December will be remembered for the amount of rain that fell over many days to add to the excess that we have seen over recent months.

This has left many fields waterlogged and it looks like the UK wheat area could be 15-20% lower than last year and could see a shortfall in wheat supply that’s unlikely to meet 2024-25 domestic wheat requirements as there is very little chance of any more winter wheat drilling taking place now.

Some of the demand could be met by using some of the substantial carryover from this 2023-year crop.

If we look at the premium between old crop wheat futures and new crop futures, there is a current premium of over £10 per tonne. Currently May 2024 old crop wheat futures stand at £194 per tonne and November 2024 new crop stands at £206 which is a £12 per tonne premium.

*Cereal surplus*

Normally the weight of a UK wheat surplus would push prices lower to achieve export sales, but current physical prices are about £10 per tonne too high to compete with other exporting countries as the carryover premium prevents prices from falling low enough.

The official UK 2023 wheat production estimate is now put at 13.98m tonnes but with no exports, the carry out could be at least double the amount that the UK domestic market will require.

Last October the UK only exported 20,000 tonnes but at the current UK price, total wheat imports for the whole season are expected to be 6% higher at 1.43m tonnes and currently are attracting wheat imports and for this season from July to October 581,000 tonnes have been imported which is 20% more than for the same period last year.

Exchange rates are still important to UK competitiveness and a stronger sterling makes imports more attractive if sterling remains strong against the US dollar going forward it could continue with stronger grain imports.

However, the strength of the pound against the euro will also be important as the eurozone remains an important supplier of grain to the UK.

*Slow exports*

EU wheat exports have been slow compared to the past two years and currently are 15% behind the same period in 2022-23 and 8% behind 2021-22 but 13% above the five-year average where to date 12.52m tonnes of soft wheat have been exported from the EU compared to 15.26 for the same period last year.

Earlier this month the AHDB published the latest GB animal feed production figures and from July to October this season, total production was at the lowest level since 2016-17.

So far this season usage of wheat, barley, maize, and oats has totalled 1.57m tonnes, down 3.6% from last season.

*Wheat consumption*

The latest UK supply and demand estimates indicate human and industrial wheat consumption to increase by 328,000 tonnes to 7.664m tonnes in the 2023-24 season.

This increase is largely due to the bioethanol and starch industries with usage expected to remain firm for the rest of the season.

If this demand continues or increases, we could see strong price premiums or increased imports of wheat.

Now surplus wheat available for either export or free stock is estimated at 947,000 tonnes, which means premiums could remain at the current high level for at least the short to mid-term.

Feed barley prices have remained low due to the lack of any export business as UK prices are too high but there has been some domestic demand from English maltsters for early next year as UK prices are less than in Scandinavia, plus the quality is better from UK origin as well.

With barley still priced at £20-£22.00 less than wheat there will be a demand for barley for feed rations but we will see the total barley area increase next year so this could put pressure on prices going into the next crop year.

*Oilseed Rape*

Oilseed rape prices have eased on the back of lower soybean values recently due to better weather conditions in Brazil, leading to a predicted soybean crop bigger than last year’s 160m tonnes.

Oilseed rape prices had earlier been firm as there was strong demand from crushers who were struggling to get supplies which were scarce due to lack of ex-farm selling especially as Australian canola will not come on stream until late January.

Canada has increased their canola crop up from 17.37m tonnes up to 18.33m tonnes which will help global supply and demand and for the first time much of Canada’s production is to be used for US biofuels due to increased production.

Global fertiliser urea trade has slowed down as more suppliers produce less tonnage and the latest urea import figures into the UK show a 22% reduction in the 2023 January to October period in comparison to 2022 but still significantly higher than in 2021.

Ammonium Nitrate imports are down as well by 9% and again lower than in 2021 and supplies look tight for spring 2024 just when buyers are starting to look for supplies for their fertiliser applications in the spring following a very wet autumn.

China, which is the world’s largest wheat producing country, bought over 1m tonnes of wheat from the US when the US wheat futures fell to contract lows, but the sale revived futures prices once again.

*China*

This is China’s largest purchase of wheat from the US since 2014 and China’s wheat production estimates for this season are 137m tonnes and domestic Chinese demand is 153m tonnes so China is expected to import 12m tonnes but still their stocks will drop 6m tonnes on the year to 134m tonnes.

World wheat production is forecast higher as Australia has increased its wheat production up to 25.5m tonnes and Canada up to 31.95m tonnes.

Together Australia and Canada will account for 20% of global wheat trade in 2023-24, 69% of rapeseed, and 85% of oat trade.

World wheat consumption is forecast to rise by 1.8m tonnes which will see world stocks reduce slightly to 258.2m tonnes which would be 11.65m tonnes down on the year.

*Floods*

We have been discussing the recent poor weather and resultant drop in potential wheat production for next year and it has been estimated that extreme weather events are now costing Scotland’s farmers more than £160m per year with this autumn’s unprecedented floods and experts say that this is a situation that is only going to get worse. Already we are looking at a reduction in wheat for next year and food production depends on us having healthy ecosystems and a stable climate.

The Scottish Government’s recently published draft Agriculture and Rural Communities Bill is looking to find ways to help choices made by farmers and the publication of the Government’s Land Reform Bill which is to look at the responsibilities of landowners has been delayed due to many responses to the consultation paper.

At least politicians are now looking at high quality food production and food security along with sustainable practices and support for rural communities. More than 80% of Scotland’s land is agricultural so the scope for major nature recovery and working together with food production is great. Farmers can play a major part in this but should be rewarded accordingly and should also receive a fair price for their goods.

Food top of the COP

It is 28 years since the first “Conference of the Parties” (COP) meetings took place to look at climate change issues that were causing concerns at that time and earlier this month the 28th meeting of COP took place in Dubai where around 100,000 delegates took part over twelve days.

It was interesting to note that it was hosted by the UAE which is a major oil-producing nation, and it was pointed out that fossil fuels contribute over 75% of global emissions!

One area that had been ignored at the previous 27 meetings was food production and again it was pointed out that food production globally is responsible for 33% of greenhouse gas emissions so it was encouraging that COP 28 was opened by the UAE to discuss food systems, farming, and climate.

Investigating climate change means that food consumption and production must adapt, transform and commit to integrating food and farming into future climate negotiations and this COP meeting held more than 650 food-related events over the 12 days and food systems’ role as a key driver of climate change has now officially been recognised.

A statement of intent was signed by at least 158 countries at the event which included the UK, EU, and USA. Some interesting figures that affect food supply now and in the future were that during the 12 days of the event from 30th November -12th December the world population increased by 2.6m and now stands at 8 billion.

At the time of the first COP in 1995, the world population was 5.74 billion so it has increased by 39% therefore we can see why we need to put food security and supply at the top of the issues for discussion as there are already many hungry people starving at the present time.