Category: Arable

International commodity trader RCMA is building a new oilseed rape crushing plant at Camgrain’s Stratford-upon-Avon site.  According RCMA the new £25m facility will only crush UK grown rapeseed and, for the first year, only that sourced from Frontier Agriculture, Camgrain’s marketing partner.  This should reduce delivery costs for co-op members with grain stored at the plant.  The facility is expected to be up and running this autumn and will crush about 100,000t of seed a year.  It is claimed to be the first new crushing facility to be opened in the UK for around 30 years.  It is relatively small, with the UK’s largest plant at Erith in Kent having a capacity of over 1m tonnes of seed per year.  The Erith plant is owned by ADM which, together with Cargill (plants at Liverpool and Hull), currently have a virtual duopoly on rape crushing in the UK with a market share in excess of 90%.  The new Stratford facility should add more competition into the market.

Probably the most important event in May for UK arable farmers was the arrival of some much-needed rain.  The majority of winter-sown crops received enough in the second half of the month to perk them up and, barring another prolonged dry spell, there may not be too much effect on yield.  Spring crops have been more badly affected.  The spring cropping area is relatively high this year, especially spring barley.  Some of these crops are looking quite patchy.  Even those with better establishment are playing catch-up and there may be a noticeable effect on yields.  Whilst there are many good reasons for the recent shift back to more spring cropping, this year has perhaps been a reminder that it is a fundamentally riskier growing proposition than autumn plantings. 

In terms of markets, currency has given domestic prices a bit of a lift.  The narrowing of opinion polls ahead of the General Election has created uncertainty and caused the Pound to weaken.  The basics of the global grain market remain unchanged however.  Stock levels are at historic highs, and most forecasts indicate there will remain plentiful supplies following the 2017 harvest.  Indeed, as the northern hemisphere harvest draws nearer, the chances of a catastrophe in one of the major growing regions recedes.  UK ex-farm feed wheat prices for November 2017 are stuck in the range £130-£140 per tonne (depending on region) and may be there for a while.  These kinds of prices should allow better producers to make a profit from their cereals production – as long as costs have been kept under control. 

The EU is set to vote on the criteria for identifying endocrine disruptors.  Although this sounds highly technical,and not a little dull, it could have profound effects on Europe’s and the UK’s farming industry.  The definition of endocrine disruptors (EDs) has been a long-running saga.  The EU Plant Protection Products (PPP) Regulation (1107/2009) introduced a move from a risk-based to a hazard-based assessment criteria for the approvals of active ingredients in PPPs.  Effectively, this means the inherent properties of a chemical are looked at, rather than how it might be used in practical situations.  In general, the new rules make it less likely that an active ingredient will be approved because the test is whether a substance is harmful (for example caffeine) rather than how it actually interacts with humans or the environment (i.e. diluted in your morning latte).   At the same time as Regulation 1107 came in, endocrine disrupting active ingredients (substances that may interfere with hormones) were classified as hazardous.  But the rules defining what is an ED have not been agreed.

The rules on what constitutes an EDs look like they may now finally be set.  This would be based on World Health Organisations definitions.  Until all active substances have been assessed it is not clear how many may be lost as a result of this change.  Various studies have suggested upwards of 30 might be affected.  There is a split among Member States (and lobby groups) over the proposals.  Some want tougher criteria, whilst others think the scientific basis for the restrictions are unproven.  As we have said elsewhere, even with Brexit, these European rules matter because the UK is likely to take them on wholesale upon leaving the EU under the Great Repeal Act. 

Discussions with Member States are set to recommence on the possible renewal of Glyphosate, although the proposal looks likely to be for 10 years rather than 15.  Whilst Farm Commissioner, Phil Hogan and Commissioners for Climate Action and Trade are all pushing for a 15 year approval, Commissioners for Internal Market and the Environment would like to see the renewal for less than 10 years.  A new proposal for reauthorisation is being drawn up and ‘technical’ discussions will be re-launched with Member States shortly.  A decision on the re-approval will be made by the end of 2017 at the latest.

