April Arable Update

Unusually for this time of year, there is still a considerable chunk of old crop grain remaining unpriced on farm. This, at a time when the last futures contract of any material volume relating to the old crop market is expiring. Markets could well therefore become more volatile and erratic from now on. This might be a reason why many farmers have been deciding to sell out of their long position in the last couple of weeks, although it is more likely the start of preparations for the forthcoming year, cleaning and airing barns and so on. However, this is not likely to be a sufficient increase in sales to clear the surplus at the end of the marketing season. Indeed, of thesales made, few are reaching boats for executing export contracts, so the tonnage in the UK remains high. At the moment, there is a small carry into the new marketing year for wheat, which might be what some long-holders are looking at, although this is not the case for barley.

For the smaller total volume crops such as the pulses, oats and, to an extent, oilseed rape, the markets will become less fluid now, meaning selling something will become more difficult and prices could move sharply. Having said that, it has been a busy month for oilseed rape business, with short term demand for oilseed having pushed prices upwards and tempting the remaining unsold stocks to the marketplace. Planted areas in other parts of the world could be lower this year too, with early indications from Canada (a major oilseed rape producer) of a smaller cropped area than last.

The old crop pulse market is just about finished, with no active buyers about but the focus on new crop is picking up. Pulses are generally more difficult to sell a long way forward because of the lack of futures contracts, so growers wanting to sell ahead of harvest have to look at this time of year. The premium for feed beans remains £30 per tonne above wheat, giving it a competitive gross margin again for the forthcoming crop, while the premium lasts.

The USDA will be releasing its first forecast of the 2015 harvest (2014/15 crop in their words) on the 12th May.  This is an influential publication and often unsettles the market.  The USDA crop forecast is the most commonly used analysis of grain supply and demand in the world.  Unexpected figures could move the market, but of course, until then, nobody knows which markets or in which direction!