Category: Arable

Crop Area Projection Updates

At last the weather has turned out nice.  The rain has stopped, at least for now, but certainly for long enough for many farmers from Oxfordshire to Newcastle to complete (and in some cases even start) their drilling.  At the time of writing, many farmers are busily trying to get as much of their spring seed in the ground as possible.  Seed merchants are reporting low availability of late drilled seeds like maize and spring beans as a result of high demand.

Last month we published an article commenting on the second Early Bird survey that we support AHDB with.  This is the survey that assesses what has been planted and what growers intend to plant in the UK.  It included planting intentions which, at the time, left opportunity for winter wheat to be planted.  The rain did not stop in time for winter crops to be drilled and also may have curbed the spring drilling window for some growers leaving, we believe, a high chance of elevated fallow land and grass this year compared with normal. Our updated projections on crop areas look as follows:

If this projection is correct, it would leave potentially the lowest wheat area planted in the UK since 1978/79, and the highest spring barley area since 1987/88.  Some projections expect spring barley to exceed 1 million hectares but we are not convinced there is enough time for that to occur.  Oilseed rape area might end up being the lowest since 1988/89.  Even so, it still might be the highest we see again because the difficulties of growing the crop this year have been only partly because of the rain, and partly because of the flea beetle.  The fallow land area we have suggested here would be the highest level since set aside was mandatory back in 2007.  For 2020 autumn drilling and the 2021 harvest, we would expect a high proportion of farmers very keen to capitalise on the first wheat opportunity, possibly planting a little earlier than this year too.  Hold tight for a big wheat crop next year.

Crop Market Summary

The demand for bread and therefore milling wheat is high.  People eat chicken and eggs at home more than beef and lamb so the demand for feed wheat has also increased.  Old crop prices have benefited from the surge in short term demand, which farmers have benefited by selling into.  The fall of Sterling has given grain prices a considerable boost (see earlier article), and also made the UK wheat price competitive for exports, so new shipments have been sold into continental destinations this month.  New crop feed wheat hit contract highs.  Globally, wheat has also risen on news of the Chinese buying US wheat, and a considerable 240,000 tonnes in two shipments.  This is the first such deal in three years.

The consumption of alcohol (especially beer) out of the house has disappeared and people drink less beer at home (and alone) than when they are out.  And this is global.  Hence the malting barley premium is declining sharply.  The combinable crop price matrix is shifting because of (presumably) short term, sudden, changes in the way that people eat.

Crude oil has fallen by 60% to its lowest level since 2003 as the demand for travel falls.  The demand for biofuel has therefore disappeared too.  This has a greater impact on the vegetable oil market through bio-diesel than the ethanol market into cereals.  This has played a bearish factor in the oilseed rape market, meaning prices have not rallied on the fall in Sterling as much as the grains have done.

The pulse market has been relatively light, with reduced international business, partly because of the virus, but more because of the freshly harvested Australian bean crop that dominates business into North Africa at this time of year. Usually by Easter the UK bean market is more or less finished.

Grain merchants and other crop production businesses remain open as the food supply industry is classed as an essential business.

Cereals Event Cancelled

As with so many other events, both in the UK and around the world, the Covid-19 outbreak has caused the cancellation of the Cereals Event.  This was due to be held in Cambridgeshire on the 10th and 11th June.   The team behind Cereals are looking at undertaking online activities over the two days the event was meant to take place.

Arable Markets

As of late February, the price difference between new crop feed wheat and new crop feed barley is £23 per tonne. Clearly, the market has gathered that there will not be much wheat harvested.  It looks like it is also assuming a large area of barley will be harvested compared with usual.  Clearly, the chances of this are beginning to erode as well.

If we work on 1.3 million hectares of wheat plated in the end, (we really don’t know), an area not seen since the mid 1970’s, and use a low yield of say 7 tonnes (because surely what has been drilled is not in good condition), we get to 9 million tonnes, about 56% of last year’s 16.2 million tonne wheat harvest.

So how will we provide for the millers and many other consumers of wheat? Some have talked of a generous carry from old crop into new. This is a possibility, for wheat, because there is a full price carry, i.e. the price of a spot sale is does not fall as new crop becomes available as is ‘normal’.  November 2020 wheat is about £12 per tonne dearer than the spot position.  This may be tempting for some to think of storing wheat beyond next harvest.  But for many, the incentive will not be enough, and many will not be able to hold off that long either even for cashflow reasons, though many farms will have considerably lower costs this year.