The EU Commission has given the green light for the proposed takeover by Chemchina of Syngenta.  As expected the approval is dependent on some significant divestitures.  The state-owned chemical company based in Beijing, will divest a large amount of Adama, its pesticides subsidiary business based in Israel.  The bid has also got the go-ahead from the anti-trust authorities in the US which should now pave the way for the takeover to be completed by the end of 2017.  This is the second Ag Chem merger to get given approval in the last month (see Dow & DuPont ) raising concerns within the industry of less competition and therefore higher prices.  In addition formal notification from Bayer of its proposed acquisition of Monsanto is expected shortly, with the aim of obtaining EU approval by the end of the year.  However, approval may be hampered by complications arising from the renewal of Glyphosate and the extension to the neonicotinoids ban.

EU Farm Commissioner, Phil Hogan, has said he would like to re-authorise the use of Glyphosate for ‘at least 10 years’ to give the industry some certainty.  This gives a guide to where the EU Commission stands on the key pesticide, but, as we have previously written, this does not guarantee re-approval.  Last month re-authorisation appeared to take a significant step forward when the EU’s Chemical Agency (ECHA) concluded that Glyphosate is non-carcinogenic.  However, even this finding is now being challenged by some MEPs, saying that the findings were influenced by the chemical’s manufacturer, Monsanto.

The iconic UK cereals firm, Weetabix, has been bought by the US company Post Holdings in a deal worth £1.4bn.  China’s Bright Food took a majority share in the Weetabix business, which is made near Kettering, Northamptonshire, back in 2012.  The hope was that the cereal would become popular in China, but this never really happened.  The Weetabix portfolio includes Alpen, Ready Brek, Barbara’s and Weetos.  All of the wheat used in the breakfast cereal is currently grown within 50 miles of the Kettering base.  When the business was put up for sale in January, Associated British Foods was rumoured to have been interested, but the weak Pound is likely to have reduced its buying power in contrast to the Dollar’s recent strength.

Great Plains has announced it will be closing its base in Sleaford, Lincolnshire.  Production at the plant will discontinue this year, with its facility fully closing down in early 2018.  The company has blamed the worldwide downturn in agriculture on its decision to close its UK factory.  Great Plains acquired the site from Simba in 2010.

Old Crop

Farmers’ grain stores are nearly empty. Consumers are happy to wait if possible to purchase for new crop being a fresher sample at a lower price although quality is still unknown. The crops of smaller overall tonnage such as oats and pulses are all-but completed and the focus of attention is strongly now on the crop emerging in the field.

New Crop

Irrigators have been spotted on combinable cereals in East Anglia in the last couple of weeks. Rain fell yesterday whilst at a meeting in Ely, and the attendees, were celebrating its arrival as a lovely day. For germination and establishment of later drilled spring crops, some areas have been short of water. However for many areas, the occasional showers have just about kept the crops growing. Maybe this will lead to a greater variation of yield than we usually see.

The global price is unaffected by UK crop conditions of course, but at this time of year, the conditions in the likes of the US do have an impact on prices. And weather conditions are not necessarily ideal for everybody: Rain is required by those with crops emerging from winter dormancy and spring crops planted and dry conditions preferable for those yet to get onto their land. There are some parts of the US that are suffering from drought conditions, but we also note some parts of the US continent are drought-prone. On a global scale we would be smart to remind ourselves that stocks of wheat and coarse grains are at a high point and so while a crop failure would add to the global price matrix, it would have to be massive to push prices substantially. Politically, the leak that President Trump was planning his exit papers from NAFTA knocked the markets, but the subsequent denial of this calmed the traders.

The EU hasalso had some unusual weather that has been impacting on growing crops. Dry conditions in the UK, parts of France and Spain, have been causing crop development challenges. It is too early to tell whether crop yields have been seriously impacted in any areas.

In the UK, malting barley premiums are remaining firm (higher than for the past 5-years average) for both old and new crop. With a potentially large spring barley crop this year, we could be seeing this decline at or after harvest.

Oilseed prices have slipped again this month, as new crop values ended the month about £10 per tonne lower than they started. This is largely on the basis that considerably more soybean is being planted this spring probably as farmers are noting coarse grains and wheat prices are still near their 10-year lows that were recorded in February. It is still £30 per tonne more valuable than this time last year though.