Week Beginning Monday 17th September 2018

UK feed wheat future broke above £180.00/T for the first time since May 2013 last week in what ended as an extremely volatile week. The London LIFFE wheat future for November 2018 topped out at £190.00/T last Thursday, £40/T ahead of the contract average. Looking ahead, November LIFFE wheat futures for both 2019 and 2020 are now trading in the region of £170.00/T; this could be worth some consideration, particularly given the level of uncertainty as Brexit negotiations continue.

It will also be worth monitoring UK wheat values comparable to other global prices. With UK wheat production unlikely to allow for a significant exportable surplus this season, UK values will need to be at a premium to other values to prevent grain from leaving the UK for a more competitively priced market. However, currency movements will blur this – it will also be important to monitor the value of the pound alongside other major currencies.

 

Feed wheat for spot collection is currently valued in the region of £180.00/T ex-farm. Further forward, £190.00/T ex-farm is now trading for next spring. As for movement before the end of the year, £185.00/T ex-farm currently looks like a realistic offer for October collection.

Feed barley is proving difficult to pin-point at the moment and demand is good due to a lack of drought-suffered silage. Harvest values are currently trading in the region of £160.00/T ex-farm for as available collection whilst New Year collection offers an excellent carry at £175.00/T ex-farm.

 

The first of the AHDB weekly harvest reports arrived on Friday afternoon and the results are pleasing.

“Dry, fine weather has meant harvest has kicked off early this year and by the 24th July, 22% of the total GB cereal and oilseed area had been harvested”. They added that crops have moved rapidly from grain fill to ripening, while settled weather and low due levels has enabled excellent progress to be made.

  • Around 80% of winter barley had been harvested by the 24th July, significantly ahead of normal. The current yield estimate is close to the five-year average of 6.8 – 7 tonnes per hectare.
    • Locally, a decent majority of the winter barley is now cut and almost all have at least made a start. Malting quality has been excellent despite the variation in nitrogen levels. With the odd exception, all feed samples have met the required industry standard of 63kg/hl. Anecdotally speaking, I would say that local yields are towards the upper end of the above spectrum but anywhere from 6.5 – 9 tonnes per hectare.
  • In the same period, 63% of winter OSR had been harvested, again ahead of normal. Yield figures so far are based heavily on a small sample of early crops predominantly in the South and East – the current estimate is 3 – 3.2 tonnes per hectare, down 10-15% on the five-year average of 3.5 tonnes per hectare.
    • Again, a decent majority of the winter OSR is now cut and local results are varied, but generally pleasing with yields anywhere from 2.5 to 5 tonnes per hectare. The majority seem to have done around 3.75 tonnes per hectare which is significantly above the current GB estimate.
  • Around 5% of the winter wheat area had been harvested by the 24th July, with completed area up to 20% in the South West and South East. Again, this progress is ahead of the last five years. Yield data is limited at the moment, but early reports indicate yields close to or slightly below average.
    • We are yet to see enough wheat samples to make any conclusive comments at this stage, but most growers are both pleased and extremely surprised! Some wheat samples look small but are weighing well and milling quality has been excellent so far.

 

Further afield, a recent report as forecast EU wheat yields down to 2.4% below the five-year average which is far less than expectations. According to the report, the most adversely affected EU wheat yields are in countries boarding the Baltic and across northern and central Europe.

However, whilst wheat yields have been adversely impacted, forecast maize corn yields have fared fair better. “Abundant rainfall in southern central and south-eastern Europe, where many large producing countries are located, has been advantageous for developing maize corn and forecast yields are since revised upwards”. This will certainly be something to consider for the weeks ahead – next week’s USDA WASDE (due on the 10th August) will certainly make an interesting read!

Global oilseed prices generally have traded sideways in recent weeks as the ongoing trade dispute between China and the US continues. Furthermore, there is growing concern that lower OSR yields throughout Europe will produce a far smaller crop than forecast this season, but this is yet to be confirmed. Also, it is important to keep an eye on Canada and Australia – both are suffering from dry conditions and rainfall is needed soon to improve prospects.

Current values are now trading in the region of £306.00/T ex-farm for as available collection.


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