AT LAST we had some sub-zero temperatures which can only do some good to kill off the bugs and get frost mould into the ploughed soil which will help next year’s seed beds.
However, all that good work was undone earlier this week with some torrential downpours in some areas of the Borders, causing localised flooding.
Now that the winter sowing season is (almost) over, we can see that the UK's planting intentions for spring barley in 2017 show reveal an area increase of 17%, up to 799,000 ha – the highest level going back to 1997.
This is in contrast to Scotland, where we planted 15,000 ha less in 2016 than in 2015. This follows the 19,000 ha decline between 2014 and 2015, taking the cereal area to its lowest since 2010.
A reduction of the spring barley area accounted for most of the decline, but it is still the main crop in Scotland by a long way.
Spring barley output in Scotland for 2016 is estimated at 1.3m tonnes, which is a 17% drop from 2015 and provisionally the smallest crop since 1998.
Against the smaller crop, a pick-up in malt distilling demand is expected this season. However, the build-up of stocks over the past three seasons when output averaged more than 1.6m tonnes, has bolstered supplies this season and reduced the impact of the smaller 2016 crop.
UK barley stocks at the end of June, 2016, were estimated at almost 1.4m tonnes, similar to the previous three years and before that stocks were below 1m tonnes. Looking forward, stocks of at least maltable grades seem set to be reduced this season as a result of lower output, which could increase the reliance on harvest 2017.
Last year, Scottish wheat production breached the 1m tonne mark for the first time. While this is provisionally 6% lower this year at 950,000 tonnes, it remains above the five-season average of 860,000 tonnes. In addition, carryover stocks are likely to be high after the large crops seen over recent years, further adding to Scottish wheat availability.
Looking at the UK as a whole, wheat closing stocks for 2015-16 were the highest on record going back to 1991-92 at 2.8m tonnes, up on the previous five season average of 1.8m tonnes. Furthermore, nearly 71,000 tonnes were held in UK wheat futures stores across Scotland at the end of June, 2016 – the first time there was wheat in futures stores in Scotland at the end of June since 2011-12.
Scottish oat production for 2016 is provisionally put at 200,000 tonnes, which would be the highest since at least 1992. This is 36% larger than the 2015 crop driven by increases in both area and yield.
Oilseed rape production in Scotland in 2016 is estimated at just 94,000 tonnes, which is a 37% fall year-on-year and the smallest crop since records began in 1992. This is due to a 14% fall in the area on the back of poorer potential returns at planting, combined with below average yields at 3.0t/ha.
With production in the rest of the UK also lower, the UK looks to be in the unusual situation of having a deficit in rapeseed this season. This, along with weaker sterling, has supported UK prices relative to Europe and is likely to encourage Scottish supplies to head to English rather than continental crushers.
All those figures point to the fact that Scotland this year has provisionally recorded its smallest cereal crop since 2012.
EU farmers will keep their soft wheat area the same for the 2017 harvest, despite the recent weak prices and will have a soft wheat area of around 24.3m ha.
The EU rapeseed area for the 2017 harvest is up by 90,000ha to 6.62m ha even with the ban on the use of neonicotinoid insecticides.
Currency is the market driver and the president of the European Central Bank is concerned at how reliant the eurozone economy is on quantitative easing. The chair of the US Federal Reserve has also hinted that an interest rate rise could come relatively soon as recent economic data has shown a stronger economy.
As a result, the UK pound strengthened significantly against the euro this week, which is also bringing UK oilseed rape prices down.
In the UK, the 2017 oilseed rape area is down to a 13-year low of 557,000 ha, 4% down on last year.
While currency has helped UK wheat prices gain this season, a tighter UK supply and demand situation has prevented UK prices to fall in line with global markets. This, combined with a greater proportion of higher quality milling wheat available domestically this year, has sparked comments that the feed market feels tight this season, which is not normally the case.
Looking at currency volatility affecting the markets alone, in dollar terms the UK market would be falling. However, UK prices in dollar terms have actually risen by nearly 5% since the start of July, whereas other global grain futures have decreased over the same time frame.
The implication of this is that the UK could become less competitive on the global market which trades in dollars.