Happy New Year to you all and hope you had a great festive season. At the time of writing, John Aitchison at Lochton near Coldstream who has, as always, provided the latest weather information could tell me that we have had 77.5mm of rain in the first three weeks of December and more importantly four consecutive days without rain to give a total for the year to date of 698mm or 27.12 inches so far in 2023.

Last year by all accounts has been the warmest year on record and saw some record high temperatures during the summer, coupled with excess rain and storms which has meant that there are still some potatoes to lift and a lot of potential winter crops remain unsown.

As it is the end of one year and the beginning of another it is a good time to reflect on the past and look to the future. Looking back over 2023 and due to the weather total UK wheat production is estimated at 14.0m tonnes which is down 10% year-on-year and the lowest UK wheat production since 2021 and this could tighten UK supply and demand even further.

Total UK barley production is estimated at 7.0m tonnes, down 6% year-on-year. UK winter barley production is put at 3.2m tonnes and spring barley at 3.8m tonnes, down 10% on last year. Even with an increase in spring barley planted area last year, UK national yields are estimated at 5.5t/ha, down 11% from the previous year.

UK oat production is estimated at 830,000 tonnes, down 18% year-on-year.

UK oilseed rape production is put at 1.2m tonnes, down 11%, and like spring barley, despite an increase in planted area for 2023, production is lower due to poor yields which are estimated at 3.1t/ha, down 17% year-on-year.

The above figures show that there is a lower overall production for UK cereals, with total production now estimated at 22.1m tonnes which if there is no change to demand or import levels, the surplus available for either export or free stock would be 2,811K tonnes.

Now looking forward to this year based on the Early Bird Survey carried out by Defra in November and where the weather has remained wet with the Met Office reporting 120% of 1991-2020 average rainfall in November across England.

As a result, which also applies to farmers in the rest of the UK, they have not been able to plant all the crops that were intended. This has seen the UK wheat area for harvest 2024 estimated at 1.66m ha, down 3% year-on-year and the lowest since 2020.

Spring barley planted area is anticipated to be up 4% to 1,179K ha as higher spring barley planting intentions outweigh a drop in the winter barley area.

The planted oat area is forecast to be up 8% from last year to 180,000 ha, the oilseed rape area is forecast to fall 19% year-on-year to 317,000 ha and the pulse area is anticipated to be down 11% from last year. It looks likely that the intended area of arable fallow land will be up by 25% but this figure may vary depending on what the weather does over the next few months.

Moving on to other areas such as marketing a lot depends on what other exporting countries are able to do such as undercutting prices to be competitive in the global marketplace. Exchange rates are an important factor for example for wheat markets and recently because of the stronger pound and euro against the dollar this saw European prices fall while the US markets rose. UK and Paris wheat futures also fell due to pressure from exchange rates despite price rises in the US markets. Both the euro and pound reached multi-month highs against the US dollar which eased European prices and the weaker dollar added support to US prices.

The main support for sterling was the Bank of England holding interest rates unchanged for the third time in a row at 5.25% and similarly, the European Central Bank held interest rates at 4.5% but warned that inflation was likely to rise in the months ahead. Currently, UK wheat prices are closer to attracting imports than exports, exchange rates are still important to UK competitiveness and the strength of the pound against the euro is also important as Europe remains an important supplier of grain to the UK.

EU-27 exports are currently struggling against cheaper Black Sea supplies as European wheat exports are, as of 10th December, still 14% behind last year’s figures and could see a potential buildup of stock in 2023-24. This, however, could be offset by the lack of winter cropping having been done to date and in France, for example, their soft winter wheat planting is down 5.1% on the year to 4.49m ha which is the lowest in four years. Their winter barley was also down 4% to 1.31m ha although above the five-year average.

Feed wheat as of mid-December delivered in February in England was quoted at £180.00 per tonne, which was down £1.50 on the week and milling premium remains high with bread wheat delivered in January quoted at £271.00 per tonne which was down £1.00 on the week.

Oilseed rape delivered Erith for January in late December was quoted at £367.50 per tonne which was a fall of £6.00 over the week. Later, rapeseed delivered to Erith for Harvest 2024 was quoted at £374.50 and for May 2024 at £372.50. The new crop domestic rapeseed market’s pricing is being heavily influenced by this current marketing year, with harvest prices only just ahead of May 2024 prices.

Total EU OSR planted area is expected to drop for harvest 2024 despite an increase in French OSR area which is up 5% to 1.35m ha and up 17.3% over the five-year average. Germany is expecting to be down by 4% to 7% because of dropping prices last year and disappointing yields in 2023.

This does not mean that prices will rise if large US soybean plantings take place next spring as this will keep pressure on rapeseed prices. As of 9th December, 89.9% of Brazil’s soybean crop had been planted which is 6% down from this time last year and soybean planting in Argentina is 59.9% complete which is up 9% from last year. Forecasts of rain in Brazil will be welcome as farmers have been suffering from drought and have had to replant soybeans once again.

For this marketing year, soybean prices have been at a premium to rapeseed prices, due in part to large US and Chinese demand, combined with recent weather issues.

The latest fertiliser prices released this past week remain relatively stable with imported Ammonium Nitrate quoted at £359.00 per tonne which is in line with prices quoted in October, but UK produced AN was up £14.00 from August at £384.00. In comparison to last year imported AN has fallen by 52% with November 2022 prices quoted at £741.00 per tonne.

Prices before the energy crisis in 2021 and the outbreak of war in Ukraine in March 2022 for imported AN averaged £239 between 2017-2020. The stability of AN prices is mainly due to stable natural gas prices which account for 60% of nitrogen fertiliser production.

Looking forward Europe’s natural gas prices have been dropping recently as current natural gas supplies are at historically high levels due to reduced usage because of the warmer European autumn weather which has reduced industrial gas usage on the continent. So, while nitrogen fertilisers will continue to react to natural gas prices, ample gas supplies look to keep some fertiliser price stability in the short term which is good news.

Recently we have highlighted the issues of food security and an example of this is the decline in pig numbers which are at their lowest since 2012. The latest Defra figures as of 1st June 2023 show the UK pig population stood at 4.68m head which is a year-on-year decline of 10.3% which is a loss of 537,000 pigs resulting in a substantial fall in the numbers of fattening pigs. These are at their lowest number since 2015 at 4.26m head, a fall of 11.2% compared to June last year.

This week a £6.6m or 17% cut to Scotland’s Agri-Environment scheme was announced. For this 2023-24 financial year, only about 5% of the budget is being spent on dedicated support to farmers to deliver environmental benefits to improve climate change. This reduced support undermines the agricultural industry’s ability to play a full part in meeting its obligations around the production of food and drink and the above example of reduced pig numbers is a huge concern for the future of the industry to supply sufficient food for the world in the future.

Looking back over 2023 and due to the weather total UK wheat production is estimated at 14.0m tonnes which is down 10% year-on-year and the lowest UK wheat production since 2021 and this could tighten UK supply and demand even further.