Northern Hemisphere Harvest Update

As grain harvesting continues to get underway across the Northern Hemisphere, UK grain values have fallen under pressure over the last week or so.

Opinions are mixed regarding the outcome of last week’s European heat wave. For some, the recent high temperatures have ‘merely assisted the maturation of winter crops’ and insist that we can be reassured by the favourable spring that all crops enjoyed’ earlier this year. For others, dry conditions have added pressure to both spring and winter crops, particularly those across central Europe.

According to the US Department of Agriculture (USDA), ‘dry weather and above average temperatures which persisted throughout early July’ have significantly altered the prospects for this year’s European wheat crop and they have subsequently downgraded their estimate to 147.88 million tonnes. This is a 3 million tonne decline on estimates forecast a month ago, and more than 8 million tonnes lower than initial forecasts earlier this year which were close to last year’s total of 156 million tonnes. 

Around 15% of this year’s French grain harvest is now believed to be in the shed, the majority of which is winter barley. Yield reports are varied although most appear to be in line with the five year average and the local Agricultural Ministry are still insistent that we should continue to expect a soft wheat crop in excess of 37 million tonnes, regardless of what the USDA are saying. Over in Germany, harvest progress is limited; we should have a clearer idea of yield prospects as harvest gets fully underway.

Further afield, Russia are now almost 10% of their way through this year’s wheat harvest and all local yield estimates are above (albeit marginally) last year’s average yield of 3.64T/Ha. Simultaneous to this, the USDA have increased their forecast for this year’s Russian wheat crop to 57 million tonnes. This is a 2 million tonne increase on last month’s estimate and is now just 2 million tonnes short of last year’s total. A favourable weather forecast for the week ahead should allow for progress to continue across the South. Harvest progress in neighbouring Ukraine is currently unknown.

Following extensive talks in Brussels, Eurozone leaders have this week agreed to offer Greece a third bailout, averting the risk of Greece leaving the Eurozone. This appears to have marginally strengthened the Euro although further uncertainties are expected to remain until the restructuring of Greece’s debt is formalised later this week. Consequently, UK feed wheat markets have been volatile once again over the last couple of days and pinpointing specific values for the purpose of this column is rather difficult! As I write, £120.00/T ex-farm currently looks like a realistic value for feed wheat at harvest.

To view this month’s USDA WASDE report in full PDF format please see:

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