The Gleaner: UK harvest starts to come home

It is not often that we see oilseed rape cut before August, but due to the recent hot dry weather everything ripened that bit quicker and by July 19, 28% of the GB winter oilseed rape had been harvested – typically only 4-15% is done by the end of week two in July.

My local weather information source tells me that at Lochton, near Coldstream, only 19.2mm, or less than an inch of rain fell in July to add to the 221.4mm in the first six months of the year. That means there's only been 240mm, or only 9.5 inches of rain for the seven-month year to date – though some localised heavy showers did produce more rain in some areas in July.

Irrigators have been going flat out for some time now on potato crops and soon lifting will start soon.

The average air temperature in the UK during the second week in July averaged 18.7°C which is 2.6°C above the long-term average and the following week continued temperatures were in excess of 30°C.

By the middle of July, 69% of the Scottish, English and Welsh winter barley harvest had already been completed and the earliest harvest prior to that was in 2006 when 45% had been completed by that time.

One a wider front, after weeks of negotiations, a deal was agreed to allow Ukrainian grain to be exported from Black Sea ports and the following day after signing the document, Russia proceeded to launch a missile attack on the port of Odessa, which caused much uncertainty.

This deal is valid for 120 days, although it is expected to be renewed should the war still be going on. More than 80 ships are said to be stuck in Ukraine’s ports and with harvest underway, farmers there have nowhere to dump their grain from the combine as all stores are full.

On August 1, the first 26,000-tonne vessel left Odessa with grain and a further 17 ships were ready to leave from two other ports to travel though mine-infested waters and it is at least a start to moving the backlog of last year’s harvest since the last tonnage moved on February 24.

This military action to Odessa caused some volatility again in commodity prices and wheat futures fell sharply but have now recovered again to where they were four weeks ago.

Currently, November, 2022, Liffee feed wheat futures stand at £267, compared to £266.00 four weeks ago and for May, 2023, at that time were at £272.40 and currently stand at £271.

People who have been involved in agriculture for a long period have been reminiscing about the harvest of 1976 which was a drought year, and this year has been the earliest widespread start to the UK wheat harvest since 1976.

The early wheat yields this year, so far, have been good with high specific weights, but proteins appear to have been variable. The high record-breaking temperatures caused fire problems and some combines had been cutting through the night instead of during the day to get moisture levels high enough!

The hot, dry weather is not only here in the UK but widespread around the globe. France started harvest about two weeks earlier than normal and a week ago 50% of its total soft wheat area had been cut, compared with just 3% at the same time in 2021.

Wheat yields have been estimated at 6.95 tonnes/ha for 2022, down from 7.12 tonnes/ha in 2021 and this why analysts are forecasting the EU wheat production will be down by 7m tonnes from last year, to 123m tonnes this time.

The impact of drought and heat on the US winter wheat crop has been causing volatility in its markets, too. As of July 17, 70% of the US winter wheat crop had been harvested which is in fact around the five-year average.

Russia is looking to have a larger wheat crop this time which will lead to a bigger exportable surplus from an expected crop of 90.9m – exports could hit 40m tonnes. As of July 14, Russians had cut 3.7m ha of wheat, 600,000 ha up from the same time in 2021. Yields are averaging 4.2 tonnes/ha, up from 3.4 tonnes/ha compared to last year.

On the other side of the coin, recent drought conditions and the ongoing war in the Ukraine has severely reduced wheat production, which is now estimated at just 19.5m tonnes for this season and export availability is set to reach its lowest in eight years at just 10m tonnes.

Argentina is also looking at a reduction in wheat tonnage this year, down by 2.7m tonnes and exports down accordingly by 3m tonnes. Australia is looking at a reduction in wheat production of 6.3m tonnes and exports down by 3.5m tonnes.

Even with higher Russian wheat production, globally the wheat supply situation is still going to be tight for 2022-23, with stock-to-use ratio, excluding China, forecast at 21.2% instead of 19.8%. This could see ex-farm prices remain higher than historical averages.

Read more: Doug Niven: Hot weather in the fields – but markets cool down

The International Grains Council cut the total grain production forecast for 2022-23 by 3m tonnes down to 2252m tonnes in its latest report due to wheat, barley, and maize drought in the EU but global consumption was cut by 3m tonnes as well.

France, along with other EU countries, is said to be maintaining a record-breaking export pace with wheat exports up to July 10 up to 364,000 tonnes, compared to 294,000 tonnes last year. Egypt has bought 640,000 tonnes, of which 360,000 tonnes came from France.

Last year, this tonnage would have come from Russia and Ukraine as Russia is having difficulty in competing on price due to export taxes.

EU wheat exports are now up to 1.4m tonnes for the first three weeks of the 2022-23 season and French wheat exports outside the EU are looking to rise by 12.4% to 10.95m tonnes, despite a 5.6% fall in harvest tonnage.

The UK has the potential to export wheat for 2022-23, but this will depend on EU export wheat prices being higher than UK domestic prices. There are problems for some Group 2 wheat varieties here in the UK where Hagbergs and specific weights have been good, but protein levels have varied widely.

A significant volume of varieties are below 11% and have been consigned to the feed heap and few of the Group 1 varieties tested meet the miller’s minimum bread making specification of 13%.

Even though wheat prices have been coming down over the past few weeks, UK milling wheat premiums have remained historically high. In 2021-22, milling premiums averaged £29.74 per tonne over UK ex-farm feed wheat for the season.

In 2019-20 the premium averaged £18.56, this year premiums are remaining strong and at July 14, UK ex-farm bread milling wheat was £47.90 above UK feed wheat.

It is estimated that 24%, or 437,000 ha of the total UK area has been planted to Group 1 milling wheat varieties for this harvest, compared to last year when it was 29% planted to Group 1 varieties.

Feed barley prices have followed wheat, moving in a range of £5-£6 per tonne and barley’s discount to wheat remains around £20-£25 per tonne. Some UK barley exports took place to Portugal last week, but other countries have also had good yields, so demand is slow.

Some demand was expected due to the drought affected EU maize crop, but this has yet not happened.

Malting premiums are high at £50-£80 per tonne over feed but barley cut in high temperatures and very dry will need careful cooling storage facilities. Malting varieties make up more than 60% of this season’s barley area.

The UK’s annual inflation rate increased to 9.4% in June, the highest it has been since 1982. This could influence sales, such as alcohol, although in the recession of 2008-09 sales of wine and spirits remained the same but beer sales were hard-hit and fell from a 6% year-on-year growth in 2007 to a 1% decline in 2009.

Maltsters in the UK buy around 1.8m tonnes of malting barley every year and produce about 1.5m tonnes of malt. In 2021, 53% of malt usage was allocated to distillers and only 31% to brewers, with the rest going for exports or for use in food. With a larger proportion going to distillers, industry use is more affected by the sale of spirits than beer.

So far this year, alcohol retail sales have eased compared to 2021 sales with beer and lager declining at a faster rate than spirits. Beer and lager sales are down 14% from last season, which is surprising given the long hot dry weather experienced this year, but up 14% from pre-pandemic levels.

Spirit sales are down 8% from last season, but up 17% compared with pre-pandemic levels.