Category: Arable

Combinable Crop Market Outlook

Global Position

With results from the Northern Hemisphere harvest (which accounts for about 80% of the global grains harvest) now becoming available, forecasts of global grain supply and demand are being refined with some actuals.  The latest figures from the International Grains Council (IGC) are presented in the table below for the new 2024/25 marketing year (2024 harvest), alongside the last month’s figures.

World Grain Supply and Demand – source: IGC
Marketing Year –

UK harvest –

 21/22

2021

 22/23

2022

 23/24

2023

 24/25 (2024)

Aug       Sept
m tonnes WHEAT
Production 780 804 795 799 798
Usage 784 794 807 803 803
End Stocks 274 284 272 266 267
Stocks/Use Ratio 34.9% 35.8% 33.7% 33.1% 33.3%
Stocks: Main Exporters 62 70 63 59 61
m tonnes MAIZE (CORN)
Production 1,222 1,163 1,227 1,226 1,224
Usage 1,213 1184 1,223 1,229 1,230
End Stocks 298 277 281 277 276
Stocks/Use Ratio 24.6% 23.4% 23.0% 22.5% 22.4%
Stocks: Main Exporters‚ 56 47 54 58 57
m tonnes SOYABEANS
Production 357 376 393 419 419
Usage 360 369 385 406 406
End Stocks 54 61 69 82 82
Stocks/Use Ratio 15.0% 16.5% 17.9% 20.2% 20.2%
Stocks: Main Exportersƒ 18 16 19 29 28
22/23 figures estimates; 23/24 forecasts   Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US    ‚ Argentina, Brazil, Ukraine, US    ƒ Argentina, Brazil, US

 

It shows that the total wheat and maize production estimates are not changing vastly overall as the various nations’ harvest figures are counted up.  However, within the figures, the European crop is declining and the US, Australian and South American crops are being revised upwards.  This makes marginal overall change but advantages the European markets with additional surpluses further away from our markets; making them dearer to ship to here.  Meanwhile, soybeans have not changed month on month.

Total global grain production estimates now sit at 2,315 million tonnes, or 2.3 billion tonnes.  This is the largest crop the world has ever produced.  We should not be surprised or impressed with records, as demand rises annually with more mouths to feed and ever-hungrier consumers.  Despite harvesting more than ever before, stock levels are likely to decline this year as consumption rises have outstripped production increases.  Yet, the ability of our industry to provide sufficient should year-on-year should offer food for thought for those expecting imminent mass starvation because of resource loss.  It might happen, but it is clearly not inevitable.

Domestic Situation

The combinable harvest 2024 is now all-but complete in the UK – apart from some areas in the far north, and some later-harvested spring crops including beans and linseed.  Harvest progress has slowed in the last week, with the heavy rain having hampered growers’ combining.

Overall yields for winter cereals and oilseeds are lower than average – but, it appears, by less than most people anticipated back in, say, March.  Nature, once again has compensated remarkably well since the appalling winter weather; of course with the help of agronomists and farmers.  Harvest performance, in terms of yield and quality variation is inevitable each year, but this year, the ranges in both are unsurprisingly greater than usual.  Spring crops have faired better, with both yield and quality, especially in the North of England and Scotland.  Some spring crops such as spring malting barley are likely to be the best performing combinable crops financially this year on many farms.

The unexpected and extreme weather conditions will have disadvantaged some farmers more than others, meaning those who usually excel may not stand out from the crowd this year, and indeed, bank managers and farm advisors might see cash issues with farms that are usually very safe, whilst others are relatively unaffected.

Over the last 31 days, the November 2024 (new-crop) wheat futures contract has fallen by £5 per tonne, and is now close to its contract low set in March.  This is despite a rise since then of £47 per tonne, followed to a £45 fall.  Previous Editions of this Bulletin have reminded the reader that prices of grains in the UK are not set by local supply and demand, having such a small proportion of the global production and trade.  Having a small UK crop is not a very bullish factor on the scale of things.  Whilst the 2024 crop price has swung so much since spring, the value of 2025 wheat has shifted far less, being £2 per tonne dearer when prices fell, the £12 per tonne cheaper when they rose.  It is now back to carrying a £14.40 premium over 2024 crop prices.

Feed barley has outperformed feed wheat this month, with its discount now smaller than it was at the end of August.  However, it is now dear on a global basis which suggests lack of exports might soon curtail additional price rises, especially as the UK does have an exportable surplus.  Demand has picked up by compounders and pushed more value into barley than wheat.  Malting barley premiums are slimming as it emerges the harvest, especially in Scotland is better than previously expected – being a smaller and more domestic market, the malting barley market is more localised than wheat.

