Week Beginning 20th July 2015

The London LIFFE wheat future for November 2015 closed at £125.45/T on Friday evening (17^th July) – £5.85/T lower than the week previous. In Opening trade this morning, the future is valued £0.45/T lower at £125.00/T.

Currency is again predominantly responsible for the above – the pound is now at its highest level against the Euro since 2007, making UK wheat exports appear extremely uncompetitive when compared to a European alternative.

Just to exemplify how weak the Euro currently is, Agrimoney have this morning commented that French wheat was sold to Mexico last week despite plenty of offers from neighbouring USA. Algeria is also looking to source some European wheat as we head into the new crop months.

For those of you with old crop wheat left in the shed, there are some small opportunities available for late July / early August delivery in the region of £118.00/T ex-farm –please contact the office for more information.

As for new crop values, feed wheat for collection straight off the combine should just about make £120.00/T ex-farm. With the LIFFE screen currently red and heading lower, end-user demand appears to have thinned this morning.

This year’s winter barley harvest is now well underway in South Lincolnshire according to Farmers Weekly (please see their website for more). Various reports have suggested that moisture contents ahead of a showery weekend were excellent with several growers reporting moisture contents well below the 15% mark. Yields are anywhere between 6/T – 7.2/T per hectare for feed varieties although reports would suggest that some malting varieties (flagon and Venture) have achieved similar yields. The nitrogen content of these varieties is low with some testing below the 1.4% mark.

A couple of our growers in Northern Lincolnshire and several others in the Doncaster/Selby area are intending to make a start over the next couple of days, weather depending of course. Here in East Yorkshire, there are talks of our growers making a start in the Beverley / York area by the end of the week in some of the earlier winter barley crops.

Farmers Weekly have also commented that growers in Essex are now making a start with this year’s winter OSR crop. Yield reports are average although a number of growers appear to have been pleasantly surprised with yields in the region of 3/T – 3.5/T per hectare.

With wheat harvesting now well underway France (France is Europe’s largest wheat producer) and few problems reported, concern is now turning to Germany (Europe’s second largest wheat producer). According to the HGCA, the earlier development of the French wheat crop means that despite the initial hype, ‘weather conditions in early July are unlikely to have a noticeable impact on yields’. As for Germany, crops there tend to be later to mature in their final stages and we could therefore see a reduction in yield potential. European analysts Strategie Grains have therefore decreased their forecast for this year’s German wheat crop by 0.9 million tonnes last month to 25.4 million tonnes.

Concern remains for both spring drilled crops and maize corn crops throughout Europe – this should be one to watch as we progress into the later summer months. The USDA have already downgraded this year’s European maize corn crop by 2 million tonnes in this month’s WASDE –  

New crop OSR values have fallen under further pressure over the last week or so and £250.00/T ex-farm for August collection currently looks like a realistic offer. Harvest prospects over in the US are still uncertain as wet weather continues to threaten crops further north; August is a critical month for soybean development and this will definitely be one to watch, particularly for those of you who have short term storage options. Dry weather across Europe is also a concern – markets are therefore expected

The Ukraine has made a good start on this year’s wheat crop with around 25% of the crop now in the shed. Average yields are slightly better than last year and at this rate we could be looking at a crop (as estimated by agrimoney) in the region of 23 million tonnes – this would be a 1.5 million tonne decline on last year’s crop but would far exceed initial expectations earlier this year.

Consequently, the Ukraine have made an excellent start with grain exports – in the first two weeks of the current 2015-2016 trading season (commenced on the 1^st July), 138,000/T of wheat and 227,000/T of barley have been exported.

Again according to Agrimoney, Neighbouring Russia have made a notably slower start to this season’s export program, presumably due to a slow start to this year’s harvest and the new export tax which is now being implemented.

434,000/T of grain has been exported so far – the slowest start to the season since 2008. Perhaps European wheat supplies are also proving competitive aside Russian supplies?