.50 per tonne, with earlier gains pared back as traders downplayed the likelihood of Russian port closures. London November 2026 wheat futures  are hovering around the £200/t mark. The Algerian state grains agency’s purchase of around 720,000 tonnes of milling wheat also added some support to European prices.

Looking ahead, the market remains finely balanced between bullish supply-side concerns and bearish external pressures. While Black Sea tensions provide a floor for wheat prices, high EU wheat prices are curbing demand from North African and Middle Eastern buyers, who are also receiving their own harvests. Russian and Ukrainian wheat remains the cheapest in export markets, with Russian 11.5% protein wheat quoted at $222-$225 per tonne FOB, well below French and Romanian offers. In summary, wheat markets are navigating a complex mix of geopolitical risks, weather developments, and export dynamics. With the Black Sea region still in flux and the US crop outlook improving marginally, traders will be closely monitoring export flows, tender results and weather forecasts for further direction.

BARLEY

• Feed barley demand in the nearby, consumers wait out forward markets

In the last week barley markets have been somewhat volatile as they have largely tracked wheat markets that have been heavily influenced by geopolitics, weather and global demand dynamics. For the feed consumer there seems to be no hurry in forward markets, instead purchasing only near-term requirements as needed. Consumers seeking nearby coverage are finding the market well supported, especially in England and Wales, following the end of harvest selling. Discounts versus wheat of £15-17, places barley competitively in the feed ration, while a wider discount than that in Scotland will see the Scottish feed consumer heavily into barley once again.

• Market relaxed despite disrupted spring barley crops

Spring barley harvest has continued and has now reached Scotland, where the market expects to see the best of the UK crops. Spring yields in East Anglia and the South of England were poor overall, as expected considering the heat and lack of rain throughout the growing season. At this stage, the UK barley crop has shrunk, with the area sown being at the lowest since 2012. There’s still crop to be harvested but for the moment, the UK barley crop looks relatively tight this year. Like feed consumers, maltsters are in no rush to buy. With weak demand for malt and plenty of carry-over stocks available, they believe that they can afford to wait before purchasing from the new harvest. The market still has the Scottish spring crop to come, as well as crops elsewhere in regions like Scandinavia. Expectations for both crops are good.

OSR

• Bearish

Large global oilseed supply outlook continues to weigh on markets, as expectations for another sizeable global rapeseed/canola crop remain the dominant fundamental. Strong production prospects across Canada, Europe and Australia continue to point towards comfortable global availability, with Canadian canola supplies forecast to increase alongside expanding domestic crush capacity.

The European harvest is progressing with generally solid yields. Harvest activity has accelerated across Europe, with early yield reports broadly confirming a larger crop than last season. While hot and dry conditions have trimmed some sunflower and rapeseed estimates in parts of Eastern Europe, overall EU production remains significantly improved year-on-year.

Continued harvest pressure on selling and ample new-crop supplies are limiting price rallies despite occasional geopolitical support.

• Bullish

Low Rhine water levels are increasing logistical costs. The persistent low water levels on the Rhine are restricting barge loadings across key inland transport routes in Germany and the Netherlands. This is increasing freight costs and slowing the movement of rapeseed, vegetable oils and biodiesel feedstocks to crushers and end users, providing near-term support to regional prices despite comfortable overall supplies.

Black Sea conflict continues to support risk premium. Ongoing Russian attacks on Ukrainian port infrastructure, rail networks and agricultural facilities continue to create uncertainty over export logistics. Although grain and oilseed exports have remained relatively resilient, the market continues to price in the risk of disruption to sunflower oil exports and regional oilseed supply chains, underpinning the wider vegetable oil complex.

China's steady import demand for soybeans and canola continues to underpin the global oilseed complex, helping offset some of the bearish influence of large global production. 900,000t of US soybeans traded in to China over the weekend.

• View

Logistics and geopolitics offset abundant supplies. While another large global oilseed crop remains the overriding bearish factor, logistical constraints on the Rhine and continued uncertainty surrounding the Russia-Ukraine conflict are preventing prices from fully reflecting the comfortable supply outlook. Both factors are supporting nearby physical premiums and contributing to periodic bouts of volatility.

