Category: Arable

Grain Market Update

UK wheat prices were largely stable through January.  This is despite further tightening of the global grain supply and demand and rising maize prices.

The chart shows the latest figures from the International Grains Council (IGC).  The latest figures relate the the previous, 2024 harvest.  The IGC produces its first current-year estimates in March.

US maize prices have been rising following a further tightening of the global grain balance sheet.  As can be seen, production has been cut whilst the consumption forecast has risen.  End stocks are set to be the lowest for some years.  These figures are supported by the United States Department of Agriculture’s forecasts which have output and stocks reducing by 7 and 5 million tonnes, respectively.

Attention will now turn to the South American maize and soyabean crops.  There has been some concern about excess rainfall in Brazil which could hamper planting of the second maize crop.  The second maize crop accounts for 75% of Brazilian maize production and is planted in February and March.  However, the outlook now looks like rainfall in Brazil will be at normal levels.  Production forecasts point to record Brazilian maize production at 120 million tonnes.  For Argentina, dry conditions are a concern, but production forecasts again remain high.  Increased concerns for the Brazilian maize crop or changes to Argentinian forecasts could see prices increase and provide short-term selling opportunities.

Despite rising maize prices, which underpin feed markets, UK wheat prices, while up on December, have remained largely flat through January.  One of the drivers for this is the strong import programme of grain in 2024.  Data available from HMRC, from July to November 2024, shows 2.6 million tonnes of combined wheat and maize imports.  These imports are keeping a lid on domestic values.

UK oilseed prices have been supported by a tight UK market.  Ex-farm oilseed rape in January averaged the highest monthly price since February 2023, at £430 per tonne.  There has been growing concern about the decline of rapeseed area in the UK, with an ‘OSR reboot’ campaign, led by United Oilseeds looking to help the area recover.

While UK grain prices remain stable, the cost of fertiliser has been rising heavily through January.  Reports of a tightness in UK and European nitrogen supplies have resulted in increases in the price of ammonium nitrate and urea of around £20-30 per tonne.  Adding to the challenge, offers are being withdrawn quickly, making it hard to gauge the price of fertiliser on any given day.

Neonicotinoid Ban

The Government has set out its intention to completely ban the use of Neonicotinoids, including ending the use of emergency authorisations.  The Neonicotinoids in question are Clothianidin, Imidaclopria and Thiamethoxam, which pose a risk to bees and other pollinators.  Under current pesticide legislation these are banned from general use within the UK, but emergency authorisation has been given (see article https://abcbooks.co.uk/emergency-sugar-beet-seed-treatment/) for Cruiser SB to protect sugar beet crops from virus yellows, in each of the last four years.  But to honour an election commitment, the Labour Government has said it will ‘first review and update the approach on applications for emergency authorisation in England.  The revised approach will set out how all future decisions on emergency authorisation take full account of the importance of pollinators.  We will also identify and assess potential changes to legislation’.

In terms of this year, Defra had said the current legal requirements for emergency authorisations were still in place and applications for 2025 would be considered under the law as it stands.  But it has now been confirmed that an emergency authorisation will not be allowed this year.  An application from the National Farmers Union and British Sugar for emergency authorisation to use Cruiser SB on sugar beet in England in 2025 has been denied.  Emergency authorisation can only be given if 5 tests are met;

  • there must be a danger
  • there must be special circumstances which make it appropriate to derogate from the standard approach to authorisations
  • the danger must not be capable of being contained by any other reasonable means
  • an emergency authorisation must appear necessary because of that danger
  • an emergency authorisation may allow only limited and controlled use of the plant protection product

The Environment Minister, Emma Hardy, decided that the fourth test was not met and that emergency authorisation should not be granted.  The full Decision Statement can be found at https://www.gov.uk/government/publications/neonicotinoid-product-as-seed-treatment-for-sugar-beet-emergency-authorisation-application/statement-of-reasons-for-the-decision-on-the-application-for-emergency-authorisation-of-the-use-of-cruiser-sb-on-sugar-beet-crops-in-england-in-2025.

Pesticide policy and regulation is a devolved issue and with regards to the Neonicotinoids Policy Statement it applies to England only.  However, the Government has said it will work with the devolved Governments to seek a ‘shared and consistent way forward’.

