May Arable Update

Toward the End of Old Crop

There is precious little old crop grain remaining unsold in the barns around the UK. Its time to clean out the storage facilities if they haven’t been yet in preparation for the next crop.

We know that, as one season ends and another starts, the prices (old crop and new crop) come together.  Sometimes this takes place suddenly over a day when harvest begins, other times it is some distance away – as for this year.   As the May 2014 UK wheat futures contract came to an end (the last of the old crop futures contracts, other than technical July) old crop prices came down quite sharply.  Consumers are in a comfortable position through to the new crop harvest which, on a global basis has now already started. Global logistics and knowledge of grain availability throughout the EU are such that the opportunity for late season price spikes are so minimal these days, they shouldn’t be used in marketing strategies.

The global supply and demand picture of all grains is one of relatively full barns and undemanding consumers. The USDA data for 2014 harvest that was first published in May shows a comfortable position for consumers. Whilst the global picture suggests that a slightly smaller crop to last year might be harvested, it is still ample to meet consumers’ requirements, stocks are starting slightly higher and therefore closing stocks are also up. This is so for both wheat and coarse grains. Refer to the previous article for more details. This is having an impact on the prices of grains in the UK right now.

For oilseeds, the good growing conditions are also depressing prices. Rain in Canada and the US have settled supply concerns, and uncertainty of requirements of oilseeds from China have also unsettled sellers with a consequential fall in values. Again, this has led to lower values.

Probably the main opportunity this month is pulses. The market price has been very firm this year, partly on the back of a strong quality crop last year, which, despite its large volume was largely exported to Egypt. This left a smaller feed pulse crop to sell resulting in a higher price tag for those beans remaining in the UK. If the weather is less ideal at harvest time this season and the quality is lower, the feed bin could still end up being fuller leading to a consequential fall in pulse values. It is a big unknown but worth speaking with your grain merchant about.

WHEAT FUTURES PRICES – Source: HGCA

The barley market in 2013/14 suffered under the weight of such a large crop in 2013. Clearly, barley growers are hoping this problem will go away in the coming marketing season, with crop areas heading more or less back to ‘normal’. However, Defra’s latest estimates on UK Grain supply and demand suggest that the carry over will amount to a quarter of a million tonnes more than usual at about 1.23 million. Despite this, the exporters have managed a considerable estimated 1.25 million tonnes of exports, 3 times the amount of the previous year and about double the usual export figure. This suggests that the additional surplus might not take so long to shift. Nevertheless, it does mean that, at least at the moment, (spring) malting barley prices are still not as high as feed wheat.