We can always import wheat, some will already have been procured no doubt, but the physical facilities to import grains are not as good as for exports, simply as we don’t normally have to do it.  And by January, we might have tariffs to contend with.  Other consumers, particularly the feed mills will be able, at least in part to switch to benefit from that large discount for barley.  We may notice that price gap close a bit when this starts.

It is too early to make such crop production projections for barley as more time is still available for drilling subject to a change in the weather. Oats too, might be up on previous years and pulses, if the rain stops could be very high too. But all these high area possibilities depend on one thing stopping, and currently there seems little immediate prospect of this.

Crop Areas

The AHDB’s Early Bird Survey of cropping and planting intentions for harvest 2020 was repeated in Mid-February. It shows a significant drop in winter cereals area, even more than in November (when it was first undertaken).  For example, the winter wheat area is forecast to fall by 27%.

The table below shows a summary of the Early Bird results.  Changes in cropping area have been extrapolated onto the data from Defra’s provisional 2019 UK June Survey to produce forecasted crop areas for the 2020 harvest.  Already, they are now looking rather optimistic.

As it included the planting intentions as well as what was already drilled, it captured farmers’ then still eager plans to plant in late February and Early March.  If, at that point, the weather had been anything near ‘normal’ for the time of year, then drills would be coming out early next week.  But that was all ahead of the onset of Storm Dennis and before the full impact of Ciara was appreciated which jointly kyboshed that.

 

Early Bird Survey (EBS): GB Crop Areas for Harvest 2020 – source AHDB
‘000 hectares DEFRA June Survey 2019 EBS Forecast Harvest 2020 % Y on Y change
Winter Wheat 1,790 1,304 -27%
Spring Wheat 26 200 +672%
All Wheat 1,816 1,504 -17%
Winter Barley 453 347 -24%
Spring Barley 710 1,042 +47%
Oats 182 229 +26%
Other Cereals * 51 54 +5%
Oilseed Rape 530 361 -32%
Other Oilseeds‚ ** 17 25 +47%
Pulses 178 226 +27%
Arable Fallow 224 336 +50%
Other Crops on Arable Landƒ *** 719 756 +5%
TOTAL 4,880 4,880
* includes rye, corn and triticale, ** includes linseed & borage, *** includes s. beet, potatoes, vegetables, Maize (33%) and temp grass (20%)

Much of those plans are now not likely to happen. Every day that rain continues to fall (and more is coming), is now gradually tightening the drilling window for spring cropping throughout so much of the UK.

Your Editor has spent much of this week (24th Feb onwards) travelling by train.  If the views from the window are anything to go by, pretty much the entire country north of the M4 and south of Edinburgh are in a similar condition; flooded or saturated with sitting water on untended fields.  Bales of straw still sit un-gathered in puddles of mud.  For those fields that are drilled and the crop has emerged, it is becoming increasingly evident that most fields have large bare patches – up to 40% in some cases.

The water appears to have nowhere to go and the rivers are a rich brown, telling of the topsoil that has been washed away.  We expect the soil structure of many fields, even those that have not had root crops, will be in a poor state and take a season or more to correct.  In parts of central England, the only drilling since October has been on land that had cover crops on them.  Perhaps this will be a lesson to the industry to consider these crops more seriously.

The Early-Bird Survey is undertaken each autumn to assess national cropping intentions.  It is carried out by The Andersons Centre with the help of the Association of Independent Crop Consultants (AICC) and other agronomists.  Over 80 agronomists took part in this year’s survey contributing over 615,000ha of arable land stratified across all regions of Great Britain.

Three Crop Rule

At the time of writing the NFU is still campaigning for an exemption to the Crop Diversification rules (‘three crop rule’) under BPS Greening.  Defra has not announced any derogation as yet.  Last month we reported that RPA had released guidance for claimants (see https://abcbooks.co.uk/wet-weather-three-crop-rule/).  It is perhaps worth reiterating that fallow land is classed as a ‘crop’ and that spring and winter varieties are also treated as separate crops based on the variety grown and not the date when sown.  In addition where a crop has been planted but subsequently fails it can be counted as the original crop (field records will need to be kept if evidence is required on inspection).  Lastly, for those who will struggle to get anything or very little drilled, there are also exemptions to the Crop Diversification rules; where more than 75% of the arable area is left fallow (or is used for temporary grass or planted with leguminous crops) the three crop rule does not apply.

