Weather

At last, summer has arrived with probably the hottest day of the year so far where temperatures reached 25°C here in the Borders and temperatures are expected to stay high for most of this week.

We have also seen the Royal Highland Show come and go without being spoilt by rain and winter barley is starting to ripen which means harvest is getting closer.

Wheat

Various estimates have been mentioned for global wheat production and here in the UK now down from around 15mt last season to only 10.351mt of wheat is expected to be produced due to prolonged rainfall and low temperatures damaging the yield potential.

If the 2024 UK crop is just over 10mt, the wheat carry from the old crop and imported volumes will each need to exceed 3mt to meet domestic demand.

This might be possible with the carry, but UK ports might struggle to handle such high import volumes. Some areas of the UK have received just 50% of its usual sunlight for this time of year, which happened in 2012 and resulted in widespread ear disease and low specific weights.

From last July to April UK wheat imports totalled 1.84mt, up 65% on the year and up 25% on the prior five-year average. As well as limited high-quality supply from harvest 2023, concerns over the upcoming harvest has meant that imports have remained busy with full season 2023-24 imports expected to reach 2.175mt which is an increase of 60% or 815,000t on last year.

To reach this figure, the UK would need to import on average 169,000t a month for the rest of the season. This would see an increased tonnage of maize imports due to being more price competitive against wheat in recent times.

Usage of maize in the bioethanol, brewing, distilling and animal feed sectors is expected to drive an increase in domestic demand for maize for the remainder of the season. The USDA released its June World Agricultural Supply and Demand Estimates for wheat with Russia’s production cut considerably as well as cuts in Ukraine and Europe.

The hot dry weather followed by frosts during May in Russia resulted in the wheat crop being cut from 88.0mt in May down to 83.0mt and some estimates put the total at nearer to 81.0mt. The head of the Russian Grain Union stated that a large proportion of the Russian winter grain crop had been affected by frosts and the southern Rostov region declared a state of emergency due to drought with potential crop loss of up to 30%.

French wheat output is forecast to drop by 5mt on last year and might be less than 30mt due to ongoing rain and cool temperatures, crop ratings are at 62% rated good to excellent and remain well below last year’s figure of 85%.

Other countries, however, are looking at a larger wheat harvest with Romania expecting a crop of 10.5mt which would be a record and Bulgaria are forecasting a 7m crop compared to 5.3mt last year. The US is forecasting a wheat crop of 51.02mt up from 49.3mt last year and the US 2024-25 wheat end stock is seen rising to 20.64mt which would be over 5mt up from two years ago.

The US wheat harvest is well underway which recently was quoted at 27% complete, well ahead of estimates and the five-year average of 14% at this point in the season. As can be expected states further south have made more progress and Oklahoma is now 83% complete compared to the five-year average for this state of 37% at this time of the year.

This has caused the Chicago Board of Trade futures to fall and for December 2024 futures fell to their lowest level since April 22, making an 18% fall in value from the recent peak on May 28. The London Liffee feed wheat futures have been falling as well, two weeks ago, July 2024 futures were at £186.85/t and now stand at £167.45/t, a drop of £19.40/t. November 2024 futures stood at £207.60/t and are now at £196.90/t, which is a drop of £10.70/t.

Turkey

The Turkish government recently announced that it will stop wheat being imported into the country from June 21 to until at least October 15 to protect Turkey’s domestic wheat producers from declines in global wheat prices due to harvest pressure.

Turkey is amongst the top five largest wheat importers in the world, importing 10mt of wheat each year with Russia and Ukraine being their largest suppliers. Turkey is the world’s leading flour exporter and one of the biggest exporters of pasta. Since 2018, only exports made from imported grain are allowed but until October 15, Turkey will allow exports of flour from home grown wheat.

Maize and Soybeans

Harvest in the US is already well underway and their maize crop in the south is rated at 74% good to excellent and the USDA is forecasting their crop at 377.5mt, down 3.1% from 2023 as the projected record yields will not offset a 4.9% smaller planted area.

Soyabean production is forecast to rise 6.9% to 121.1mt due to gaining planted area from maize plus record yields. Brazil is expecting their soybean production to fall to 151.8mt, Argentina is expecting to produce 50mt and this will result in world ending stocks of soybeans at their second highest total ever of 111.1mt for the 2023-24 season.

For 2024-25 world end stocks are forecast at 128.5mt which, if achieved would be the largest ending stocks on record, helped by Brazil’s projected record crop of 169.0mt.

Barley

Barley prices have dropped, even with very little ex farm sales, there has also been very little tonnage exported as UK prices have not been competitive with Baltic and Black Sea sellers.

With barley discounts to wheat remaining around £30/t it is a very competitive raw material in all EU rations and depending on the size of the UK crop, the exportable surplus ranges from 500,000t-900,000t. This could mean we only have between 300,000t-500,000t of feed barley to export all year.

Growing conditions for spring barley in May brought some rain which was required but June has been lacking in sunlight and heat which has left some crops looking stressed.

Malting barley prices have dropped as well but still command a £30/t-£55/t premium depending on variety and location. Imports of barley total 147,000t so far this season, which is more than double the level at the same point last season and the five-year average.

Pulses

The growing pulse crops are still benefitting from the recent warmer weather and even with some disease pressure crops are reported as in very good condition. Recently the UK bean crop was forecast to be below 500,000t, down from 650,000t last year.

However, with the recent good growing weather the UK crop is now expected to be over 500,000t. The price of new crop beans continues to follow wheat values with the recent price volatility affecting the bean market as well.

Oilseed Rape

Sterling reached its strongest level against the Euro since August 2022 earlier this month and stronger sterling makes imports comparatively cheaper and puts pressure on UK prices compared to EU values.

This affected UK delivered rapeseed prices and rapeseed delivered to Erith in November was quoted recently at £394.50/t which was £10.50/t down from the previous week. The global outlook for 2024-25 predicts reduced production of canola and rapeseed to a three-year low with the increased Canadian canola output likely to be offset by lower crops in other key growing countries.

The EU is looking to produce around 18mt, back from 20mt last season. In recent months European rapeseed has developed a premium over other oilseed products and rapeseed of other sources to reflect its import requirement for this season.