Half of the combinable pulses are still in the field and may have been affected by the recent very heavy rains.  Samples from other countries are showing insect damage, so potentially leaving opportunities for our pulses if they are clean and bright.  It may be prudent to reflect on marketing them before the Australian harvest arrives in the New Year, which is likely to be clean.

Arable Update

As harvest progresses in the UK, grain prices have continued to slide.  The value of UK November 2024 UK feed wheat futures reached the lowest point for the contract since March 2024, although spot prices remain ahead of those levels.  The full picture for grain, oilseed and pulse prices is shown in Key Farm Facts.

The Andersons Centre has been carrying out harvest reporting for AHDB throughout the course of the summer.  The latest harvest report was published on Friday 16th August.  This showed that the wheat harvest was 37% complete; significant progress has been made in the week since then and is now nearing completion in much of Eastern England and the Midlands.  Wheat yields so far are 7% down on the five-year average across the UK.  There has been significant regional variation, with yields generally better for winter crops in East Anglia, and poorer in the Midlands.  This is perhaps not surprising given the challenges during planting and crop development this season.

Spring crop harvesting is also well underway across much of England.  Early signs suggest that spring crops are performing better, comparatively, than winter crops.  Yields and grain sizes have been promising and malting quality of barley samples has been good.  The lack of sunlight through crop development has led to low levels of nitrogen.

While low nitrogen is good for malting barley, the same cannot be said for milling wheat.  Low protein content has been a feature of milling wheat samples.  This has led to continued strength in milling premiums.  That said, poor protein is more manageable for millers than last year’s Hagberg quality challenge as it can be blended to acceptable levels. This may result in a fall in premiums through the season.

The direction of global grain prices is driven by the balance of global supply and demand.  The United States Department of Agriculture made unexpectedly large upward revisions to maize and soyabean production estimates in August.  The trade had expected increases of 0.75% and 0.05% to soyabean and maize production, respectively.  The USDA increased their forecasts by 3.48% and 0.29%, respectively.  The size of the change is relatively small but, being greater than traders expected, led to a decision to sell more, leading to a fall in prices.

Domestically, pressure is also coming from increased grain stocks which have been carried through harvest.  On-farm stocks are estimated at 1.16 million tonnes and more than 1 million tonnes of merchant, ports and co-operative stocks.  According to AHDB this figure is 89% above the five-year average level.  This reflects both the expectation of a smaller 2024 by the trade, and also the direction of prices this season leading to a lack of farmer selling.

Beet Price for 2025

British Sugar and the NFU have agreed a headline price of £33 per tonne for the 2025 sugar crop (2025/26 marketing year).  This is £7 per tonne lower than the price paid for both the 2023 and 2024 seasons.  It reflects lower prices on sugar commodity markets.

Growers will be able to sell up to a maximum of 70% of their contract tonnage entitlement (CTE) at the basic price of £33.  There are two further contract options;

  • a base price of £30.70 per tonne with a market-linked bonus paid on top
  • a contract linked to the sugar futures price (limited to 50% of CTE)

Growers can also opt into a Yield Protection scheme which pays £31.60 under the fixed-price option and £29.30 for the market-linked option.  Frost insurance is also offered.  The calculation of the Late Delivery Allowance is unchanged.

The usual CTE performance rules will be relaxed for 2025.  As long as growers deliver 70% of their tonnage next year, they will not be penalised with any CTE reductions.  This seems an ackowledgement that growers may want to reduce their acreage given the lower price.  Most beet growers will have been expecting a beet price reduction given the slide in sugar values.  However, the scale of the drop is likely to be a surprise. 

Grain Markets

Grain prices have fallen as harvest has commenced in the UK.  Many in the East and South East of England are progressing well with winter barley and oilseed rape harvests; early results have been varied, reflecting the picture of crops throughout this season.  That said, overall, early yields are perhaps not as disappointing as feared.

Grain prices have declined due to plentiful global supplies.  In its July update to the World Agriculture Supply and Demand Estimates, the USDA increased global grain stock forecasts for the 2024/25 season by 6 million tonnes.  The increase was largely driven by an almost 5 million tonne increase in expectations of global wheat stocks.

Harvests also are well underway in much of the Northern Hemisphere, with harvest completion ahead of normal in the US.  In France, progress is slightly behind the five-year average pace, and results have reportedly been disappointing.  That said, with expectations for harvests already low, it takes further reductions in reported yields to increase prices.

In the UK, AHDB published its annual Planting and Variety Survey results.  The results show year-on-year declines in wheat area (-9%, UK) and oilseed rape (-21%, GB). The total barley area is estimated to have increased by 6%, owing to increases in spring barley plantings.  It is notable that the results show a smaller decline in wheat area than was forecast in the spring re-run of the Early Bird Survey.  The Early Bird forecast a wheat area decline of 15%.

