Tag: barley

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.

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.

UK Planted Area Update

Rainfall in the UK between August 2023 and February 2024 is the second highest for the period since records began in 1837.  This has caused major challenges for crop planting for the 2024 harvest.  In December, AHDB published the Early Bird Survey showing planting intentions for the coming year.  With weather issues continuing the Survey has been re-run capturing planting intentions up to the end of March.

Wheat planting is down 15% on the year at 1.46 million hectares; this includes a significant increase in spring wheat planting.  In 2019/20, the last seriously wet planting season, spring barley area increased considerably to pick up the slack.  The area of spring barley is forecast to increase for harvest 2024, to 881,000 hectares.  The oat area is also forecast to increase in response to the challenged winter planting conditions, with farmers seeing spring oats as an option.  The oat area is forecast at 208,000 hectares, an increase of 26%.  These spring cereals plantings are only the intentions of farmers.  The weather over the next few weeks will determine whether these intentions can be turned into actions.

Oilseed rape has also been challenged significantly, both by poor establishment conditions and increased pest pressure, notably from slugs, in the autumn.  The result is a 28% decline in the area likely to be taken through to harvest at 280,000 hectares.

One of the most notable increases this year is that of arable fallow, up 79%, to 558,000 hectares.  This area is will include a proportion of land which will be placed into environmental schemes.

Area figures only give a part picture of the state of cropping in the UK this season.  Whilst areas of winter crops are down there are significant area of crops in poor or very poor condition.  Very little of the poorer quality crop will be re-drilled, as such it will be carried forward with lower yield prospects.

Arable Roundup

Grain prices fell considerably during February.  The May-24 UK Feed Wheat Futures contract started the Month at £175 per tonne, as of 24th February the same contract was worth £164 per tonne.  It is a similar story for the 2024 crop, with November-24 Futures £9 per tonne lower on the month.

The direction of the UK market is driven by the availability of global grains.  Concern had been building about dry conditions in South America hindering planting progress.  However, both Brazil and Argentina have received rainfall and planting of maize and soyabeans has progressed.  Argentina is forecast to harvest an additional 22.5 million tonnes of maize in 2023/24 compared to 2022/23 (when it was affected by a widespread drought).  Brazilian grain and oilseed production forecast have fallen.  However, the country is still expected to harvest a combined 300 million tonnes of cereals and oilseeds; the second largest harvest on record.

Furthermore, grain prices are weighed down by cheap Black Sea wheat, slow US grain and oilseed exports, and the large sold position held by speculative traders in US grain futures.

Looking ahead to the 2024 UK harvest, the window of opportunity for further winter wheat plantings, prior to latest safe sowing dates, is closing.  Heavier ground is still sodden, especially across the East Midlands.  Crops on lighter land look far better.  UK growers face the prospect of smaller crops being sold at lower prices.  The poor outlook for the 2024 harvest is increasingly accounted for in grain prices.  Looking at the gap between old crop and new crop wheat futures (May-24 versus November-24), the new crop is worth almost £19 per tonne more that the old crop.  This time last year the November crop (November-23) was worth just £3 per tonne more than the old crop (May-23).

UK Feed Wheat Futures Chart

Source: AHDB

Farmgate grain prices have reflected the wider trend in futures, as shown in Key Farm Facts.  The UK still has ample old crop wheat and barley stocks, with prices uncompetitive into export markets.

UK Arable Market

Whilst the weather might have slightly improved since the storms of October, ground conditions have not.  With many fields, particularly in the Midlands, still having standing water on them, the opportunity for winter cropping is falling.  In addition, there is the challenge of planting behind root crops and maize, still to be lifted/ cut.

The AHDB has published an updated Early Bird Survey estimate of cropping this month.  This shows that, before the bulk of the poor weather, farmers planned to plant 3% less wheat for harvest 2024.  Given the unfavourable conditions since that survey was conducted the decline in area is now likely to be far greater.  Industry sources suggest a fall of around 15% and this is contingent on significant areas of wheat being planted in January and February.

