By Doug Niven

IN THE Borders we’ve had just 0.4 mm of rain for the month of April and its been the sunniest April ever as well.

The weather has been changeable so far this month with drying winds and apart from a few heavy showers, we have not had a steady day’s rain so far.

Crops and grass could certainly do with more moisture, but prolonged dryness has also been affecting crops in northern Europe and the Black Sea regions which has helped to support wheat prices in recent weeks.

Southern Russia, which is a main winter wheat producing region has seen hardly any rain though some was expected at the time of writing.

The wheat area in the US is estimated to be the lowest on record, with drought conditions expanding across Kansas, one of the primary winter wheat producing states.

That means that global new crop wheat futures picked up on the bad weather issues, including frost across the US Midwest, cold frosty weather in Europe and news of some European countries starting to ease lock-down measures also lent support.

Reports that UK restaurants, pubs and other hospitality events will not open or take place until at least July will not help support prices and against the euro, sterling fell by 0.5% to equate to €1.1374 and in the 10 days prior to March 19, it also fell 12.4% against the dollar – reaching its lowest level since the 1980s.

May, 2020, old crop futures currently stand at £153.45 and November, 2020, new crop futures have risen to £163.25 per tonne.

The International Grains Council has cut world wheat production by 4m tonnes due to dry weather in Europe, Russia and Ukraine.

This brings the production figure down to 764m tonnes but due to the coronavirus pandemic, demand for wheat also fell by 5m tonnes, down to 755m tonnes.

So, world wheat stocks are predicted to rise by 6m tonnes up to 289m tonnes which would be an annual increase of 10m tonnes.

However, stocks for the world’s main exporting countries are predicted to fall by 3m tonnes on the year to 64m tonnes and this figure would be 19m tonnes less than it was three years ago.

Last week, Defra released its estimate of on farm grain stocks, following a 2019 UK wheat harvest of 16.2m tonnes.

As at the end of February, there were 4.4m tonnes of wheat still on farm, which is an 11% increase on last year and barley stocks stand at an estimated 1.2m tonnes – a 62% increase on last year.

There is a 197% increase in recorded ex-farm sales of wheat and barley in the month of March, compared to the three-year average.

As a result of this, home-grown wheat stocks held by merchants, ports and co-ops were 25.9% higher than at the same time last year at 1.28m tonnes, though home-grown barley stocks at 931,300 tonnes was similar to last year.

Europe has seen an increase in year-end wheat stocks at 17m tonnes, or 3m tonnes up on last year, partly due to reduced demand as a result of the impact of Covid-19.

EU wheat production is likely to be down this year with a forecast soft wheat crop of 135m tonnes, compared to 146.4m tonnes last year and this is due mainly to lack of rainfall.

The EU and Ukraine continue to export wheat, with EU shipments jumping by 800,000 tonnes last week taking the total to 28.8m tonnes. This figure is much higher than the 17.1m tonnes exported at this time last year and is getting ever closer to the end-of-season target which is around 32m tonnes.

With seven weeks of the season still to go, Ukraine has now exported 19.1m tonnes of wheat – close to its export quota of 20.2m tonnes.

With pubs and restaurants still closed, resulting in a lack of demand for beer and spirits, this is seeing demand for malting barley decline, which will have a knock-on effect going forward for new crop malting barley sales.

Demand for feed barley is still good for export in the south of England, as prices ex-farm are currently competitive for export and it will be good to get as much away now as possible so that there is not as much to carry forward into the new season.

There is, potentially, a large spring barley crop to be harvested and facing a market that looks like being over supplied – it’s not looking like a good year for this crop.

Recent good weather in the US allowed farmers to plant over half of its intended maize area, the fastest since 2016 – currently it stands at 51% compared to 21% last year. It is expected that an extra 7m acres will be planted compared to last year and predictions are for maize global ending stocks for 2020-21 to be at a 30-year high.

This should have affected maize prices, especially when ethanol production has almost halved, but instead maize futures have risen as a result of an increase in crude oil prices now above $30 per barrel, up from around $20 per barrel in recent weeks. China also purchasing a large tonnage of US maize as well.

As at May 3, US farmers have planted 23% of their soyabean crop compared to 11% on average and intend to plant more instead of maize as prices have fallen recently due to the reduced demand for maize for ethanol due to covid-19.

Soya prices have dropped but not to the same extent as maize and with improved Chinese purchases of US soya this has provided some positive news but there is still the issues of large US stocks and depressed global demand.

In the week ending April 23, China purchased 619,000 tonnes of US soybeans and more recently a further 288,000 tonnes. While this is good news, a potential 48m tonnes were forecast to be exported and to date the total is 34.2m tonnes, so a long way to go yet.

The EU oilseed rape crop production for this year is estimated at less than 16.5m tonnes, which would be a 14-year low, and this low figure is due in part to the quality of rapeseed crops in Europe and the Black Sea region.

Lack of moisture, resulting in a short flowering period, has been the issue in recent weeks but now frost damage is evident as well.

UK oilseed rape prices are up £5 this week and prices have picked up to claw back half of the £30 price drop seen in the first 10 weeks of this year again due to Covid-19. Currently rape delivered to Erith is worth £320 per tonne.

World consumption of oils is forecast to decrease by up to 500,000 tonnes compared to that seen in 2019 due to less biodiesel and food demand. In the UK vegetable oil demand remains weak due to the reduced requirements from restaurants and the wider food industry.

The Canadian canola area is expected to be the lowest since 2013 at 8.34m ha and in recent years Canadian canola has been imported into the EU , last year 1.15m tonnes came to the EU and represented 29% of EU rapeseed imports.

In recent years, Australia has had many drought seasons with poor rapeseed crops and Canada has been supplying their canola instead but this year planting conditions in Australia are much improved with plenty of soil moisture so their crop will make up for the reduced tonnage from Canada.