AHDB suggest that less wheat was replaced by spring cropping than the Early Bird Survey indicated.  However, it is notable that the sample size of the Planting and Variety Survey is smaller than that of the re-run Early Bird Survey.  One thing the difference between the results does draw into question is the reliability of surveys, and how individual farmers record data.  Have farmers entered the area of the fields which were cropped which will be reflected by lower average yields?  Or, have farmers subtracted lost/ poor areas from planting figures, which would be reflected by better-than-expected yields?  Defra June survey area data will be published in late August.

Whilst UK ex-farm grain prices have fallen, on average, across the month, oilseed rape prices have increased.  It remains to be seen whether the better price will encourage more oilseed rape planting this autumn.  More details on cereal and oilseed prices can be seen in Key Farm Facts.

Sugar Price Warning

The NFU Sugar Board has warned that the contract price for the 2025 crop (2025-26 contract) is unlikely to be as high as the current £40 per tonne.  The NFU is presently negotiating prices with British Sugar, but with EU sugar prices falling significantly since the winter, the farm-gate price of beet will come under pressure.  Looking at the current 2024 crop, it has reportedly recovered well after a slow start caused by late plantings and the cold, wet spring.  With an estimated 102,500 hectares planted, the highest for some years, there could be a large domestic crop this year if the rest of the season is kind.

Grain Markets

Prices for feed grains have fallen considerably throughout June, pressured by improved global conditions.  The value of UK feed wheat futures (Nov-24), averaged over £217 per tonne in May, but just £205 per tonne in the month to 26th June.  The decline in UK futures prices is the result of falling global prices.  New crop (Dec-24) US wheat futures fell consistently during June, towards the contract low, set in March 2024.

The US wheat harvest is progressing well, and the increased liquidity of global grain has put downwards pressure on prices.  In addition, the harvest of Brazil’s second and largest (Safrinha) maize crop is adding to the volume of available grain.  The increased availability of grain has so far outweighed the fact that global grain stocks-to-use ratios are set to be tighter year-on-year; posting an eighth consecutive annual decline.

The months immediately before harvest are often some of the most volatile and reactive to weather and harvest progress stories.  For prices to rise, almost continual negative stories are needed.  There are some events that could offer support to grain prices.  If they materialise there may be opportunities to gain on short term market rallies.

There has been excess heat and rainfall across the US corn belt.  This has led to flooding in some key grain producing regions, most notably Minnesota.  However, assessments of the US maize crop remain largely positive, although these assessments do not fully capture recent negative weather.  One watch point for grain markets is the US acreage survey.  The survey will be published on Friday 29th June, giving the clearest indication yet of the scale of the US maize and soyabean crops.

Another area of concern had been Russian wheat crops, which were hit by unfavourable weather in April and May.  Whilst early information points to good yields, this is based on a small proportion of the harvest.  Russian analytical firm SovEcon point to the potential for yields to come down as harvest progresses.

As mentioned, the value of UK grain has followed the global market lower, for both old and new crop.  At the same time, the value of UK milling wheat over feed wheat has grown, averaging £68 per tonne, ex-farm in June.  The value of pulses have also increased, with little availability of old crop, and some time before new crop is available.  That said there is also little to no demand at present.  Domestic cereal, oilseed and pulse prices can be seen in Key Farm Facts.

Oilseed rape continues to look attractive for planting this autumn.  Dependent on available moisture, many will be anxious to drill early following the wet 2023-24 season.  Provided soil moisture is sufficient prices approaching £400 including bonuses will be attractive.  Of course, much will also depend on pest pressure.

Potato Update

The UK is likely to have another sub-five million tonne potato crop this year, according to projections from newsletter World Potato Markets. It expects the planted potato area to be similar to last year at 100,000 hectares. A five-year average yield would deliver a crop of 4.757 million tonnes, which would be 3.3% larger than the estimated 2023 crop which was the smallest on record.

Planting was again delayed by very wet weather and was only fully complete by the end of May, with many growers finishing up to a month later than they would normally. Conditions since crops went into the ground have been favourable to crop growth, although there is the threat of blight.

Planting conditions have been even worse in parts of Europe with Belgian growers only finishing in the last few days. World Potato Markets expects a similar EU crop to last year of 47.5 million tonnes, with the area planted barely changed.

Prices of potatoes have reached record levels, with the EU processing potato price in excess of €600 per tonne at the end of June, while UK packing potato prices have reached £750 per tonne, according to newsletter Potato Call.

The global potatoes industry has been gathering at the World Potato Congress in Adelaide, Australia this month. Despite the diversity of the industry, one of the major topics was climate change with extreme heatwaves and rainfall making production more difficult across the world. Delegates from India and Africa said that conditions are particularly challenging but the potential for potatoes to help feed a growing population remain enormous. There was a definite feeling that the dominance of the American and European potato industries in the potato trade has peaked because of the pressure on supply.

