A higher than expected planted corn area in the US has led to grain markets falling further and the expectation of a ‘difficult harvest’ for producers who have not already sold their crops on the futures market.

A US acreage report showed a corn [maize] planted area of 37.11m ha – 2m ha higher than trade expectations in a Reuter’s polland this saw grain prices fall in a ripple effect across world futures markets.

On Tuesday, UK feed wheat (Nov, '19), slipped £1.35/t to £150.15/t, with Paris milling wheat (Dec, '19), down €1.75/t at €183.50/t and Chicago wheat and corn falling $5.23/t and $3.54/t to $192.61/t and $166.34/t, respectively.

“We are potentially looking at a difficult harvest for those who have not sold a lot forward,” said Donald Ross, AgriScot arable farmer of the year, who was speaking at Arable Scotland.

“The futures market was nearer £170/t last August/September and while it slipped down to £144/t at Christmas, is has been bubbling along ever since. This new report from USDA could cause a bit of depression in the market and the revised US acreage figures are not due until August when prices have already been set,” pointed out Mr Ross who farms in the Black Isle.

He said the situation is exacerbated by the fact that many grain growers will have been lulled into a false sense of security by strong spot prices in the past two years.

On a more optimistic note, he said cereal crops in general were looking good with the potential for higher yields than 2018.

Mr Ross was speaking on the benefits of benchmarking on his 700-acre mixed arable and livestock unit, which he said had seen his arable enterprise produce a profit for the past seven or eight years and pay tax. This, he pointed out is good thing instead of forking out huge amounts of money for new machinery.

“I’d rather pay tax than take the depreciation hit on new machinery,” said Mr Ross. “Benchmarking has given me the knowledge to farm better by comparing fixed and variable costs. You can’t do much about variable costs, but we do make our fixed costs work harder by doing more contract farming."

He added that the key to improved profit margins on arable farms is to stop focussing on shiny new machinery and to share equipment if necessary.

David Aglen, farm manager of Balbirnie Farms, Fife, was another who highlighted the benefits of benchmarking. He said there is complete honesty in his group, with some members having completely changed the crops grown and rotations to improve margins.

Since joining the group six years ago, he has seen one member of staff retire, but rather than replace him, it was cheaper to sell his tractor and plough and replace him by direct drilling via a contractor.