Category: Arable

The grain harvest is still not completed in Scotland and some are calling 2017 the worst harvest for 20 years.  Farmers have been harvesting very high moisture grains and considering anything that can be cut as a bonus, even if the dryer is flat out.  Of course whilst this is a costly problem for the farms affected, the proportion of unharvested grain nationally is small.  Quality of grains is going to be pretty awful for those caught by the turn of the weather.  Nationally, the AHDB wheat quality survey reported a fall of bushel weights and Hagberg levels, but higher proteins, for high and medium quality wheats.

Yet the millers are, on the whole not overly concerned by the decline in wheat quality, to the point that milling wheat premiums have been falling.  In late September, full specification milling wheat premiums over feed were trading at about £20 per tonne, but have fallen now to about £13.50 this week.  Whilst this is a sharp reduction, it is still a far cry from the lows of £2 or £3 in March earlier this year.  The fact that the UK is now producing approximately 250% more NABIM Group 1 milling wheat than only four harvests ago means the millers choice is greater (notwithstanding imports and exports).

Throughout the UK, EU, wider Europe and globally, most grain buyers are comfortable that there is ample for everybody, even discounting the 50% of the global grain stocks that sit in China (away from the marketplace).  The only market participants that don’t appear to have grain on their books at the moment are the speculators, suggesting they are more bearish yet.  However, of course, that could change very quickly.  Against this background, global values have remained in the doldrums.

Spring malting barley premiums in East Anglia, have been heading the other way to wheat, with a £33 per tonne premium over feed barley, for those who have top-quality samples.  This is a high premium, and explains why the UK is dearer than the price bid by overseas consumers.  Despite a reasonable start to the barley export campaign this year, malting barley will not be shipped at these levels, suggesting downward pressure is more likely to come to bear on these figures sooner rather than later.

DEFRA has released its provisional estimates from the June 2017 Survey of Agriculture and Horticulture showing planted areas in the UK for the main crops, and also estimates for crop production in the UK.  The key results for the arable sector are summarised in the table below.  The data is only provisional at present, final results are expected to be available on 21^st December.

Although the wheat area declined once again, much better yields means the overall production has increased by 5.4% on the year.  The barley area has risen again and with better weather for crop production this year, yields for barley have also increased.  A closer look at the split between spring and winter barley, as expected, reveals the area of winter barley has reduced again, whereas the spring crop area increased by 10.4%.  Producers continue to switch to spring crops to help with weed (blackgrass) control, spread workloads and the favourable economics of spring malting barley production over winter feed barley.

The oilseed rape area has fallen again.  But a much improved yield has seen production increase by 23% compared with year earlier levels, although still short of production seen in the recent past. The lack of pest and disease control options continue to be the main reason for the drop in area.  This trend is likely to continue for the current year, but the increase in oilseed price and consequent improvement in margins, is likely to limit the fall. 

The new sugar beet contracts offered has seen a significant increase in planted area for 2017 but it has still not recovered to its ‘traditional’ area of circa 120,000 Ha.   Improved potato prices last year has probably contributed to another increase in the planted area this year.  Although poor prices currently being achieved are likely to be reflected in next seasons plantings.

The effect of Greening continues to be seen in the crop area figures with beans seeing a further increase in area, although peas have seen a significant fall this year.  However the ban on PPPs on all EFA land for 2018 is likely to see the bean area reduced for 2018.  The full crop area and production figures can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651173/structure-jun2017prov-UK-12oct17.pdf  The first statistical indications of plantings for next year will come next month with the publication of the AHDB’s ‘Early Bird’ Survey.