Potato planting has been continuing at a rate of knots, with still little or no rain – but arctic conditions, complete with showers of snow, are not ideal to give tubers and seed a good start.
Heat and some rain are required now to help spring sown crops, some of which have been in the ground now for some time and are appearing through the ground but patchy in places due to lack of rain.
Dry weather in the UK, Spain, North-east France, Belgium, Luxembourg and Western Germany is giving concern for wheat yields and spring-sown crops, and in France, Europe’s largest wheat grower, given the dry weather so far, rainfall in the coming weeks will be crucial.
If there is sufficient rain, the outlook will be positive, but may turn negative if dry conditions persist. Current weather forecasts point to continued dry weather in most of these regions until the end of the month.
Last year, French wheat production was severely hit by adverse wet weather during the spring and this year the lack of rain may impact on yields once again if conditions don’t improve over the coming month.
Rain across parts of the US Plains and Mid-west over the past week is thought to have improved moisture levels for wheat growth and while rain has been favourable for wheat it is thought to have held up maize planting in some areas.
The Ukraine is reporting a 700,000 tonne increase in maize production up to 26.2m tonnes and stocks from last year are expected to be smaller than forecast and their maize exports are forecast higher at 20m tonnes in 2017-18 season.
The pound reached the highest value since December against both the euro and the US dollar following the Prime Minister’s announcement of seeking a snap general election on June 8. A stronger pound makes UK wheat more expensive and less export competitive.
However, given the tight UK supply situation this season, the market has already responded accordingly by curtailing exports. In the months ahead, we can probably expect more currency volatility and an air of uncertainty will remain until the election result is known.
At the end of last week, nearby Liffe feed wheat futures closed at nearly £31 over nearby Chicago feed wheat futures – which is the largest premium in over four years in sterling terms. Currency movements have helped support UK prices and over one week sterling appreciated by 3% against the US dollar to reach its highest point since October.
The May, 2017, Liffe old crop feed wheat futures closed last week at £137.05, down £2.20 on the week, while November, 2017, new crop futures were down £3.80 to £145.50.
UK ex-farm bread milling wheat was down 20p to £147.30, feed wheat was up 10p to £146.20 and feed barley was down £1.20 to £119.10.
There is more than just currency influencing UK markets this year with a combination of a fall in domestic wheat output this season, as well as strong demand for feed grain, along with supply issues on the continent have all contributed to the rise in wheat prices.
This not the case in the US, which is faced with ample supplies this season and which has affected prices. US wheat end of season stocks are currently forecast at the highest level since 1987-88 at 31.6m tonnes.
In Australia, the 2017 wheat harvest is forecast to be down by more than 30% to 24m tonnes from the current season’s record high of 35m tonnes due to forecast of lower average rainfall and lower planted area.
Farmers have been influenced by the continuing fall in wheat prices on world markets and ‘alternative’ crops, such as canola (OSR), are expected to become more popular. There has also been ongoing port and logistical problems from a shortfall in shipping containers, which merchants rely on for wheat exports.
These began in the second half of 2016, when shippers diverted containers to carrying pulses and oilseeds as they have higher unit values and were given priority by shipping companies over wheat exports from the second half of 2016.
Elsewhere, Canadian farmers are set to plant their largest ever area of Canola at 9.1m ha, which is 10% up on last year and 150,000 ha higher than the previous record in 2012.
The Argentinian soyabean harvest is well behind schedule due to excessively wet fields after heavy rainfall and with approximately 3.5m ha of soya at the mature stage, any further delays will impact on yield and quality of the unharvested crops. Wet weather in the US Mid-west and Canada is also delaying plantings of soya and canola, respectively, and this is giving some market support.
May, 2017, palm oil futures fell to an eight-month low last week mainly driven by increased availability of soya this year. Although the meal component of soya is much higher than the oil component, the sheer weight of the global market means that soya oil is the second largest global vegetable oil after palm oil.
Two weeks ago, the US recorded its lowest weekly nett export sales of old crop soya since December. Similarly, new crop sales were at a seven-week low.
With 16% of the Argentine’s soya crop now harvested and more soya becoming available on the export market, the US will face greater competition for sales.