Global weather and issues affect the UK market consistently

My source of rainfall information, John Aitchison at Lochton, near Coldstream, tells me that we had 61.2mm, or 2.4 inches, of rain in March which gives a total for the year to date of 160mm, or 6.3 inches – and the forecast for the rest of this week is for more rain. Other places in the Borders have had a lot more rain and a farmer friend in Essex tells me they’ve had over 20 inches since last October and are not able to get onto the land.

Temperatures have started to rise and winter sown crops, especially oilseed rape, are growing as they get hold of the fertiliser applied recently when the weather allowed vehicles to travel without too much damage to the crop.

Wheat

The liffe feed wheat futures have risen considerably over the past few weeks and May 2024 old crop currently stands at £171.95 and not long ago was at £159.70 per tonne.

November new crop wheat futures price is at £194.50 and again was recently as low as £177.95, which means that the price premium between May and November is over £20.00 per tonne. Wheat prices rose as weaker sterling boosted UK wheat futures and as the largest private Russian grain exporter was in dispute with the Russian authorities and was not being issued with the relevant documentation to allow ships loaded with grain to sail with their cargoes.

Speculators panicked as they thought there would be more grain sourced from the EU and USA. Later it was confirmed that exports from Russia had not been affected as 5m tonnes of wheat were exported last month and in one week alone 1.12m tonnes were shipped from Russia. The price of wheat exported from Russia has been dropping to around £150 per tonne as Russia is expecting a large wheat crop in 2024, with 94% of their crop in reasonable condition having come through the winter. For 2024, they are expecting a crop of around 93m tonnes.

Further news of China cancelling sales of wheat from the US of over 500,000 tonnes does not help prices. Currently US wheat exports sit at 13.3m tonnes, which is 16% behind last year’s total, and it expects to export just over 19m tonnes for the season. There is a mixed outlook for the 2024 wheat crop among the major wheat producers in the Northern Hemisphere as many of the EU producers are predicting poor crops which includes the UK whose crop is worse than any other European country.

Over the past 15 years, the UK wheat yield has ranged from seven to nine tonnes per hectare which at the top end of the scale would produce a crop of around 13m tonnes and 10m tonnes at the lower end, and this is where analysts think the crop will be this year, coupled with less winter sown crop, down 15% to 1,463m ha.

Just 34% of the winter wheat is rated as good or excellent condition as of late March compared to last year when the figure was 90%. The EU-27 is forecasting a 4% reduction in wheat production of 120.8m tonnes due to a lower planted area caused by disruption by heavy rain in the top producing regions.

UK wheat imports could reach 2m tonnes for the 2023-24 season due to the poor quality of the 2023 harvest and concerns for the 2024 harvest – and 2m tonnes would be the highest level of UK wheat imports since 2020-21.

UK wheat exports for the season to date have totalled 165,700 tonnes which is 78% down on last year, and 64% down on the previous five-year average. With a slight increase in domestic consumption to 14.86m tonnes, this leaves the UK wheat stock balance at 2.83m tonnes which is 31% less than last year. Larger stocks look likely to be needed with lower crop areas for harvest 2024 and poor crop conditions.

Wet fields in the Borders on April 1

Barley

The total UK barley area is estimated to rise over 8% from 2023 to 1.236m ha but with a much larger area of spring barley. The winter barley area is estimated at 355,000ha, a drop of 22% from last year. Despite establishing better than most wheat crops, the stress over winter barley has badly impacted GB winter barley crops and now only 38% are in good or excellent condition.

A year ago, 92% of the winter barley crop was rated as good or excellent. Spring barley is forecast to be up 29% year on year to 881,000ha which would not be as high as the 1m ha planted in 2020. Barley exports for

the season to date total 494,700 tonnes which is 27% down on the year and down 39% on the five-year average, leaving the UK stock balance 7% down on last year at 2.13m tonnes. Barley imports, so far this season, amount to 99,000 tonnes, which is more than double last year’s total at this time.

Barley prices have risen amid increased tension between Russia and Ukraine, with more missile strikes taking place coupled with more rain, especially in the EU. France is now approximately 80% sown but continual rain is causing problems. In the UK, England is at best 20% sown and Scotland around 5% completed. This has seen the price of barley rise by around £10 per tonne this past week as merchants, maltsters and brewers try to buy stock.

The usage of wheat, barley, maize and oats in feed production this season has totalled 2.84m tonnes, similar to last year for the same period. Barley saw a rise in usage, up 2.9%, wheat down 0.3%, oats down 29.1%, and maize down 11.8%.

Barley is currently being used heavily in feed rations as it is at a price discount to wheat of £25.40 per tonne compared to £20.70 at this time last year.

Oats

Winter oat crops are generally in better condition than other winter crops in the UK but still only 37% of the UK oat crop is rated as good or excellent, which is much lower than the 83% at the end of March last year.

The total UK oat area is estimated to rise by 26% to 209,000ha which is just short of the area planted in 2020 and down on last year. Oat exports this season total 84,300 from July to January and this is down 28% on the year, but up 46% on the previous five-year average. The current full season estimate is 100,000 tonnes and if this is realised it is expected to lead to the tightest ending stocks seen since 2012-13.

There is still a window for planting spring crops but if the rain persists then it becomes economically unviable, especially if we did get a long dry spell after sowing going towards harvest. Some figures from AHDB make interesting reading when UK figures are compared to other countries. At £180.80 per ha, labour cost in the UK is relatively average – much lower than France or Denmark but much higher than the US, Canada or Spain, who have bigger fields and larger machinery, coupled with less fertiliser and crop protection passes.

The UK spends 13.71 hours per ha compared to the US at 2.43 hours per ha and Canada at 1.82 hours per ha. Machinery costs for the UK at £403.82 per ha are the highest of all countries with fuel at £87.70, and repair costs per ha of £81.74 are particularly high for the UK due to the high number of input applications and field passes to establish the UK crop.

Oilseed Rape

Rapeseed prices continue to be supported with concerns regarding ongoing rapeseed production in the EU-27, Canada, and reduced crops in the Ukraine.

Domestic prices were quoted higher this week at £376.50 per tonne delivered Erith for March 2024 and £379.50 per tonne, up £10 per tonne on the week for harvest 2024. Canadian farmers are intending to plant 3% less rapeseed for harvest 2024 as they experience very dry weather across large parts of the country.

Smaller rapeseed crops are expected in Europe and Ukraine, and an 8% fall in the EU-27 crop from last year and a 9% fall in the Ukraine crop this year.

In the UK, where the rapeseed crop is down 28% from last year due to a difficult planting season last autumn and an ongoing wet spring, only 31% of the crop is rated as good or in excellent condition – and is well below the 70% rated last year at this time.

Prices will also be helped if the rumours are true of the EU applying 50% import tax on Russian oilseeds and its products.

Another factor is an increase in oilseed crusher buying, partly driven by biodiesel producers for the summer as well as supportive crude oil prices.