The announcement comes ahead of the publication of a new UK National Action Plan (NAP) which will set out how pesticides can be used sustainably.  The full Policy Statement can be found via https://www.gov.uk/government/publications/a-new-approach-to-the-use-of-certain-neonicotinoids-on-crops-grown-in-england?

Glyphosate Resistance

The AHDB’s Weed Resistance Action Group (WRAG) has confirmed the first case of resistance to Glyphosate in the UK.  The incidence was found in Italian rye-grass (Lolium multi florum) on a farm in Kent, where the plants survived after Glyphosate was applied at the correct rate, time and conditions.  The population was from a site considered to have an elevated risk of developing Glyphosate resistant weeds.  Further testing by ADAS, under controlled conditions in a glasshouse, on plants grown from seeds collected on farm confirmed the resistance.

Since 2019, ADAS and NIAB have tested over 300 weed samples but to date there has been no indication of glyphosate resistance in any other sample screened.  However, AHDB has said a ‘small number’ of other cases are under investigation.  There have been some cases reported in Europe (2006 in Spain and 2012 in Italy) but, according to AHDB, most cases of Glyphosate resistance in Italian rye-grass have been in North and South America.

In responce to this case in Kent, ADAS will screen Italian rye-grass populations that survive Glyphosate applications (prior to drilling a spring crop).  These will be conducted on live plant samples submitted by farmers and advisors.

Grain Market Update

The global grain market is tighter in the latest United States Department of Agriculture (USDA) World Agriculture Supply and Demand Estimates (WASDE).  The forecasts, published on 10th December, reduced global grain stocks by more than six million tonnes.

The tightness in the grain market comes from the maize and wider coarse grains market, where demand increased by almost nine million tonnes.  The wheat stock position increased marginally, despite a fall of two million tonnes in production.  The picture for global grain supply and demand is still not set with harvest due in the Southern Hemisphere.

Alongside the tighter supply and demand outlook, trade reports suggest a tightening of Black Sea grain availability in 2025.

The tighter supply and demand outlook is increasing in global grain prices.  Paris wheat futures (May 2025), often a good benchmark for UK grain prices, have increased by more than €20 per tonne since the beginning of December.  Despite the increase in wheat prices on the continent, UK prices are flat over the same period.  A strong Sterling/weak Euro has undermined the ability of UK cereal prices to rise.  UK wheat futures (May-25) were up by only around £5 per tonne over the same period.  However, the value of oilseed rape has increased significantly in the UK over the past month.

In December, the value of Sterling against the Euro hit the highest point since the EU Exit referendum on 23rd June 2016.  It is arguably a case of a weaker Euro than strong Sterling with a series of political challenges, notably in Germany and France weaking the single currency.  The relative strength of the Pound makes importing grain from the continent cheaper and undermines the price of UK cereals.  Similarly, it also makes purchasing imports from the EU cheaper.

Imports have been a big part of UK grain supply and demand this season, due to tight domestic availability.  In the season to October 2024, wheat and maize imports have totaled more than 2 million tonnes, 50% higher than the 5-year average.

The AHDB published its Early Bird Survey results this month, with regional forecasts of crop areas.  The survey shows a 5% increase in the winter wheat area to 1.61 million hectares. The survey captures data up to November 15th, subsequent improvements in conditions may have resulted in an increase in area since that point.

Crop Areas & Yields

Defra has released the provisional summary of UK crop areas and combinable crop yields for harvest 2024.  The results confirm what a difficult year at has been for growers.  The latest figures show a decline in both the UK wheat area and yield resulting in a 20.3% reduction in grain production for 2024, at 11.15 million tonnes.

Total barley production is up on the year.  This is driven entirely by an increase in spring barley grown (+18.7%), as producers were unable to grow winter crops because of the wet autumn.  However, even with a 5.1% increase in area, the increased proportion of spring barley resulted in a 3.1% decline in average yield and total production was just 1.8% above year earlier levels at 7.1 million tonnes.  Oat output was up, with an increase in area, again as a result of growers switching from winter to spring crops and also a better yield than the previous year, although still not back to historic levels.  Growing OSR remains challenging, and the area has now fallen below 300,000 hectares; yields were also down resulting in a total UK production of just 823,000 tonnes, -32.3% compared with 2023.  Other significant changes on the year were combining peas, with the area planted up by 46%, another ‘winner’ as a consequence of the difficult autumn.

