THE GLEANER by Doug Niven

We have been experiencing more snow this winter in the Borders than we have seen for seven years and that will mean that more animal feed will be required than normal with the ongoing cold weather.

Winter and barley usage in compound animal feed production in November reached a record high for the month where records go back to 1992. The November wheat use figure was 298,300 tonnes, which was a 5% increase from October and an increase of 7% from November, 2016. November 2017 barley use of 99,000 tonnes was 20% more than that used in the same month last year.

As a result of this extra wheat use, prices have been given a bit of a lifeline, especially in the northern regions of England where stocks have been reduced to the extent that wheat is being brought up from the south of England to bolster stocks.

The south of England is still holding an exportable surplus that is far from competitive to current export market values. Some European countries are struggling to sell old crop wheat above the cost of production due to the glut of cheaper stock from countries such as Russia, which has exported more than any other country and is already half way through a record 35m tonne campaign. It is pricing its wheat competitively in order to move a record amount in store.

UK wheat exports were lower than previous years in the back-end months of 2017, between September and November exports of UK wheat totalled 158,000 tonnes, which is 71% less than for the same period in 2017 and the lowest for this period since 2013 and below the five-year average of 394,000 tonnes. Exports in November alone hit just 35,100 tonnes, which is 80% less than for the same period last year.

Imports of wheat into the UK, however, were on the up. These reached a total of 436,000 tonnes between September and November, or 11% higher than the previous year for the same period, but a little below the five-year average of 450,000 tonnes.

Our low exports, though, reflects the tight supply in the UK for this crop year. This situation will not be helped by a recent AHDB survey which showed a decline in winter plantings in favour of spring varieties. This will be the case more in the northern regions of the UK, where wetter weather delayed winter crop drilling.

The UK's winter wheat planting is forecast down 2% making it the smallest area since 2013. This is being replaced by oilseed rape in England, which will be up 11% in total in the UK from last year but still 18% below the highest area planted in 2012. Our winter barley planted area will be down by 9% but will see spring barley increase by 7%.

In Scotland, the spring barley area is expected to increase by 12%, compared with the 2017 harvested area.

So, if UK wheat yields for this coming harvest reach the five-year average of 8.2 tonnes/ha, then UK wheat production will be 14.4m tonnes in 2018. That would be a 3% reduction on the 2017 harvest and almost 0.5m tonnes down on the five-year average. If, however, a maximum average yield achieved in 2015 of 9.2 tonne/ha were to happen, then we would have a 15.7m tonnes harvest, but would still be 800,000 tonnes less than in 2014 and 2015.

The other side of the coin is, if a five-year minimum yield is achieved – as in 2013 when the average yield was just 7.4 tonnes/ha – then UK wheat production would total only 12.9m tonnes. Unless 2018 has high yields, UK wheat supplies could again be tight in 2018-19.

UK maize imports from last July to November were the highest on records going back to 1992-93 at a total of 883,000 tonnes. This is 28% above the import total at the same time in 2016-17 and 5% more than in 2015-16.

Part of the reason for this is increased animal feed demand and from last July to November, 138,000 tonnes of maize were used for animal feed, which is up 13% from the previous year.

For a fifth consecutive year, compared to the UK, world wheat production and ending stocks will reach record levels. This was confirmed by the latest USDA report which increased global wheat production to 757m tonnes and is a 6.6m tonne increase year-on-year, due mainly to Russia’s increased wheat production.

Ending stocks in the USA increased to 27m tonnes due to increased imports and reduced demand, while in the EU, wheat stocks increased to 12.6m tonnes due to reduced exports which is likely to see prices come under pressure in the future.

And on futures, the May, 2018, old crop Liffe feed wheat futures were down 30p to £140.70 and for November, 2018, new crop futures were down £1.70 to £141 per tonne.

Malting barley prices for old and new crop dropped this past week due to EU maltsters not looking for tonnage of old crop and, for 2018, traders are taking heed of reports of increased areas of malting barley being planted. As well as in the UK, the Baltic States is also thought to be increasing its spring production due to wet weather hitting autumn sowing.

However, EU feed barley exports have helped prices and in the northern regions of England, due to the ongoing cold winter weather, prices are increasing due to the demand for extra animal feed.

Oilseed prices weakened this past week, due in part to palm oil prices coming under pressure as the European Parliament voted to ban palm oil for biodiesel production in the EU from 2021 onwards and have frozen all biodiesel inclusions to 2017 levels.

Dry weather conditions in Argentina has given a small set of jitters to the market, especially if conditions persist in the main soyabean growing areas. Latest estimates are for a 52.0m tonne crop in Argentina, which would be a four-year low.

Globally, world soya supplies are expected to increase leaving global stock levels at 92m tonnes, which would keep supplies at a comfortable level should Argentina have a reduced tonnage due to any ongoing weather issues – so those 'jitters' will likely come to not very much.