Week Beginning Monday 9th July 2018

Global wheat futures have continued to rise sharply over the past week following cuts to European production forecasts and the ongoing challenging weather conditions throughout the Northern Hemisphere.

The November 2018 LIFFE wheat future reached the highest price recorded to date for this contract last week £166.65/T) and has since moved beyond this.

AHDB have added that “high pressure continues to dominate across Northern Europe, meaning a continuation of above average temperatures and limited rainfall looks set to continue”. For the UK, June 2018 was one of the UK’s top five warmest June’s from records dating back to 1910. Limited rainfall is also proving problematic in most areas now.

Harvest 2018 is now underway here in Yorkshire and although we have only seen a handful of samples at this stage, many growers in the York/Selby/Holderness area believe that they will have made a start on some winter barley by the weekend. As for growers up on the Wolds, most remain a good ten days off combining which will nicely coincide with this Year’s Driffield Show.

The first samples seen are all 6-row winter barley varieties and bushel weights have averaged somewhere in the region of 62kg/hl which is certainly encouraging at this stage. Yields are anywhere from 7.5 tonnes – 9 tonnes per hectare which again is very pleasing.

New crop feed wheat is now valued at £170.00/T ex-farm for September collection.

Feed barley has continued to trade at a significant discount to wheat – £140.00/T ex-farm is now offered for harvest collection.

AHDB have commented that old crop feed barley sales have remained buoyant over the past couple of months after rising throughout much of the season due to good demand from the animal sector.

Furthermore, current warm, dry weather is impacting grass growth. This will have implications for the current feeding needs of livestock and forage production. This could mean an increased need to supplement animal feed in the winter months, hence the premium offered to growers for feed barley further forward (more than a £15/T carry is currently offered for December collection).

AHDB are now encouraging farmers to monitor silage stocks and calculate winter feeding budgets to plan ahead; please see their website for more information.

According to the local organisations, German grain production this year is now forecast at 41 million tonnes. If realised, this would be 9% lower on last year’s harvest. Furthermore, it would be the smallest harvest since 2007 when output totalled 40.6 million tonnes.

However, the fall in output can only partly be attributed to the hot and dry weather, particularly in the key growing areas of North and Eastern Germany. It also important to consider that Germany had a much smaller winter area sown in the autumn last year; the winter wheat area was down 6% from the previous year, winter barley was down 1% on the previous year and rapeseed was down 3% on the previous year.

If the above is confirmed, the smaller German grain crops would likely reduce export availability from the country this season. It is also interesting to consider that Germany has accounted for 26% of all wheat imports over the past five years. As for OSR, we could see higher German import requirements this season.

Globally, grain (wheat, maize corn and all other course grain) production is now forecast at 2,077 million tonnes by the IGC. This is a 12 million tonne reduction on the figure given earlier in the Spring (Mid May). The sharp cut follows on from “harming adverse weather in Russia and the EU” which has hampered prospects for this season’s harvests.

As a result, global grain output is now forecast at a three-year low.