Category: Arable

Cabbage Stem Flea Beetle

Many will have noticed there are considerably fewer bright yellow fields than last year, and some a much paler shade of yellow than their owners will have wanted.  Evidence suggests that in the UK a slightly lower amount of oilseed rape was planted last autumn than previous the year.  A considerable proportion did not have a good start, possibly in part as a result of the very dry soil conditions at the time, but also the concerns of Cabbage Stem Flea Beetle (CSFB).  This a meant an unknown quantity, but perhaps 8% of the national crop, written off before winter.

That which made it to the spring, is also in rather poor condition now, with another 5-10% being written off largely in the central and Western parts of England.  This will either be replaced with another crop or fallowed, or in some cases, left in poor condition, its owner resigned to the fact it will probably generate a poor yield.  It is concerning that reports are emerging that CSFB is having a damaging effect on the emerging sugar-beet crop too.  It is too early to speculate on yield impact, but we will continue to monitor this situation.

Ironically, reports from Lincolnshire suggest some bee-keepers are concerned there is insufficient OSR to supply enough nectar to produce honey from their hives.  Perhaps the loss of Neonicotinoids has had adverse impacts even on the insects that the ban was designed to protect.

What the impact of CSFB on OSR in the British farmer’s rotation in future might be is unclear, but many growers and agronomists have suggested their rotations and crop recommendations will not include OSR for at least three years.  The OSR area is in long-term decline; its area topped out in 2012 and has fallen every year since then apart from once.  In 2019 we could harvest the lowest rape area since 2004, and possibly the smallest crop since then too.

Chlorothalonil

Another important agro-chemical will be lost to EU farmers as the European Commission has voted to ban chlorothalonil.  The fungicide, which is the active ingredient in Syngenta’s Bravo, is an essential tool for controlling diseases in arable crops including septoria in wheat and ramularia in barley.  The proposal by the European Commission not to renew the use of the fungicide was endorsed by Member States of the EU’s Standing Committee on Plants, Animals, Food and Feed (SCoPAFF) on 22nd March.  The proposal was based on EFSA’s assessment, which concluded that the approval criteria was not satisfied for ‘a wide range of reasons’, including serious concerns over high risks to fish and amphibians and contamination of groundwater by metabolites of the substance.  The ban is being described as a ‘severe blow to the industry’.  Chlorothalonil also plays an important role in keeping resistance development under control.  There has been no information regarding use-by or phase out dates as yet.

Horticultural Labour

Defra has published results from a new survey into the demand for horticultural workers.  Currently classed as ‘experimental’, the data comes from a voluntary online quarterly survey that asks horticultural businesses in England what their demand for temporary workers is, and what they have actually secured.  The gathering of this information have obviously been prompted by Brexit and the increased difficulty in securing temporary farm staff over the last couple of years.  For the 2018 year, the demand for seasonal labour unsurprising peaked in the summer months.  The average shortfall (for those who reported a lack of staff) ranged from 4% to 12% over the year.  Details can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785863/Labour_in_Horticulture_Quarterly_Survey_2018_Final_14mar19.pdf

Glyphosate Ruling

There has been a further ruling against the herbicide Glyphosate in the US legal system.  A Federal jury in California found that Monsanto’s Roundup was a ‘substantial factor’ in causing the cancer of Edwin Hademan.  We reported last August that a Californian state court had awarded almost $290m in damages to Dewayne Johnson after finding Roundup caused his terminal cancer.  The latest ruling, coming in a Federal court, carries greater weight and may set a precedent for up to 9,000 similar lawsuits lodged in the US.  However, this is only the first stage of a two-stage trial and Bayer, who now own Monsanto, have stated that they expect to see the ruling overturned.

UK Arable Viewpoint

There have been some healthy volumes of wheat export sales from the EU in March, especially from France to third countries, helping to clear out the overall EU surplus.  Whilst it might seem that France is a competitor to the UK and so French business is not good for UK sales, it is still the same Single Market that volume is being taken from, reducing any surplus and a rising tide lifts all boats in the same harbour; at least for now.

The increase in wheat area in the UK this coming year will be the first rise for five years, and, even then, primarily because 2013 was fraught with drilling problems leading to a very low drilled area.  The prospect of a large 2019 harvest is contributing the sharp decline in grain (wheat values) for new crop in the UK just now.  It is also possible that the market has started making an adjustment to partially build-in the cost of tariffs for new crop exports, should we leave the EU without a deal.  The UK has a feed wheat surplus most years, the majority of which has been exported to Iberian customers for decades.  This would be one area where the impact of Brexit would be felt by the farming community relatively quickly.

Old crop feed barley values are still discounted against their calculated feed-value equivalent to wheat, but still higher than new crop in a similar fashion to the wheat prices.  New export business for malting specifications has temporarily slowed whilst traders are unsure of whether or how much tariffs they are likely to have to pay.  It is much easier once they know what to tap into their calculators so they know the relative costs of grains around the world.