Black Sea exports remain the key geopolitical watchpoint. Markets will continue to monitor Russian attacks on Ukrainian infrastructure and the resilience of export routes. Any escalation that materially disrupts sunflower oil or oilseed exports could quickly tighten global vegetable oil balances and support rapeseed prices.

European logistics deserve close attention. Should dry weather persist and Rhine water levels fall further, inland freight costs could rise further, tightening regional supplies and supporting basis levels even if futures remain constrained by ample global production.

FERTILISER

• Market overview

Fresh geopolitical developments and resurgent import demand have returned volatility to the forefront of nitrogen markets this week. India’s National Fertilisers Ltd has launched a new tender for one million tonnes of urea. While European gas benchmarks have strengthened sharply and Middle East shipping risks persist. Together these factors have shifted the balance of risk firmly upwards.

• Global drivers

India’s latest urea purchase tender, considerably smaller than the 1.7 million tonne tranche launched in late May but still significant, has reawakened global price momentum and has the possibility of reshaping trade flows short to medium term. Bids are due in mid-August with shipment windows confirming continued urgency in New Delhi’s replenishment strategy. For UK buyers, the tender tightens available export tonnes from traditional Middle East and North African supply corridors at a sensitive point in the purchasing calendar. Time will tell whether China, which have been building some urea inventories, will export to India on this occasion given their protectionist stance on agricultural inputs.

Title Transfer Facility (TTF) front month gas settled at 59.44 Euro’s/MWh, at time of writing, approximately 30% higher over the past month. This feedstock cost escalation feeds directly into marginal production economics for ammonium nitrate and calcium nitrate, reducing to probability of price softening through Q3. The low stocks of gas within the EU and UK are likely to underpin continued market volatility into Q4, with values remaining highly responsive to changes in supply, demand and weather conditions.

Despite diplomatic progress reported in June toward an interim US-Iran framework, physical supply-chain normalisation through the Strait of Hormuz remains incomplete, if not non-existent. Marine insurance and freight differentials on Hormuz, originating cargoes continue to price substantial risk premiums whilst many shippers refuse to enter the region for fear of attack. Gulf economies accounted for 25% of global nitrogenous fertiliser production and exports in 2025. While persistent trade and logistical restrictions compound physical disruption we should expect and prepare for supply problems into Q3 and Q4.

• UK market developments

Domestically produced ammonium nitrate has firmed £50 to £60/t above levels seen in early July, with offer volumes constrained. Several suppliers have moved to price on application terms (POA), reflecting the rapid replacement cost reassessments having to be done. Liquid fertilisers values have strengthened in parallel.

The price correction observed through June driven by improved spot availability and temporary subdued buying has proven short lived. Early August purchasing activity, though partly muted by ongoing harvest operations is increasingly focussed on short- term buying for usage rather than a tactical deferral to buy for 2027.

UK Potash costs remain comparatively steady and phosphate values hold firm, with sulphur availability constraints continuing to restrict production flexibility.  Growers planning autumn oilseed rape establishment and low nutritional index ground for autumn cereals  should prioritise starter fertiliser enquiries given the concentrated seasonal demand ahead.

• Strategic considerations for growers

With UK average spot prices for August and September delivery reflecting these upstream pressures and TTF gas showing sustained elevation, the margin protection case for staged purchasing strengthens. Grain values have improved in the past two weeks, offering some absorption capacity against input costs for this coming season.

The “little and often” purchasing discipline remains appropriate. Attempting precise market timing in current conditions carries heightened downside given POA volatility and rapid offer withdrawals risk. Growers with uncovered tonnage requirements should maintain a close contact with their Frontier representative to discuss a strategy and plan to reduce the risks to their businesses on issues that we have no control over whether that be war, energy, or the United Kingdom’s Carbon Border Adjustment Mechanism (CBAM) regulations into January 2027.

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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