August Arable Roundup

Harvest has progressed well with good conditions for most of the time despite a short break mid-August.  Domestic feed wheat price has found strength in the weakness of Sterling and a lack of farmer selling (as they’re all busy harvesting) and quality is reasonable overall. The milling wheat premium is slim following good harvest conditions meaning there is a greater percentage of high specification wheat.  It has also been hit due to the continued rise in the percentage of NABIM Group 1 milling wheat varieties in the wheat crop in 2016.  We mightnot expect high premiums all year.  Whilst France has reported ‘harvest problems’, such weather-based problems experienced in the Paris Basin are often not at the same magnitude as weather problems we experience in the UK.

Barley price is currently steeply discounted to wheat.  This means the relative cost of the nutritional value within it is under-priced which explains why feed compounders have been taking a renewed interest in it.  Malting barley premiums for the newly harvested crop are yet to be established, but traders are not expecting records this year.  Despite a smaller winter barley crop than last year, it is probably still as large as 2014 and the 10 preceding years.  The spring barley area has been the third highest in nearly 20 years.  Furthermore, Danish malting barley is good quality and will provide strong international competition.

The bean harvest is now in progress.  With the feed bean price at about the same as feed wheat, it seems undervalued, but again will depend on when boats arrive to take the good quality exports to Egypt or nearby destinations.  Much of the winter crop is not great quality though but the spring beans may fare better.

Conversely, at comfortably over £300 per tonne, before bonuses, the oilseed rape market is strong, partially reflecting the fall in yield throughout the UK and EU.  This might turn out to be a reflection of the loss of neonicotinoids.  Whilst the low yield is likely to discourage OSR being grown for 2017, the high price will do the opposite.  It is not yet clear what the UK farmer will decide to do, but there is more talk of reduced area than increased.

Globally, as the world population continues to rise each year, and as consumers gradually demand more from the food chain, it should be natural that, each year, a record harvest is gathered as a record demand is generated by consumers.  Overall, this is the case, but when the International Grains Council identifies a record crop of all grains of just over 2 billion tonnes, half of which is maize, the market notices.  Indeed, the market might have taken more notice of the figures in the publication showing carry-over stocks for all grains rising 5% on last year and a considerable 19% more than only 3 years ago.  This explains why the Chicago wheat price has sunk to a 10-year low this month.  The weakness of Sterling has protected us to a large extent from the vagaries of the global marketplace, at least for now.

Very early indications for the forthcoming autumn suggest wheat area is likely to be similar or marginally higher than 2015 winter drilling.  There will probably be yet another decline in the winter barley area, but compensated for by higher spring barley drillings in 2017 – subject to weather conditions.  Oilseed rape, as already mentioned is unclear, but most anecdotes suggest a fall.  So much depends on the grain prices in the coming four weeks and drilling conditions between now and November.