Spring drilling conditions have been good to excellent throughout Britain, it’s just that there’s not so much land available to drill as conditions were so good in the autumn, with more land was drilled then as well.  We would assume there will not be much fallow land this year for that reason.  The area of spring wheat has fallen dramatically this year according to anecdotal reports, partly because the favourable drilling conditions last autumn left little space for spring wheat.  Similarly, spring barley area is thought lower than last year too.

The pulse market is just about finished now so anybody with beans still unsold should think about what they plan to do with them.

In Leicestershire’s heavy soils, the damp footprint beneath the boot suggests a good seedbed and ideal growing conditions. However, dig a spade’s depth into the soil and it becomes evident the soil is still rather dry as a result of last year’s drought.  In fact, this winter has also been a relatively dry few months.  The crops survived last year’s drought because of the very wet spring, this year, the soil moisture is far lower than this time last year so crop will rely on reasonable rains this year to reach harvest safely.

Grain Price Spring Volatility

The £16 per tonne difference in price between old crop and new crop wheat will eventually close.  Either old crop prices will fall or new crop prices rise.  There is currently not much happening to suggest a major increase in new crop values (and prices tend to drift downwards on the lack of new market information). But this time of year tends to see grain market volatility increase slightly.  This is for several reasons.

  • Firstly, the limited tonnages of old crop grain at the end of a marketing season have to match up with demand, and any surpluses, or even more so, shortages, could see prices shift considerably.
  • Secondly, the winter crops that have been lying dormant around the world emerge from their hibernation and agronomists get to see how well (or not) the forthcoming crop has coped with the cold.
  • More importantly though, a quarter of the world’s wheat and almost all the maize are only now being planted, meaning that over the course of this month, the total wheat area for the Northern Hemisphere (which accounts for 80% of cereals) will be established.
  • Weather conditions at this time of year affect crop growth considerably.  However the forecasts, particularly concerning large grain-producing regions such as the US Prairies tend to affect the traders more.  One forecast of rain and the markets swing one way, and another forecast for drought and they swing the other.
  • Finally, whilst the International Grains Council started suggesting its global crop area thoughts for 2019 last month, and the US Department of Agriculture posted some thoughts along the same vein, April is the first month that the new crop is analysed in any real depth by global grain analysts.  This alone causes market shifts as market traders look carefully at these reports.

Cereal farmers will have relatively little grain left unsold by now and will be thinking more about the new crop.  It is important to keep a focus on the underlying market fundamentals when marketing grain in the spring rather than respond ‘knee-jerk’ style to daily announcements and short-term movements.

BPS or June Survey Areas, which are Correct?

Since the revision of the CAP in 2015, when Greening was introduced, the claim form for direct payments has become considerably more complicated. The necessity to record each crop, which was simply not a requirement of the Single Payment scheme is present with the Basic Payment because of the 3-crop rule.

For the second year running, Defra has published a comparison table comparing the June census crop area figures for England against the claimed BPS crop areas. A noticeable difference between the 2 sets of data has emerged, specifically in wheat, with an almost 7% difference in 2018 (BPS lower). This is equivalent to 108,000 hectares which at average yields is over 850,000 tonnes of wheat potentially  missing, certainly enough to have a considerable impact on the market, especially as it would shift the UK’s balance from that of a net exporter to net importer. The market reacted with an assumption the survey was incorrect which may not be the case.

Examination of the other crops suggests the differences between the two data sources have increased this year compared with the previous 3 years. As the tables below show, considerable differences  of the magnitude experienced in wheat (as a percentage of each other) are also seen in oats, beans and fallow land.

There were no differences to the forms this year, so whilst it is possible that claimants entered field edges and environmental scheme information differently, or entire field versus cropped field areas, one would expect the differences to be consistent year to year. It is barely possible that the different date of each form made any difference (even with the extreme weather conditions) as crops would have been planted for both dates; 15 May and 1 June. Defra is examining the discrepancy and we will report of the outcome when we know it.

Arable Market Commentary

New Crop

In terms of growing conditions, little could be more extreme than the temperatures recorded this month compared to last February.  In the February 2018 bulletin we cited the ‘Beast from the East’ delaying drilling.  This year, spring drilling is well ahead of normal with almost 25% of spring barley already in the ground.  A word of warning though; early drilled spring crops are not always the highest yielding, and there is time yet for very cold weather.  We reserve any judgement on harvest yield potential.

The USDA makes its first prediction of US wheat area every February, this year suggesting decreased plantings, in a falling area trend.  Indeed, if correct, it would be smallest US wheat area for 110 years.  This identifies the changing demands for grains, shifting to maize, for pig and poultry feed, biofuels and indeed even human food.

