Category: Arable

Potato Market Update

No two potato seasons are the same and that is certainly the case this year.  A year ago growers were struggling to plant potatoes in wet and difficult conditions, with some not seeing an end to the planting season until June. This year conditions are much more favourable allowing growers to get onto fields and plant.  Soon the cry may be for more water after one of the driest March’s for years.

Despite improved field conditions, growers are unlikely to plant a large potato area.  Last year the UK potato area was up a little on the all-time low of 98,000 hectares planted in 2023 to around 100,000 hectares – there are still no definitive Defra figures.  A poor growing season meant that the total harvest was around 4.4 million tonnes – the smallest on record. This year, the favourable conditions and two years of much higher prices means growers will probably plant more.  However, the area increase is not likely to be above 5%. Average five-year yields of 45 tonnes per Ha would deliver a 4.725 million tonne crop, which would not be much larger than the 2023 crop.  It would be remarkable if production nears anything like five million tonnes – before that only weather-affected crops were below that volume – 1976, 1977 and 2012.

GB Potato Production – Source Defra/World Potato Markets

Prices have eased compared to last year, but they are still historically high.  Newsletter Potato Call’s latest report puts Maris Piper prices for packing at up to £350 per tonne.  A year ago some buyers were prepared to pay £600 per tonne for the best of the variety.

Whilst prices are lower this season, British growers have not been exposed to the same decline in values that has taken place over recent weeks in mainland Europe. Free-buy prices had reached as high as €300 per tonne for processing potatoes, but lower demand for processed and a spooked market has seen them drop to €175 per tonne in six weeks. Processors in Belgium asked growers to reduce their contracted areas for the 2025 crop, which did not go down well, but hinted at concern among the industry.

Fears of a trade war between processed potato trading nations such as the US, the EU and Canada have affected the market, as has the rise of other suppliers including India, China and Egypt who have seen sales jump by more than 40% over the last year.  Lower potato prices in Europe make those stocks more attractive to importers into the British market, given the price difference between the two territories.

Combinable Crops Roundup

Old crop grain and oilseed markets tumbled through March.  There is a compounding set of factors behind this, including good planting progress in South America, improved weather in key growing regions, lacklustre domestic demand, and tariffs on Canadian canola (rapeseed) products. 

The most liquid old crop UK feed wheat futures contract (May-25) reached a contract low in March at £172 per tonne.  Domestically, the strong import campaign this year is going to result in an increase in stocks year-on-year.  This is despite a 20% reduction in wheat production in 2024 compared to 2023.  Milling wheat premiums have been eroded by the strong import levels.  Milling wheat premiums have fallen to just £20 per tonne, compared with £60 per tonne post-harvest. 

There is currently a £20 per tonne carry from old crop (May-25) to new crop (Nov-25) futures.  With crops reportedly coming out of winter in good condition, with limited disease levels, this premium could come under pressure.

The International Grains Council (IGC) published its first projections of supply and demand for the 2025/26 season on 20th March.  It forecasts that wheat carryover stocks will fall by six million tonnes year-on-year, despite an eight million tonne increase in wheat production.  For the wider grains complex, a forecast 52 million tonne increase in maize production leads to a one million tonne increase in total grain stocks.  The increase in stocks is further underpinned by an eleven million tonne increase in major exporter stocks.  This will put pressure on maize prices which is the main cereal crop in terms of global output.  There is still a long way to go until the 2025 crops are harvested so there is time for prices to move in either direction depending on crop progress and conditions. 

For oilseeds, soyabean stocks are expected to rise marginally, year-on-year (up one million tonnes).  However, prices have been undermined by the ongoing ‘trade war’.  Following a drawn-out anti-dumping investigation, China has placed 100% tariffs on Canadian canola (rapeseed) oil and meal.  Since the beginning of March, the value of Paris rapeseed futures (Nov-25) has fallen considerably.  From 3rd to 17th March the value of the contract fell by €40 per tonne (reaching €460 per tonne).  Prices have since recovered to €475 per tonne. 

Currency is another important watchpoint for the UK market.  Sterling has moved stronger against the Dollar.  This reduces UK grain prices relative to global markets.  However, it also makes imported inputs cheaper.  Movements against the Euro have been mixed although the Pound is currently weaker than at the start of the year (supportive of rapeseed prices in the UK). 

Fruit & Veg Aid Scheme

Defra has confirmed that the Fruit and Vegetable Aid Scheme will close at the end of this year.  The scheme continued funding that was available under the CAP to provide Producer Organisations (POs) in the horticultural sector with support for innovation, collaboration and assistance to market products.  It provides £40m per year to the sector through matched funding.  The announcement only applies to England, with the administrations in Scotland and Northern Ireland already extending their equivalent schemes.  The situation is Wales is unclear, as is the what happens where POs operate across different countries.  Defra has stated that it is considering the best way to support horticulture in the future and announcements will be made ‘in due course’.  The PO model is widely seen as a success in the horticulture sector.  The expectation is that Defra will move to a capital-grants model for any sectoral support in future.  This is seen as less flexible and more restrictive than the current system.   

Grain Market Update

Old crop UK feed wheat futures prices (May-25) declined through February.  There has been little news to support prices for some time.  Large opening stocks, high levels of imports and subdued demand will mean the current trend likely continues.  The large import levels of milling wheat in particular have reduced the milling wheat premium from an early season peak of £60 per tonne to around £25 now.

Whilst old crop prices have fallen, new crop prices (Nov-25) have increased, driven by rising global grain markets.  US maize futures in particular have increased considerably in recent months.  Speculative traders (managed money funds) have bought considerable volumes of maize futures, elevating prices.  The weather outlook for maize production in both North and South America had been in question, including excess rainfall in Brazil.  In the main maize producing region of Mato Grosso, planting of maize is more than eight percentage points behind the five-year average.  However, the forecast is for improved weather.

The US weather has also been a key focus.  Key wheat producing states in the US have been on the receiving end of temperatures as much as 15C below normal for February. However, this picture is also improving.  Additionally, the current market price dynamics for maize and soyabeans in the US is expected to drive an increase in maize planting for 2025.  The price gap between old and new crop could close quickly if the funds started selling.

In the short term, there has been support for UK feed barley prices with export demand driving selling opportunities.  This has been much-needed owing to the surplus of out-of-specification malting barley adding to the feed heap from harvest 2024.

One positive aspect for arable markets is the strength of the oilseed rape price.  That said, the crop area has declined significantly in recent years meaning the price support will only the minority of cereals farmers still growing the crop.  In addition, the positive price movement in oilseed rape may not be enough to tempt nervous growers of the crop for 2025 harvest to sell.

A final point worth noting is the direction of fertiliser prices.  Natural gas prices, a key input in the production of ammonium nitrate, hit the highest point since October 2023 in February.  Prices have fallen back, but remain almost twice as high as the same point last year.  So far we have seen an increase in nitrogen prices in the UK market in 2025, but not to the same level as has been observed on the Continent.

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.