The table below summarises the data –

Loam Farm Latest

Following harvest 2024, we have updated the figures for our Loam Farm model.  This shows low profits from the previous cropping year.  In addition, the outlook for 2025 is not great.

Loam Farm is a notional 600 hectare business that has been used since 1991 to track the fortunes of British combinable cropping farms.  It is partly owned and partly rented and is based on real-life data.  It has one full-time worker and employs harvest casual labour.  It grows a range of cereals crops and has entered into an SFI agreement.  The table below provides a summary of the last three harvest years, and a budget for harvest 2025.

The farm is completing its grain sales from harvest 2024.  it has less to sell than average due to reduced yields – a result of the wet weather through the autumn of 2023 and spring of 2024.  Coupled with unexciting prices this means the output of the farm is reduced – some 35% on the 2022 harvest year – although it must be noted that this was an unusually good year.  Although variable costs have fallen, overheads have climbed.  This has resulted in a loss from production.  This year’s residual Basic Payment and the SFI the farm has entered offset this shortfall, but there is a low level of overall farm profitability.

We have commented before about the variability of results from harvest 2024.  Loam Farm is simply an illustration.  Some businesses will have had an ‘OK’ year (although very few are likely to have had a ‘good’ year).  But, equally, some combinable cropping farms will have fared worse than Loam Farm and are facing significant losses for the past year. 

Turning to the budget for harvest 2025, output is forecast to recover somewhat.  This is largely due to yields reverting to average rather than any firming in prices.  Loam Farm has managed to establish its crops this autumn despite some testing conditions.  With costs not changing greatly, profitabilty from production improves so that there is a positive return.  The sharp drop in the Basic Payment for 2025 can be seen – this is a result of payments being capped at £7,200 per farm.  Previously, Loam Farm was budgeting on BPS income of £58 per hectare.  The SFI income has risen as the farm has added some new SFI2024 options.  It shows how important this income stream has become to overall profitability.  

Grain Markets

Farmers might have hoped that the small UK grain harvest would support prices.  However, it must be remembered that UK prices are largely determined by the global market.  Furthermore, the UK seems to have already imported enough grain to make up for the shortfall at harvest 2024.  In July to September, UK imports of wheat were nearly 900,000 tonnes, plus 640,000 tonnes of maize.  The high level of wheat imports includes Canadian and other origin high protein wheat, which is eroding milling premia.

Some support has been seen for grain prices towards the end of November, driven by the increased tensions surrounding the use of western weapons in Russia.  However, prices still remain subdued relative to the levels seen in recent years.

Prices of oilseed rape have responded to restricted availability of oilseed crops at the global level.  The International Grains Council (IGC) estimated in November that the supply and demand of soyabeans has tightened relative to earlier estimates, although stocks are still expected to increase year-on-year.  This, coupled with estimates of smaller oilseed rape crops in key growing regions of Ukraine, Europe and Australia, has lifted prices.  Values can be seen in Key Farm Facts.

One factor which had been supporting European pricing of oilseeds was the impeding EU Deforestation Regulations, which have been cast into doubt with EU Member States voting for the introduction of ‘no risk’ zones which will be extempt from regulation.

Crop Areas 2025

The wheat area is forecast to increase by at least 5% for harvest 2025.  This follows last year’s rain-affected reduced acreage.  Figures from AHDB’s Early Bird Survey show a potential acreage of 1.61 million hectares of wheat.  The survey is based on a snapshot in time, and dry weather after returns may have led to further increases in area, up to 1.7 million hectares.

The big ‘loser’ in cropping this year is oilseed rape.  Increased growing risk and poor returns has resulted in growers turn their back on the crop.  United Oilseeds forecast the area planted in the UK this winter at 215,000 hectares, a 40-year low.  The reducing crop area has prompted an industry group led by United Oilseeds to launch an ‘OSR reboot’. The relaunch is aimed at increasing confidence in the crop.  This, in turn, aims to increase the ability of UK farmers to satisfy domestic crush demand (around 2 million tonnes).