The International Grains Council’s first expectations of the forthcoming 2019/20 year are for a rise in global wheat production, of about 1%, a similar magnitude to the annual rise in demand so no substantial changes in year-end stocks.  This seems to contradict the findings of the USDA, but theirs, of course is USA only.  An increase in coarse grain harvests are also foreseen by the IGC, with maize and barley both up about 1%.  This is in line with the rise in demand so is no more than trend demand.  Much of the coarse grain increases are predicted to occur in the USA and China; the two biggest grain producers, so a small proportional change in these countries will be noticed.  However, there are also rumours that China is considering rolling-out a major expansion to its bioethanol inclusion policy, which would have a considerable impact on feed grain demand in the coming few harvests.

Of course, much of these crops that have been forecast have not yet even been drilled; all maize, and soybeans are spring crops and Canadian, Russian and half of the US wheat is also spring varieties.  Therefore, these projections are statistical analyses coupled with a smattering of planting intention data, not hard evidence of plants sprouting from the ground yet.

Old Crop

In the EU wheat market, a gradual decline in values this month (making European grain cheap compared with American grain) led to Europe and Russia winning some large export contracts to Saudi Arabia, boosting the export figures and balancing the supply and demand books.

The demand for ruminant feed is currently slipping away as cattle venture into the fields and sheep have grass to eat; leaving a lack of demand for feed barley, which has fallen to a £25 per tonne discount beneath feed wheat (which is primarily fed to housed chickens).  Barley is being included at maximum rates in rations now for this reason.

Oilseed rape prices have taken a tumble, based on the arrival of a large vessel loaded with Canadian canola, and the reduction of the rapeseed crush volumes in the UK.  This time of year is often difficult for European rapeseed (and pulses) as harvests from the Southern Hemisphere become available and start putting pressure in markets.  The Old Crop pulse market is increasingly thin and new opportunities will become rarer now, despite a healthy premium over feed wheat for pulses.

Potato Roundup

It is not shaping up to be such a high-priced season as many in the potato industry might have been expecting, but there is still time for further price increases.

The UK may have had its fourth smallest crop ever in 2018, but many growers will be surprised that prices have not been higher in response.  Average free-buy prices in February were at £250 per tonne, which was more than double the year before, but still below two years ago and £60 per tonne off the values of the rain-affected 2012/13 season.

Final estimates from the AHDB put the 2018 GB crop at 4.887 million tonnes, 24% lower than the bumper 2017 harvest and the lowest figure since 2012.  Only that year and the mythical drought years of 1975 and 1976 saw harvests of less than five million tonnes.  But there is evidence that buyers are using potatoes more sparingly, with November stocks higher than those in 2016.

Quality in store has also been better than many expected and most buyers were still finding it relatively easy to secure the stocks they needed in February.  There is an expectation that the market will tighten once stocks of contract material have been used.

There could also be export demand, with the German and Belgian potato industries at least one million tonnes each short of the stocks they need.  Free-buy prices in most Northern European countries are at the highest they have ever been for the tine of year.  So far it has been France which has benefitted from its neighbours’ shortages.  It had a relatively normal harvest and its proximity to where the demand is means that it has been shipping large volumes of potatoes.  UK potatoes have not been at a large enough discount to French stock to make it worth shipping material, but that could change in the coming weeks.

A messy Brexit could damage hopes of late-season export demand, but if there are restrictions on trade or tariffs then it would be EU suppliers to the UK who would suffer the most, facing an €110 million in tariff duties on potatoes and potato products shipped to the UK, compared to €27 million for British suppliers.

At home the potato industry will be relieved that higher grower prices this season have not led to reduced consumer demand.  Latest figures from research company Kantar Worldpanel show that sales of fresh potatoes have held steady along with consumer prices, while sales of frozen chips have actually increased.  In the 2012/13 season much higher consumer prices led to reduced sales.  However, there will be concern about who is bearing cost of higher grower prices, with retailers still selling some potatoes at 50 pence a kilo.

The drought-affected 2018 harvest has limited the 2019 seed choice of some growers, although, again, the UK has not been so impacted as the continent because of a good supply of Scottish seed.  There is little expectation of a significant increase in the potato area this year.  A very dry winter on top of last year’s drought is causing concern among growers that they will not be able to get the water they need to irrigate, but there is a nagging fear that after so many months of dry and warm weather we could be due plenty of rain, which could be just as damaging.

Potato Production Falls

AHDB estimates put the 2018 GB potato crop at the lowest level since 2012.  Provisional figures, released before Christmas, put total output at 4.89 million tonnes.  This is a 19% drop from the 6,043 m tonnes seen in 2017, and 13% below the five year average.  Whilst the planted area dropped by 4%, it was low yields that really hit production, caused by the weather during 2018.  Late plantings and the hot dry summer took their toll on crops.  Average yields fell to 41.7 tonnes per Ha, down 12% on the five-year average.  The AHDB points out that there were also quality issues this season, which means that not all of the crops harvested may be marketable.  This has the potential to keep prices firm for the rest of the season.