The NFU has launched a Save Our Spuds campaign following the difficulties of the past few potato seasons. It is calling for more government support to reduce the economic burden on potato growers. The Union’s action follows the bankruptcy of packer QV Realisations which was blamed by owners AH Worth on the volatility of the market and rising costs of production. The business failure threatens the jobs of 200 people.

Oat Milk

The international alternative-milk producer, Oatly, has abandoned plans to build a factory near Peterborough.  The facility, which was announced in 2021, was planned to produce up to 450m litres of oat milk per year.  The Swedish company says that demand will be met from existing factories in Europe.  The growth in dairy alternatives has slowed in recent years and this may be behind Oatly’s change of heart.  

Grain Market Update

Whilst UK yields will undoubtedly be lower for harvest 2024, over the course of the past month, the value of arable commodities has increased.  The rise is fueled by concerns about global new crop (2024 harvest) availability.

World market price rises are a result of the tight supply and demand situation for grains developing ahead of the 2024 harvests.  The United States Department of Agriculture (USDA) published its first estimates of 2024/25 supply and demand earlier in May.  Global grains supplies are expected to increase by 21Mt; however, this is offset by a 21Mt rise in consumption, and a fall in opening stocks.  It results in an overall forecast decline in grain stocks of 4Mt, year-on-year.

A large driver of the decline in grain stocks is the fall in forecast wheat stocks.  Declines are anticipated for six of the eight top wheat exporting nations.  The largest fall in is expected for the EU and Russia. That said, the latter is still expected to be the top wheat exporter globally.  Russian conditions are a key watch point for grain prices at present.  Russia’s key wheat growing regions have been dry with abnormally low temperatures also hitting the crop.

New crop (November 2024) UK feed wheat futures were worth more than £220 per tonne on 21st May, an increase of almost £18 per tonne on the previous month.  In the physical market, AHDB has reported November 2024 bread milling wheat prices approaching £300 per tonne delivered into the North West.  This is a strong signal of the concern surrounding domestic milling wheat availability.  Plantings are down considerably year-on-year, and opportunities to apply nutrition to crops has been limited.

The price of competitor feed grains will be a factor to keep an eye on in realtion to UK feed wheat pricing.  Barley prices have also risen over the past month but remain at an increasing discount to wheat owing to expectations of larger supplies.  Availability of feed barley could still increase, depending on the quality of the malting crop.  Maize import prices are also at an increased discount to wheat.

Looking further ahead, values for 2025 harvest are also relatively attractive, given an increase in the wheat area globally looks inevitable.  November 2025 UK feed wheat futures were worth almost £212 per tonne on 21st May.

Rapeseed prices are also higher than they have been in recent months.  Concern around availability in the EU has moved new crop rapeseed prices back above £400 per tonne, in some regions.  Gains in prices have been capped slightly by expectations of large global soyabean crops.

Fruit & Veg Blueprint

The Government has set out a ‘Blueprint for Growing the Fruit and Vegetable Sector’.  This was launched as part of the Prime Minister’s Farm-to-Fork Summit at Downing Street.  The aim is to increase the proportion of fruit and vegetables consumed in the UK that are produced domestically.

A key element of the plan is a replacement for the legacy EU Fruit & Vegetable Aid Scheme which used Producer Organisations (POs) to distribute grant support to the sector.  This will be replaced in 2026 by a new ‘Horticulture Resilience and Growth Offer’.  This will be open to all parts of the edible horticulture sector, ranging from large-scale field crops, such as potatoes, through to glasshouse production and vertical farms.  Whilst collaborative ventures will still be encouraged, the previous requirement for applicants to be in a PO will be dropped – individual growers will be able to apply.  Funding will be doubled from current levels to £80m.  Of this, £10m will be earmarked for orchard growers to access equipment, technology and infrastructure.

Other measures set out in the blueprint include;

  • address the issues that Controlled Environment Horticulture (CEH) (e.g. glasshouses) have with energy.  Specifically, this may classify CEH with other ‘energy-intensive’ sectors and make it eligble for targeted support
  • reform to the Planning regime to allow glasshouses to be built more quickly
  • a fund of £50m (seemingly on top of the £80m for the Horticulture Resilience and Growth Offer) to support packhouse automation
  • explore how long-term cold storage of products can be supported to allow UK produce to be sold year-round
  • ensure other support, such as the Sustainable Farming Incentive (SFI) and Farming Investment Fund (FIF) is suited to the horticulture sector
  • invest £15m in Genetic Improvement Networks (GIN) and establish a new GIN for soft fruit

See https://www.gov.uk/government/publications/a-blueprint-to-grow-the-uk-fruit-and-vegetable-sector for more details.