Whilst area may be down 15%, further questions will be asked of yield.  Some fields that were drilled prior to the storms are patchy and will yield lower.  Time will tell as to how the UK wheat crop will perform on average.

With a reduced area and likely lower yields, we will see a smaller wheat output from harvest 2024.  Prices for post-harvest 2024 will need to be high to encourage grain to be carried through from harvest 2023.

There are limited buyers of 2023 harvest grain at the moment.  This increases the amount of grain which could be carried into the new season.  If the trade is already working to 15% drop in crop area, the ability of prices to increase will be limited.  Also, it is important to remember that the global market will ultimately dictate UK price direction.

With an expected decline in winter cropping, attention will turn to spring cropping.  Certified spring seed availability is reportedly very tight, and prices are reflecting this.  Increases in spring barley are inevitable, but we have seen the impact of large increases in spring barley before.  There is only limited demand for malting barley, and, as such, those without a contract will need to pay close attention to the feed market.

The situation is not as severe as 2020, at the moment.  Wet weather during the planting window in 2019 resulted in a 24% drop in wheat area, and 19% increase in barley.  The result of this cropping change was an increase in the discount of feed barley to feed wheat of £26 per tonne, season-on-season.

With the drop in winter plantings, and price risk in barley markets, it is also likely we will see a noticeable increase in the area of oats, pulses, and possibly some land going into SFI.  It is important to pay close attention to margin impacts of any cropping changes, as well as considering the future impact of placing a proportion of productive land into an environmental scheme for a three-year period.

Grain Market Update

Like the water sat on many headlands around the country, old crop wheat markets could rightly be described as stagnant!

Looking back across the May-23 UK feed wheat futures market, prices have been stuck in a channel from £194 to £204 per tonne since the beginning of September.  Prices are sitting in the bottom of that band presently and showing little sign of moving back towards the top.  This is partly driven by readily available Black Sea grain, keeping prices pressured.

The old crop market is also influenced by a large global maize crop, with the US harvest all but complete.  In November, the USDA added a further four million tonnes to its production forecast for the US, citing improved yields.  In total a further 2.5 million tonnes have been added to global maize ending stocks, compared to October’s forecast.  Ending stocks of maize, globally, are up 15 million tonnes year-on-year.

The new crop market is more interesting, unless you are looking out on waterlogged crops.  Poor weather conditions have led to estimates of a 5-10% decline in wheat area across the UK, France, Germany, and Ukraine (Openfield).  This is driving an £11 per tonne premium for November 2024, over current May prices.  Concerns are built into new crop pricing.  It will take a worsening of conditions to keep prices supported.

In the UK, grain markets are lacking activity.  There are reports of weaker demand for bioethanol production.  UK wheat prices are uncompetitive in export markets and prices are under pressure (see Key Farm Facts).  Milling premiums remain elevated.

Feed barley is at a more than £20 per tonne discount to feed wheat.  However inclusions in animal feed rations are already high.  As such, barley prices need to be competitive into export markets to generate extra sales.  Old crop malting barley premiums remain high.  With concern over winter wheat plantings, and a subsequent increase in spring barley plantings likely, new crop premiums may be lower.

Oilseed rape prices are benefitting from uncertainty over planting of soyabeans in South America.  The north of Brazil remains very dry, while planting progress in the south of Brazil has been delayed by heavy rains.  The pace has improved towards the end of November but remains behind average. While this is supporting oilseeds now, it could also hinder the maize plantings which follow soyabeans in spring, offering future support to grains.

Wheat Area Down in UK

The area planted to wheat in the UK is expected to fall by 1.3% according to the results of the annual AHDB Early Bird Survey of UK planting intentions.  The survey, conducted by The Andersons Centre with the support of the AICC and other agronomists, captures a snapshot in early November.  This is a crucial caveat to the survey, in that it reflects the time before storms Babet, Ciarán and Debi.

Irrespective of the conditions of the storm, winter plantings were already expected to decline owing to the wet conditions which have persisted since harvest.  The area planted to winter barley is expected to fall by 6%.  Much of the fall in winter cropping will be replaced by spring barley (forecast up 13%) or oats (up 12%).