Nutrient Management Guide

The AHDB has released its latest version of the Nutrient Management Guide; RB209.  The guide is applicable to all those farming in England, Wales and Northern Ireland and offers best practice guidance on the application of fertilisers and organic materials to crops and grassland.  The main changes to the revision include new recommendations for the use of Phosphate in arable crops, which is the outcome of 10 years of research work.  The latest RB209 focuses on taking accurate soil samples but also grain sampling and analysis, the latter has been identified as helping to give a more accurate picture.  A further change to the RB209 P recommendations sees an arable farm only growing autumn-sown combinable crops being able to manage their arable soils at index 1, instead of the previous benchmark 2.  This should be possible on well-drained soils, where plants can development good root systems and fresh P can be applied annually.  Further information and the latest version can be found at: https://ahdb.org.uk/RB209

Glyphosate

The US Environment Protection Agency (EPA) has (again) confirmed Glyphosate is safe to use.  In an interim decision, the EPA concluded there were ‘no risks of concern to human health when Glyphosate is used according to the label and that it is not a carcinogen’.  The findings are consistent with the US Department of Agriculture and the European Food Safety Authority.  However, this contrasts with the World Health Organization’s International Agency for Research on Cancer (IARC), which concluded in 2015 that Glyphosate is ‘probably carcinogenic to humans’.  The EPA’s evaluation is part of a routine re-registration process that the agency conducts every 15 years for pesticides in the US market place.

Glyphosate is the active ingredient in Monsanta’s Roundup, now produced by Bayer.  The company is currently facing nearly 43,000 compensation claims, alleging Roundup is responsible for causing cancer; the majority of these claims are in the US.  Glyphosate is approved for use in the EU until 15th December 2022.  Of course now we have left the EU, the UK government can set its own rules on plant protection products (PPPs), although during the Transition Period, to the end of this year, the EU rules still apply. 

Planting Update

This is a short article this month.  A few bits and pieces of drilling have apparently been able to take place, on the slightly lighter and faster draining land, but really very little; probably not enough to match the amount of autumn drilled barley, oilseed rape and even wheat that, this month, has been officially written off by the farmer and his agronomist.

Some commentators in regions less affected by the heavy rain and the saturated soils are confused by the noise, expecting the flooded fields to be confined to small corners of fields, floodplains or pony paddocks.  There are consequently still people projecting wheat crops comfortably over 13 million tonnes and others sticking to sub-10 million.  Currently, our wheat area projection sits at about 1.6 million hectares, of which about 1.1 is probably planted.  This would be at about the level of the 2013 crop and before that not seen since 1981.  With a lower than usual yield, this may give a 11.5 to 12 million tonne crop.

Some seed merchants have reported fast sales of all spring crops (possibly with the exception of oats), and for some crops, pulses in particular, sales have been stellar.  Indeed, it is possible that some farms have overbought, with a view to either cancel their spring seed order or keep their winter seed through until next autumn.  It has been a good year for seed merchants but next year might not be.

Potatoes: Output and Prices

Final 2019 harvest estimates show the UK crop was the third smallest crop this century, although the British crop was just above the psychologically important five million tonne level.

Latest figures from the AHDB show a 3.7% increase in production in Great Britain (England, Scotland and Wales) to 5.100 million tonnes.  Output in Northern Ireland was up 11.5% to 129,400 tonnes taking the UK figure to 5.229 million tonnes; 3.9% more than in 2018.

The UK area was up 1.0% to 122,753 hectares, with only a 0.9% increase in the British area to 118,953 hectares.  Average British yields were up 9.4% to 46.5 tonnes per hectare, with a 5.5% increase in Northern Ireland yields to 35t per Ha.  British seed production was up 1.1% to 560,200 tonnes, with a 4.0% increase in ware area to 4.540 million tonnes.

Although the increase in UK production is only just over 200,000 tonnes, total output might be enough to supply the British market, especially if there is reduced export demand.  British exporters were able to ship the highest volume since the 2010/11 season from the small 2018 crop but prices for the 2018/19 season failed to take off as much as many had expected.  Export prospects for the 2019/20 season will depend on the quality of potatoes in store.

The mild and largely dry early January conditions allowed some remaining crops to be lifted but material is very vulnerable and there are reports of poor fry quality among late-harvested crops.  Recent warm weather will also not have helped stocks in ambient stores.

Current free-buy prices are about £200 per tonne.  That is £60 per tonne less than they were a year ago but more than double where they were two years ago.

The effective banning of use of the storage chemical CIPC from the 2020/21 year and concerns over seed supplies may limit any gain in potato area this year, which is unlikely to be more than 124,000 hectares for the whole of the UK.