June Arable Outlook

Well, at least in the very short term, the collapse of the Pound will support farming as it will make exports worth more in Sterling.  This is simply because the Pound is now smaller against other currencies.  We can expect to see markets respond to this relatively quickly. Indeed, the entire EU farming sector might benefit because, as the Euro has also fallen against the Dollar (see article above), their export prices might pick up too.

For the 2015-16 grain marketing year, more wheat had been exported to April 2016 than in any entire campaign since 2011; and projections suggest that will be exceeded by the end of the marketing period.  For barley, the exports to April were already higher than for any entire year since 1998.  Yet, we are still left with hefty closing stocks.  For wheat, the stocks in 2008 were about as high as we will take into the coming harvest; but before that, closing stock levels were all lower.  For barley, the picture is similar.  Barley stocks going into 2010 were the highest recorded and this year’s will be about the same.

Old crop is all-but sold; the only remaining old crop futures contract is the highly technical July contract with little physical grain sales backed against it, and so it is the forthcoming harvest we now concentrate on.

The wheat crop is likely to be a considerable 2 million tonnes smaller than last two years at about 14.2mt, whilst the overall barley crop is likely to be about half a million tones down at 6.9mt.  This will be a low since 2012.  These crops are still well within the normal range of crop harvests and, with the carry-in stock, we will not be running short unless Sterling falls far further (as many pundits have suggested).  In that situation, exports will be easy, substantial and lucrative.

The oilseed rape crop is heading towards about a 2.0mt crop; potentially the smallest crop since 2009, but then it is the lowest cropped area since that year as well.  The only area we might see any gains in crop-size could be in pulses with a crop area similar or even slightly higher than last year.