Harvest has been a stop-start affair so far with intermittent rain causing delays throughout August and harvest does not seem to have got going properly yet. There was a good dry spell earlier when most of the winter barley was cut and straw baled but now oilseed rape and wheat are becoming ready for the knife.
As of 8th August, it was estimated that 94% of the GB winter barley area had been cut, which is in line with the five-year average at this date of 93% completed. Yields are again in line with the five-year average at around 6.8-7.2t/ha although yields on lighter soils are not as good due to the lack of water earlier in the year affecting crop development.
Winter barley specific weights have been variable averaging between 62-64kg/hl, screenings have been low between 2-4% and nitrogen level between 1.5-1.7% but there are still a lot of results to come in which could alter these figures. Because of the unsettled weather, there has been some demand for feed barley due to the lack of new crop wheat availability and barley’s approximate £20.00 per tonne discount to old crop wheat prices, export demand remains limited, with the UK finding stiff competition from other European countries such as Poland.
Around 5% of the GB spring barley had been cut up to 8th August which is below the five-year average of 11% at that date, early yields are around 5.2-5.5t/ha and nitrogen content is ok. Feed barley prices had picked up on the back of the Russia-Ukraine war but have eased again which has allowed the malting barley premium to increase to around £70.00 for spot delivery and up to £80.00 per tonne for October-November movement.
There is a bigger excess of barley in Europe compared to the UK and cheap grain continues to arrive into eastern Europe from Ukraine via road and rail and this makes it difficult for the UK to compete for export trade against countries like Poland, Ukraine and Romania.
As of the 8th August 76% of the GB oilseed rape crop has been harvested which is down from the 95% at this time last year and the five-year average of 80%. Yields are being reported as poor with the national average currently between 2.7-3.0t/ha compared to the last five-year average of 3.3t/ha and lower yields have been as a result of poor weather, pigeon and pest damage.
Europe looks to have harvested a relatively high yielding and high oil content crop which has resulted in prices easing by around £30.00 per tonne earlier this month and in the UK, rape delivered Erith for Harvest 2023 is quoted at £376.50 which is down £1.50 from last week. Prices are dependent also on the movement of rape out of Ukraine which in the past has been moving relatively easily but is now slowing down and becoming more difficult to export which again will cause price volatility.
Traders are now focusing on Australia and Canada to see how their oilseed rape crop will turn out as these two countries produce between them a similar tonnage to the EU. In 2021-22 Canada produced only 40% of what they expected because of dry conditions and this year it was beginning to look like another poor year, but more rain has arrived which should make crop prospects nearer to what has been forecast in recent months at around 18.8m tonnes.
Going into the 2023-24 marketing year, EU rapeseed supply looks satisfactory as they started with high stocks, and they are also expecting to import a substantial amount of Ukrainian rapeseed which has recently been harvested.
Again, on the 8th of August 5% of the GB oats had been gathered in which compares to the previous five-year average of 23%, the average yield is currently between 4.9-5.5t/ha.
Finally, to the UK winter wheat harvest update as of 8th August when 5% is reported to have been harvested, which is well behind the five-year average of 36% normally completed at this time of the year. Early reports are that yields are good and around the five-year average, but prices are following continental prices down as there appears to be no new issues currently taking place between Ukraine and Russia, also EU exports are slow as well.
The London Liffee feed wheat futures for most contacts dropped by £3.00 on Monday of this week and November 2023 wheat futures currently stand at £191.50 compared to four weeks ago when they were at £199.50 per tonne and lest we forget £279.00 last October. May 2023 futures were down £3.20 to currently stand at £203.00 per tonne.
Russia continues to dominate the world’s wheat export trade and earlier in the month sold approximately 600,000 tonnes of wheat to Algeria and there are reports that India has done a deal with Russia to import 9m tonnes of wheat over the next nine months which would equate to over 20% of the expected Russian wheat exports this season and if the 9m tonne figure proves to be accurate this would see a significant tightening of wheat supplies in the global wheat balance sheet.
Russia is currently exporting between 3.5-4.5m tonnes of wheat each month with some 70% of this total coming from its black seaports despite some drone attacks by Ukraine on a Russian tanker recently which gave concern for further wheat supplies. Any disruption to sea freight will see wheat prices increase, especially if importers are forced to find supplies from other sources such as the EU or US.
Russia is expected to produce 88m tonnes of wheat this season with exports at around 47.5m tonnes. Russian drones have retaliated by damaging the Danube port of Izmail along with 40,000 tonnes of grain in store there. Ukrainian grain shipments in July were 40% down on the previous month and just 40% of the Ukrainian wheat crop is seen as milling standard compared to 70% in a normal year.
The EU wheat harvest tonnage output has been cut to 124.73m tonnes which is 5m tonnes lower than previous estimates due to weather issues, especially in France where expected tonnage is now down to 35.7m tonnes. Germany has some sprouting problems in fields still to be cut due to the ongoing wet weather and they normally export a lot of bread making wheat to the UK where similar poor weather in the UK has seen many lodged wheat fields and resulted in low Hagberg results. The problem for the UK milling industry is that only 16% of UK C2 seed sales are group1 varieties so availability is already tight without losses due to poor quality and not helped by group 2 samples tested so far this harvest showing low protein and will be fit for a low-grade specification use at best.
Canada and Germany are key sources of wheat for the UK as they supply high protein bread wheat for blending with UK crops. These two countries along with France accounted for 69% of UK imports last season which is from July 2022-May 2023. If their wheat suffers from quality issues this could see UK milling premiums remaining strong as they were in the 2022-23 season. These three countries also are important exporters in the global rapeseed and barley markets, and any reduction in their rapeseed crops could tighten global rapeseed supplies and in turn support rapeseed prices.
There has been price volatility recently in the ammonium nitrate market as prices have been increased but both autumn and spring prices for liquid fertiliser remain unchanged. There is continued demand for fertiliser for oilseed rape establishment as farmers slowly work their way through this harvest. There has been some increase in ammonium nitrate prices in the UK as they have also for Phosphate and Potash product as well following increased buying by farmers for their 2024 crop as some prices were at their lowest since spring 2021 and were below those elsewhere in Europe and looked to have stabilized at that level but have moved up again by £10.00-£15.00 per tonne and last month AN was priced at £353.00 per tonne which was up £9.00 from June.
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