The Gleaner by Doug Niven

April has brought back cold, wet and wintry showers and in some parts of the Borders there is still snow lying on the roadside from the 'Beast from the East' snow storm.

It all means that fields are still cold and wet, and recent rain is making conditions worse. There has been the odd field sown locally, either peas, beans or oats, but it will be some time before machines are back planting in the fields.

Early projections for 2018-19 indicate a tighter year for global grains. Total grain ending stocks are estimated at 560m tonnes in 2018-19 by the International Grains Council, which would be 8% below forecast ending stocks for 2017-18. Total grain production and end of season stocks in 2017-18 have been revised down by 4m and 2m tonnes to 606m and 2092m tonnes, respectively.

This is mainly due to a further reduction to the maize harvest in Argentina because of ongoing drought. Its maize stocks are expected to fall by 42m tonnes to 265m tonnes – equating to a 14% fall if realised.

The IGC has also published its first world crop estimates for 2018-19. It sees wheat production 17m tonnes lower on the year at 741m tonnes, although with a high carry in, year end stocks will only be 3m tonnes lower at 256m tonnes and would be 14m tonnes higher than the estimated 240m tonnes ending stocks in 2016-17. This fall in production is due in part to Russia expecting a lower wheat tonnage following an exceptional yield year in 2017-18.

The US hard red winter wheat belt in the states of Kansas, Texas and Oklahoma, has been in severe and extreme drought but received some decent rain recently which triggered a sell off for US wheat futures, which now sit at a two-month low after a run of higher prices.

In a recent report, analysts forecast March 1 US wheat stocks to be 41m tonnes, or 10% below last year’s level of 45m tonnes. If this holds up, then the percentage drawdown in US wheat stocks between March and June, 2018, would need to be the largest since 2015 in order to reach the 28m ending stock figure estimated by USDA.

It has also estimated US winter wheat planting in 2018 to be at the lowest since 1909, but the planted area for spring wheat is expected to increase.

US wheat futures fell further last week as President Trump announced plans to introduce $60bn import tariffs on Chines products, sparking fears of a trade war. US exports are already running behind this season, with shipments to date 7% down on this time last year and it looks like the trade war has begun as China has responded by imposing tariffs as well on some US imported goods, including grain.

Firmer sterling and weaker markets in the EU has seen futures prices drop but spot demand for physical wheat remains strong as wheat is exported to Spain and Ireland. Firmer sterling and weaker markets in the EU has allowed some trade of imported wheat into the UK and prices in the north are close to import parity.

Many areas of the UK have seen old values for feed quality barley reach feed wheat values, in part due to the fall in wheat prices. Ex-farm feed barley prices in the UK have been on the rise throughout 2017-18 gaining £23.10 per tonne from July 7 to March 31. The rising value of barley in the UK can also be partially attributed to increased demand from the livestock sector for compound feed rations.

French feed barley has also risen, gaining £21.80 from July to March and Russian barley is up by £30.80 per tonne and the UK average ex-farm barley has moved from a discount of £29.20 to a discount of £7 per tonne, gaining £22.20 per tonne on feed wheat.

With parts of the UK approaching an import parity for wheat, this could limit the potential for further gains in feed wheat prices unless global markets also rise.

This past week has seen limited sowing progress in England with spring barley, but in Europe malting barley prices have risen based on concerns about the delay in sowing and fears that some European farmers may decide to grow maize, rather than spring barley.

USDA has published its figure for soyabean planting which was expected to have reached record levels, but have come out at 88.98m acres, which is below the trade estimates of 91m acres. This helped to boost the Chicago soya futures market aided by the fact that South America's soya production will be down due to weather issues, with production expected to be 16m tonnes less than last year.

UK old crop bean values have risen over £2 per tonne this past week with demand for export and for use in animal feed rations. For new crop beans, the delay in drilling has seen trading in excess of £160 in most regions and it is expected that there will be strong early demand for human consumption beans, with premiums expected to be in excess of £25 per tonne for the best samples.