Revised Early Bird Survey figures will be available in December.  These will incorporate the final UK June Census figures and further survey returns for later plantings this autumn. 

Grain Market Update

The 2024 harvest of wheat in the UK has been pegged at 11.1 million tonnes.  This is down 20% from the 2019-2023 average of 13.9 million tonnes.  This overall production figure masks regional variability in both planted area and yields for 2024.  The wet weather that plagued last year’s crop will have wide-ranging implications across regions and individual farms.  Cashflow of some businesses is likely to be challenged with less tonnage available to be sold and ex-farm feed wheat prices only £6 per tonne higher than October 2023, at £183 per tonne.

The cumulative effects of last season’s rainfall and the wet autumn this year are driving concerns about the 2025 crop.  Met Office data for September suggests that much of England received 200% of the 1991-2020 average rainfall for the month.

The wet weather of last season and this has led some to alter establishment for this year, dusting the cobwebs off the plough, and hitching up the tine drill in an effort to avoid a repeat of last year.

There is some reflection of expectations of a reduction in wheat output in 2025 in global grain pricing.  At the end of October, the value of new crop (November 2025) UK feed wheat futures was around £12 per tonne higher than nearby futures.  The cumulative impact of a tighter supply and demand of global grains in 2024/25 and challenging establishment for 2025/26 offer an opportunity for growers to lock in an early price around the £185-190 per tonne mark for feed wheat, depending on location.

Elsewhere in the world, dryness appears to be the primary concern.  There are challenges for establishment of winter wheat in Russia.  Lack of rain in the US is advantageous for the maize and soyabean harvests which are well ahead of average pace.  That said, it could check the progress of wheat planting and development.

Rapeseed prices are well ahead of year-ago levels, averaging almost £390 per tonne ex-farm across October.  Rapeseed production was down significantly in the UK, EU, and Ukraine in 2024.  Furthermore, expectations are for a smaller rapeseed area again in the UK for harvest 2025.  However, with a plentiful soyabean crop in the US and Brazil, strong availability of soyabean oil could partly erode the premium that rapeseed currently has.

Potato Update

The UK could be heading for its smallest potato crop ever because of a combination of a reduced area and difficult growing conditions.

There are no official estimates of the UK’s planted area or harvested area yet – they will not arrive until next year when Defra releases them.  In 2023, it estimated the harvested area in the whole of the UK at 98,345 hectares – the smallest ever.  Opinion suggests that there was not a decrease in area this year, with most industry-watchers putting the area at around 100,000 hectares.

The official figures for 2023 put production at 4.704 million tonnes, following an average yield of 47.8 tonnes per hectare.  A repeat of that yield would result in a 4.783 million tonne crop.  Meanwhile, the average five-year between 2019 and 2023 was 45t per Ha, which, if delivered, would mean a crop of 4.500 million tonnes, the smallest on record – lower even than the 1975 harvest of 4.542 million tonnes.  However, there are reasons to believe that the crop could be even smaller, with World Potato Markets suggesting the average yield could be as low as 43t per Ha, delivering a crop of only 4.3 million tonnes.  That compares with more than seven million tonnes in 1992.

Another wet autumn means lifting has been difficult.  At the end of October more than 20% of the crop was still to be harvested, which was similar to last year but behind previous years.  Yields are said to be very variable depending on location and rain volumes.  The lack of potatoes has supported potato prices.  Newsletter Potato Call reports maincrop prices of £300 per tonne, with best quality well in excess of that.

The lack of British potatoes increases the need for imports.  Fresh potato imports were up 75% in the year to August, but only to 145,000 tonnes, according to HMRC data.  However, a much larger volume came in as processed frozen fries, with imports at almost 850,000 tonnes, reinforcing the UK’s position as the second largest importer in the world after the USA.  Almost all those imports are from Belgium and the Netherlands.

The EU potato crop is expected to be a little larger this year than last, with a lot of that growth taking place in France which has increased its processing capacity.  Current free-buy prices there are about €130 per tonne (£108 per t) with little expectation there will be similar increases to last year that saw values jump to €600 per t (£500) by the end of the 2023/24 season.

British growers may not increase their potato areas significantly in 2025 despite the support of good prices, because of the continued high cost of production, consolidation to those growers with adequate machinery and storage, and continued challenging weather conditions.