With prices having tumbled from their post-Ukraine invasion high, it is no surprise to also see the area intended to be planted to OSR falling by 16%.  This will also include a proportion which has already been written off, with flea beetle and slugs enjoying the mild post-planting weather.

Time will tell as to whether all the wheat area intended is planted.  Weather conditions between now and mid-January will be pivotal.  In addition, close attention needs to be paid to the condition of crops in the ground (see accompanying article).

A further update, with regional detail will be produced in mid-December, once Defra publish a full UK crop area figure.

Crop Conditions Update

It has been a challenging start to the 2024 season for many, to say the least.  Persistent rain during and post-harvest has been followed by storms Babet, Ciarán and Debi, leading to some crop casualties already.  For many, this year has marked the most significant challenge to the drilling campaign since 2019, although rainfall has largely been less persistent.

Andersons has compiled a crop condition assessment for the AHDB, summarised below in the order of planting.

Winter Oilseed Rape

Generally, the winter OSR crop can be split into three groups according to when it was planted.  The earliest established crop is generally in good condition, having rooted into good moisture and developed well to stave-off pest pressure and subsequent rains.  If anything, some of these crops are too far forward.

Crops established around the August Bank Holiday went into drier seedbeds, owing to the one week of very hot weather this year.  These crops are in far worse condition, with cabbage stem flea beetle migrating at a similar time.  Slugs have also been a significant issue, with mild evenings and wet weather.  Many regions have already written off considerable areas.

The final group is the late-August/early September crop.  This has generally established well, although root development was hampered by colder conditions and the crop isn’t as far forward as it should be.  It remains to be seen how these crops get through the winter given some of thier poor rooting.

Generally, more OSR will be written off this season than normal.  In addition, CSFB pressures are being seen further North and West than in a typical season.

Winter Barley

The winter barley crop was generally looking good, up until recent rainfall, having been established in reasonable conditions.  That said, with some crops sitting in water-logged soils, yellowing has been seen.  Crops should recover, although if biomass development is hindered,yield prospects may be too.

Given the moisture this autumn, good, stale seedbeds and weed control were achievable for many. Hopefully this will result in lower grass weed pressure than last year.

Winter Wheat

Wheat is undoubtedly the crop of biggest concern.  Whilst the AHDB Early Bird Survey estimates a planted area of 1.698 million hectares, much of this will have been either undrilled or not very well established by the time the rains hit in October and November.  Typically, by the end of October we would expect much of the winter wheat crop to be planted.  Regional estimates of planting vary from 70% to 85% on average.

Concern over the potential for crop failure is reported across many regions by businesses of all sizes. Some of the worse hit wheat is in the Midlands and the North East, where there is expected to be a degree of write-off.  What this crop is replaced with remains to be seen and will depend on how much of a field is written off.  Where headlands and wetter patches are affected, there may be an effort to re-establish wheat.  Failing that, a rise in fallow, or generally thinner, patchy, low-yielding crops are to be expected.

Pest pressure for wheat has also been considerable, with reports of the worst slug damage some have seen for 10 or more years.

Grain Markets

Global Grains

Global grain markets are largely unchanged on the month.  There has been some short-term support, but there is a distinct lack of news to sustain any price increases.  Both the USDA and the International Grains Council (IGC) published their latest world grain and oilseed supply and demand estimate updates.  For grains, both organisations made downward revisions to global ending stocks, the USDA by 2Mt and the IGC by 6Mt.  In both cases the downward revisions come from reductions to maize stocks.  That said, the month-on-month reductions to the outlook are a drop in the ocean relative to the forecast 60 million tonnes of stocks.

With the US maize harvest 59% complete, the next important drivers for grain and oilseed markets are likely to come from the southern hemisphere.  The picture in Brazil is split, where excess rainfall in the south is delaying soyabean plantings, whilst more rainfall is needed in the north of the country.  If this continues it has the potential to support soyabean and so rapeseed prices.  Beyond this, attention will turn to South American maize planting.

