March Arable Markets

The grain markets have been steadily bearish over the last month, despite nothing in the UK of note really starting to grow.  This demonstrates that the UK price is determined more from the global supply and demand market factors than the domestic outlook.  Notably, eventhe milling wheat premiums have been disappointing this year (according to HGCA analysis), considering only 2% of NABIM Group 1 wheats have achieved full specification (the lowest on record) which compares with about 30% from the 2011 crop.

Clearly though, with the magnitude of uncertainty in the field at the moment, even for those with crops actually drilled, there is a very low level of new crop marketing taking place at the moment.  Pressure at harvest time to sell grain because of lack of storage space is often an issue, but it is unlikely to be seen at all this year.

Global production forecasts are primarily focussing on Russia.  When the Russian/Black Sea regions harvesta high crop, their exportable surpluses have competed against ours, pushing our markets down.  The Russian authorities are forecasting a crop of 95 million tonnes. This is 10 million tonnes higher than most traders are planning on, but whichever figure is correct it would be 25-33% more than last year, and above the long term average of about 75 million tonnes.