Global Position
With results from the Northern Hemisphere harvest now coming available, forecasts of global grain supply and demand are being firmed-up. The latest figures from the International Grains Council (IGC) are presented in the table below. For the current 2023/24 marketing year (2023 harvest) the latest forecasts are shown, alongside the pre-harvest ones from May.
It can be seen that wheat production is forecast to be lower than last season, whilst usage is higher. This has sharply reduced end-of-year stocks and pushed up the stocks-to-use ration. All things being equal, this tight supply and demand situation should be pushing up global prices. However, a glance at the maize figures show there is forecast to be a large crop this year, with big stocks being held in the major exporters. Large maize crops are expected from the EU, US and S. America. This ample supply of the world’s main feed grain is putting downwards pressure on all feed grains – including wheat and barley. This has impacted UK prices (see below). However, the ‘wheat’ category contains a variety of grades and qualities. Tight global wheat supplies means that high-quality milling wheats are also in short supply. This has pushed up the premium for milling grades over feed.
The soya market drives the whole vegetable oil complex, including oilseed rape. (It will also be important for animal feed prices through this winter too.) The production and end-stock forecasts have been cut since the pre-harvest estimates. This has given some support to oilseeds prices through the summer. However, production levels are high historically and the market looks to be well supplied. This will keep pressure on oilseed prices.
Domestic Situation
Harvest 2023 is now all but complete in the UK – apart from some areas in the far north. Overall yields are probably not far off average – probably a little down and quite variable between regions and even farms. Quality, generally, is not great – although, again, very variable. This has meant the high premiums for milling wheat and malting barley have been maintained.
UK feed wheat and barley prices actually firmed a little during the last month (see Key Farm Facts). This is, to a large extent, currency related. The fact that UK Base Rates may not go as high as once feared led to a weakening of the Pound. This has helped increase grain prices, albeit fairly marginally. Another factor is likely to be slow farmer selling as they concentrate on the tail-end of harvest and autumn cultivations.
The UK looks set to have large volumes of feed grain. The demand for this could be lacklustre during the 2023/24 season. Pig and poultry herds/flocks are lower than historically and do not seem likely to rebuild quickly. Conserved forage in the dairy sector is reported to be of decent quality and quantity – reducing the need for concentrates. Therefore, a strong export campaign looks needed to help clear domestic markets. This has got off to a slow start with very little grain being shipped, or even deals being done so far. UK grain is currently over-priced against alternatives. This suggests that UK prices may well come under pressure in the months ahead unless the world market provides some unexpected support.