By The Gleaner
Weather forecasters are predicting another week of mild and mostly dry weather in most parts of Scotland as we edge closer to the middle of December and the shortest day.
It’s not been wintry at all very much yet and there has been little wind either which makes me wonder if we will suffer for this benign weather later this winter.
Commodity markets have been in a similarly ‘mild’ position, with little movement in prices. Liffe feed wheat futures for May, 2017, were down 40p to £137.50 and for November, 2017, new crop futures were down 50p to £131.50.
However, confirmation that the Ensus bio-generation plant on Teesside will remain open at the start of 2017 has helped keep prices firm. But it will take more than just the Ensus plant remaining open to keep prices steady in the run-up to spring.
Bread milling wheat ex-farm, though, was up £2.30 to £149.90 and feed wheat was down £1.80 to £134.80, widening the gap between the ‘good’ and the ‘bad’ wheat that is around.
Feed barley was up 30p to £116.60 and oilseed rape delivered to the crusher at Erith was up £1.50 to £357.50.
Earlier this month, the premium of UK feed wheat over feed barley increased to more than £20. And, since this time last year, the premium has risen by £12, mainly on the back of feed wheat prices increasing by £30 over the same time period.
Commodity traders were waiting last week for the latest world agricultural supply and demand estimate from the US Department of Agriculture. This indicated a large production of wheat and maize for next year, which will result in even larger end season stocks world-wide than first thought.
The Food and Agriculture Organisation also released a report pointing to record global stocks and the prospect of low wheat prices for the whole of 2017.
This could result in a contraction in the wheat area planted in the US and could see its winter wheat area for the 2017 harvest at its lowest for a century.
This is not the case, however, in Russia, Ukraine, India and Pakistan, where wheat plantings are expected to increase.
Russia, Ukraine and India have all benefited from good weather for planting and in India there has been improved water availability for the mainly irrigated wheat crop.
In the EU, wheat growers have seen planting completed under generally good conditions as well.
China, which is the biggest wheat growing country in the world, is also looking to a larger wheat crop, expected to be up by 900,000 tonnes. There, good weather conditions have benefited establishment of an early planted wheat crop.
Wheat production in Australia, too, is forecast up – by 18% higher than its previous record to a new high of 32.6m tonnes for 2016-17. That’s a 35% increase year-on-year and a record barley crop is also forecast at 10.6m tonnes, up 24% year-on-year.
During the past 10 years Australia has, on average, exported around 70% of its crop and if this continues then their large crop will add pressure to an already saturated global wheat market.
Canadian wheat production defied early snowfall and harvest worries and it is estimating a wheat crop of 31.7m tonnes – the second largest on record – adding to global wheat that needs to find a home.
The latest release of US export figures places exports of all wheat ahead of the level of the previous two seasons at 19.4m tonnes.
However, a rise in demand for US wheat helped inject support into world wheat markets. Exports of hard red wheat to date at 7.8m tonnes is 4m tonnes higher than last season and could be 7m tonnes higher for 2016-17.
There are several estimates of world wheat and maize production and season end stocks, but for wheat, global production is mainly put at 751.3m tonnes and end stocks at 238.5m tonnes. That leaves a stocks-to-use ratio of 32.3%. Wheat usage is put at 734.3m tonnes.
Coarse grain stocks are estimated at 261.1m tonnes, which is up 3.9m tonnes on the year.
Global maize end season stocks are estimated up by 4m tonnes to 222.3m tonnes and maize production will be a record total of 1039.7m tonnes.
Defra’S first official estimates of UK cereal supply and demand for the 2016-17 season has put UK barley production at 6.652m tonnes, or a drop of 10% on last harvest. Due to the increased differential in feed wheat and feed barley values, barley usage in animal feed should remain relatively strong.
Defra is also forecasting usage similar to last season by the brewers, maltsters and distillers and this will result in the UK’s exportable barley surplus reducing by 30% from this past harvest.
World soyabean stocks are forecast at 82.85m tonnes and global soya production is put at 338.0m tonnes, with Argentina forecasting production of 57m tonnes, or 7% of global output.
Australian rapeseed cropping is forecast up by 22% for this year to 3.6m tonnes making that its third largest such crop on record.
On currency fluctuations, the euro fell last week as the European Central Bank decided to extend quantitative easing, and indicated that it is likely to extend this well beyond 2017 at around $80bn per month.