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.
