Following on from 130mm or just over 5 inches of rain in the first four months of this year we have had another 20mm or nearly an inch so far this month, which has been just enough and very welcome to feed the winter and spring sown crops as well as get grass to grow for livestock use as well. The weather has not been particularly warm with some cold winds but crops generally look well following some recent rain.

Commodity prices are still very volatile, and we have seen some extreme range in values over the past few weeks Currently the liffee May 2022 old crop wheat futures stand at £336.50 but a week ago they were at a new contract high of £361.00 which saw prices move in one day alone by £25.40 per tonne.

The liffee November new crop wheat futures currently stand at £325.00 per tonne but last week moved in one day by £11.40 from a contract high of £352.00 per tonne. This is a huge price difference from year ago at this time when the November 2021 wheat futures stood at £178.75 per tonne. These extreme price movements are due to several factors one being the wheat export ban by India being announced and another being the tightening global supply in various wheat growing countries due to weather issues reducing their potential wheat yields.

In the US just 27% of the US winter wheat crop was rated good to excellent which is down from previous estimates and not since 2014 has the US reported a greater proportion of its winter wheat crop as poor to very poor than good to excellent. Last week the annual Wheat Quality Council crop tour took place in Kansas, which is the primary US winter wheat producing state and the condition of their wheat crop is recorded as the second worst ever due to drought.

Last month the USDA forecast world ending wheat stocks for the current season 2021-22 at 288.42m tonnes. This figure has taken into account the war in Ukraine and if correct will be the tightest ending stocks since 2016-17. Due to dry and hot conditions India’s wheat crop production has been reduced to 105m tonnes and in Europe France is suffering from drought as well where their crop ratings for wheat have fallen by 9 points to 73% good to excellent.

Looking forward to 2022-23 a further tightening of wheat ending stocks is expected with the total down to 272.07m tonnes as high input costs and the ongoing Russia-Ukraine war continues. The Ukraine wheat tonnage is estimated to be down by 11.5m tonnes, Argentina down by 2m tonnes, Australia down by 6m tonnes, the EU down 2m tonnes and China down 2m tonnes. These tonnages will be partially offset by increases from Canada, up 11m tonnes and Russia by 5m tonnes.

World wheat production has been cut by the international grains Council by 11m tonnes down to 769m tonnes and due to the high wheat prices, demand and usage is forecast down by 5m tonnes.

The wheat ban on exports by India would result in 1.8m tonnes of wheat being held at ports which would not be able to be shipped and this ban would hold back a further 8.5m tonnes of wheat which was due to go to other countries that would normally have accessed tonnage from the Ukraine.

Russia is looking to produce around 88.6m tonnes from this year’s harvest and export 39m tonnes but this would all depend on Russia co-operating with other countries, but unlikely, due to the current sanctions being applied.

Global production for rapeseed is forecast to increase by 9.1m tonnes to 80.3m tonnes and global consumption is expected to increase by 5.4m tonnes to 78.4m tonnes and will see end stocks increase to 5.6m tonnes, even though end stocks will be down from the 5-year average of 7.2m tonnes and will be the second smallest since 2016-17.

Recently an ex-farm price over £700.00 per tonne was achievable but prices have come down due to Indonesia planning to lift its palm oil export ban from next week and also legislation in some countries that would lead to food-based biofuels being totally phased out by 2030, at this time last year forward prices were £250.00 lower than at current levels and last week the delivered rapeseed price into Erith for November was quoted at £731.00 per tonne.

The USDA have taken the markets by surprise by forecasting that Ukraine rapeseed production will increase this year and that their rapeseed exports will increase over last year’s figure. Their sunflower exports are also expected to increase by 400,000 tonnes but their production will decrease by 6.5m tonnes. This assumes that there will be no further destruction of the country’s export infra structure which cannot be certain at this stage.

EU-27 rapeseed production for next year is set to increase to 18.3m tonnes which would be up 8% on last year and Canada is expecting a 17.9m tonne crop next year but Australia is looking at a 4.9m tonne crop which would be down 22% from last year and result in exports down 17% to 4.0m tonnes as well.

This would mean that key areas of global rapeseed production would be forecast to produce 44.0m tonnes of rapeseed next year which would be up 13% year-on-year and would be the highest amount of rapeseed produced by these countries, including the Ukraine since 2018.

Looking at the global maize situation the outlook for 2022-23 is year end stocks tighter due to slow planting in the US, high input costs globally and dry weather affecting the yield potential of the Brazilian crop and the first projection for 2022-23 world end stocks is put at 296.91m tonnes which would be only the second time since 2014-15 that ending stocks have fallen to under 300m tonnes. The reduced crop production in the US, EU, and China is outweighed by the increased forecast in production in Argentina and South Africa.

Increased fertilizer costs are very likely to see reduced yields in many commodities as application rates are reduced as end prices will not compensate for the high input cost of seed fertiliser and chemicals.

This season to date, from last July until April, UK produced 34.5% Ammonium Nitrate fertiliser prices have averaged £601.00 per tonne which is up 138% or £349.00 per tonne from the average over the 2020-21 season and AN increased in price by 182% between June 2021 and March 2022 to a price of £839.00 per tonne.

The AHDB early Bird Survey forecast UK wheat production this year at 14.4m tonnes so if nitrogen fertiliser application rates are reduced by 50% production could drop by 11% as a result of reduced fertiliser applications and this does not consider the weather factor that can affect yield as well. At the end of April, 83% of the UK wheat crop was rated as good to excellent, however, rain was needed to fulfil its full yield potential and even with some rain falling this month it has still been a lot dryer than normal.

Oilseed rape would see a larger fall in yield potential if fertiliser is reduced by 50% but spring barley production would only fall by 3% and only fall by 1% if 75% of the intended nitrogen was used in place of the usual application rate.

PULL QUOTE - The USDA have taken the markets by surprise by forecasting that Ukraine rapeseed production will increase this year and that their rapeseed exports will increase over last year’s figure