Weather
THE month of May has provided some good long spells of dry weather, but we have also experienced some very wet days as well which resulted in fields being flooded once again.
Before the latest wet weather when we had over 50mm in just over day, farmers were quietly saying that a shower of rain would be welcome just to freshen up the spring-sown plants which until recently was totally the opposite.
We seem to have missed spring this year and jumped from winter into summer as daylight hours lengthen and the temperature has also warmed up at last – but there is also the cold east wind to cope with at times as well.
Wheat
Feed wheat futures have been quite volatile over the past few weeks as Russia has experienced some cold weather and recently lost 830,000ha to frost. This has resulted in their total wheat exports for 2024-25 being cut from 91m tonnes down to the latest estimate of 83.5mt.
This has restarted speculative buying interest once again, sending futures markets to their highest level since February 2023.
This did not apply to the London futures markets as sterling continued to appreciate against both the dollar and the euro. The reduced Russian wheat tonnage will result in lower wheat exports which are now forecast down by 7mt to 45mt.
There are concerns that frost may lead to losses in 20-30% of wheat and other spring crops in Ukraine, but this has not been confirmed as at this time.
The EU crop prospects are improving with the French crop condition now at 64% good to excellent which is still well below last year’s figure of 93%. The EU wheat crop has now been estimated at 123.5mt for 2024-25 which would still be 2.6mt below last year and Spain is looking at a better crop than last year which will significantly reduce its import needs. Romania and Bulgaria are looking at improved crops as well.
The German government has confirmed an 8% drop in German wheat area to 2.6m ha following a wet autumn. Their winter rapeseed area is also down 6%, but the spring barley area is up 13% to 363,000ha.
The US winter crop condition is estimated at 49% good to excellent, which is well ahead of last year at this time when the figure was only 31%. Their spring crop is currently 76% good to excellent and up 5% this past week. Kansas, which is the US’ biggest wheat-growing state estimate the wheat yield for this year at 3.13t/ha which would be the highest since 2021 and above their five-year average of 2.85t/ha.
World wheat production is forecast to be higher by 10.5mt from last year, up to 798.19mt, but maize will be lower by 8mt to a total of 1.22bn tonnes. Increases in consumption for wheat will see stocks fall by 4.2mt and by 800,000t for maize. The US will see wheat stocks rise by 2mt and Canada up by 600,000t but Argentina, Australia, the EU, Russia and Ukraine will see stocks fall.
UK Wheat imports
UK wheat imports for March totalled 199,000t which means for the season from last July to March, imports reached 1.6mt, up 63% on the same period last year. From July to March, imports averaged 181,900t per month, which is above the five-year average of 150,300t and last year’s average of 111,600t over the same period. Some 87.3% of UK wheat imports came from Canada, Germany, France, Poland and Denmark.
Despite strong imports this season, milling premiums remain historically high. As of May 9, bread wheat delivered into the north-west of England for May delivery was quoted at £279.50/t which was a £89/t premium to nearby futures.
On November 2, some six months ago, bread wheat delivered to the same area for November delivery was quoted at £269/t which was a £84/t premium over nearby futures on that day. For the record, current Liffe feed wheat futures for July 2024 stand at £199.25/t and for November 2024 stand at £220/t. Two weeks ago, both these figures were no more than 50p different from what they are today.
The availability of UK milling wheat will remain relatively tight as we approach next season as an estimate released by UK flour millers indicates that Group1 wheat production for harvest 2024 will be 2.07mt which would be 38% down from last harvest.
This lower potential tonnage means premiums will likely remain high in at least the short to mid-term. Ongoing high levels of imported milling wheat will limit any major rises in premiums over the next few weeks, and conditions and availability from exporting countries will be monitored closely.
Food security and self-sufficiency
Having reported that milling wheat imports into the UK are up by 63%, there is increasing focus on food security due to global unrest, food shortages, climate change and other factors such as the recent pandemic. Food security, as defined at the 1996 World Food Summit, exists when all people, at all times, have physical and economic access to sufficient safe and nutritious food.
Self-sufficiency is the ability of a region or country to produce enough food without needing to buy or import additional food.
Food security could exist without a high level of self-sufficiency, if trade was stable and provided a population with safe nutritious food.
However, food supply is more complicated than that, which is why domestic production is important. Ensuring both trade and domestic production is sustainable both environmentally and economically is essential to ensuring food security.
Sterling
Over the past two weeks, a rise in the strength of sterling has offset some of the gains in global wheat markets for UK feed wheat futures. Sterling has generally risen recently due to better-than-expected economic growth in the first quarter of 2024.
Last week, sterling reached a two-month high against the US dollar and the highest level since early February against the euro. If sterling remains strong against the euro and US dollar, it’s likely to continue to impact the relationship of UK wheat prices to the global wheat market while a weaker sterling could help support UK prices relative to global level.
Barley
Barley prices recently have been quite volatile due to news of barley crops being affected by frosts in Russia, coupled with a lower planted area due to the weather which has supported prices. There has been increased farm selling at these higher prices now that the recent rainfall should help new crop barley achieve its yield potential. This has resulted in barley’s discount to wheat remaining around £30/t as wheat prices have increased as well.
Oilseed rape
European rapeseed prices have continued to rise as concerns over the EU crop condition and ongoing Black Sea issues continue.
A strong pound has reduced the price increases for UK ex-farm sales. The market continues to consider the impacts of a lower European rapeseed crop and there will be lower tonnage used for crushing due to increases in rapeseed prices which reduces the competitiveness of rapeseed oil in comparison to other competing vegetable oils.
Supply of soybeans continues to drive the oilseed market and latest figures from Brazil show an increase in production by one million tonnes to a total of 147.6m tonnes.
Pulses
Old crop bean prices continue to rise as there are very few old crop beans left to trade. New crop bean prices are very strong as buyers are unable to secure supplies due to a lack of sellers. Recent prices show that premiums of £50/t-£60/t ex farm are achievable for November or December movement. This is £20/t-£30/t more than seen over the previous four years.
Recent warm and wet weather is ideal for the growing crop and the current price premium is likely to come under pressure in the coming weeks especially as beans from the Baltic region are trading at a €30/t discount to UK prices.
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