UK Market Update

It’s been a challenging drilling window for many so far this year.  Whilst the autumn has been mild, the stop-start rains which prolonged harvest have continued.  Reports suggest that pest pressures are increased, particularly for oilseed rape with both flea-beetle and slugs a problem.  The relatively mild weather has seen widespread flea-beetle damage in rape crops further north than usual.  In addition, storm Babet left many fields, particularly in the Midlands, East Anglia and Scotland under water.

As with the global market, UK wheat prices are relatively unchanged month-on-month.  There are odd opportunities to benefit from short-term spikes.

The AHDB published its ‘Early’ Balance Sheet for the UK wheat and barley market.  For wheat, whilst the carry out stocks from last season are up significantly (9% year-on-year), AHDB estimates the 2023 wheat crop to be significantly smaller (14.1Mt).  This is due to a much smaller planted area than had been expected.  Consumption of wheat is also seen increasing, with both ethanol plants expected to remain operational.  There is also expected to be a switch from barley to wheat for some animal feed compounders.  With a smaller pig herd and poultry flock and reports of reasonable forage production for ruminants, there will be questions over the level of animal feed demand this season.

The UK wheat market is left in a broadly similar position as it was in the 2021/22 season. However, the lack of support in global markets and little domestic activity is keeping prices subdued.  Defra will provide another update on the size of the UK wheat crop in December.

For barley, large opening stocks and decline in animal feed demand are expected to outweigh the drop in production year-on-year.  As a result the UK is expected to have 1.5 million tonnes of barley which will either be held as stock or exported.  Small volumes are moving, but there are currently cheaper origins than the UK for barley.

Whilst feed markets may be under pressure, there continues to be strong premiums for milling wheat and malting barley.  Milling wheat premiums are in the region of £65 per tonne and malting barley premiums have reached as much as £85 per tonne.  The importance of knowing and maintaining the quality in the barn cannot be overstated this season.

Pulse prices have remained firm against other combinable crops, although there are suggestions that feed beans and peas may be displaced by cheaper protein sources into animal feed.  The trade expectation is that prices will fall.

Grain Market Update

The August USDA World Supply and Demand Estimates forecast a slight drop in production relative to the July report.  This is driven by a reduced outlook for Canadian and European wheat production.  Additionally, US maize production forecasts were reduced slightly with lower yields expected, following results from a producer survey.  The sentiment for reducing supply and demand forecasts (month-on-month) is echoed by the International Grains Council who cut both production and stock forecasts for total grains.

Although estimates have been reduced, this years global harvest is forecast to be considerably larger than last years, putting downwards pressure on prices.  As harvests continue across the Northern Hemisphere, and better yield information becomes available, wheat prices have continued to fall.  Suggestions of large crops in Russia, and the ease of shipping costs compared to the same time last year has moved spot feed wheat prices lower after the late July spike.

In the UK, the changeable weather continues to result in a challenging, stop-start harvest, although progress improved at the end of August.  In the South and East, many businesses have now finished harvest for another year.  Reports suggest that both yield and quality are down on last year, with lower proteins and hagbergs a potential challenge for the milling supply chain.  Malting barley nitrogens are low, a positive; but bushel weights are also low.

In August, UK feed wheat values average just over £174 per tonne, down £4 per tonne on the July average.  Milling wheat values have also moved lower, down nearly £5 per tonne on the July average, at £237 per tonne.  There is still a considerable premium of milling wheat over feed (£62 per tonne) which will be supported if quality issues turn out to be correct..

The discount of feed barley to feed wheat has narrowed over the past month.  Reduced availability of the crop has pushed the discount to £22 per tonne on average across August, compared with £28 per tonne in July.  In the last week of August the discount was as narrow as £17 per tonne.

The supply and demand for oilseeds has also eroded prices this month.  There is larger availability of oilseed rape in Europe this season, with expectations of significant carryover into the 2024/25 season. The oilseed rape price averaged £349 per tonne in August, down from £362 per tonne in July.

The value of pulse crops has taken the biggest hit over the last month.   The price of feed beans and feed peas fell by £37 and £41 per tonne, respectively, mont-on-month.  With harvest underway greater availability.  Early reports suggested that quality has been variable.