Week Beginning Monday 15th July 2019

TODAY’S LONDON LIFFE WHEAT FUTURES:

• November 2019 – £149.50/T
• May 2020 – £154.05/T
• November 2020 – £151.75/T
• March – 2021 – £157.25/T

From what I can gather online from the twittersphere, winter barley harvesting is now as far north as Grantham with the bulk of the action in Norfolk and the South Coast. Yields are anywhere from 7 tonnes per hectare to 10 tonnes per hectare alongside good bushel weights. Regardless, it remains early days yet and the bulk of the crops harvested are 6 row varieties. If we manage to dodge the bulk of the showers this week, I would imagine that harvesting will be underway in Yorkshire by the weekend.

New crop feed wheat is back to £143.00/T ex-farm for September collection, whilst the benchmark £150.00/T ex-farm is now being offered for March/April.

As for feed barley, as available collection is currently valued at £120.00/T ex-farm.

Old crop feed wheat demand is non-existent this morning as supplies remain abundant. 232,000 tonnes of maize corn arrived into the UK in May, the second largest monthly total this season behind January’s 309,000 tonnes. Wheat imports also surprised, at 107,000 tonnes. Feed compounders also appear to be using less grains generally as the mild spring weather has reduced feed demand.

Towards the end of last week, Analysts at Strategie Grains have trimmed its monthly forecast for this year’s European Union soft wheat harvest by more than 2 million tonnes as it has factors in a late-June heatwave in Western Europe. The 2019 EU soft wheat harvest is now forecast at 140.6 million tonnes, down from the 142.8 million tonnes projected last month. Regardless, the new figure remains 11% higher than last year’s EU soft wheat crop.

Looking in closer detail, Soft wheat production for Germany was reduced by more than 700,000 tonnes, Spain by more than 600,00 tonnes and Poland by nearly 400,000 tonnes. It is also important to note that there were minimal changes for France, the EU’s biggest soft wheat producer, at 37 million tonnes.

Interestingly, they added that “the heatwave that struck Western Europe and Poland at the end of June has triggered concerns around yield potentials, particularly for crops on shallow soils. For the most part, the winter barley crops escaped impact from the heatwave because the grains were already ripening. The wheat, which was less advanced in the growth cycle, was at much greater risk from grain scald”.

Harvesting of winter barley is now well underway on the continent and yield indications are good, with the exception of Spain. Concerns remain for spring barley, which may have suffered more from the heatwave, whilst maize corn plants could also have been affected after chilly conditions in May.

Elsewhere, the recent hot and dry weather in Russia’s southern wheat belt, where harvesting commenced a few weeks ago, has boosted protein levels. Milling premiums are therefore beginning to fall under pressure, as are feed wheat values there. Bloomberg have described the Russian wheat harvest as “progressing well; there is a wall of wheat coming”.

The Ukraine are also seeing high-quality wheat at the start of their harvest. The bulk of grain in the southern region is registering as milling grades after hot, dry weather near harvest time boosted prospects. More feed-quality wheat may be harvested as we move into the North and West – forecasts remain comparable to a typical season with around 55% ranking as milling quality.

This year, UK oat production looks set to be the highest on records going back to 1980. AHDB believe that oats inclusions in the rotation have increased in recent years to control the threat of grassweeds.

But will an increase in oat acreage be a challenge for the domestic market?

According to AHDB, the English and Scottish oat area for harvest 2019/20 is estimated at 178,000/Ha, an 8% increase on the year. If we achieve a five-year average yield, oat production will top 1 million tonnes for the first time on records going back to 1980. Alongside this, the UK has an assumed oat demand of 850,000 tonnes per year. On this basis, the UK will have a need to export at least 150,000 tonnes.

Over the past five years, 93% of UK oat exports have been destined for the EU. Post-Brexit however, this will no longer be a guaranteed market.  The remaining 7% has been with China, North Africa, North America and Norway; all of which will become increasingly important to the UK in a post-Brexit era. However, the ability of the UK to access these markets will be hugely dependant on both the crop quality and competitiveness of price.