Category: Arable

Arable Roundup

Despite the ninth and tenth named storms (Isha and Jocelyn) since September hitting parts of the UK in January, rainfall has thankfully been lower than in recent months.  Whilst fields remain wet, and catching up on planting will be a while away for many, frosts have at least meant some arable farmers have been able to catch up on spraying.

In the six months to Dec 2023, England received 153% of the long-term average rainfall (1961-1990 average).  Of course, national average rainfall figures hide significant variation at a farm or field level.  Many farmers will have experienced flood levels seldom seen before.  This has led some to estimate cropped area could fall by as much as 15-20%.  UK wheat futures markets, whilst demonstrating a healthy premium to incentivise carrying grain from 2023 harvest beyond harvest 2024, have fallen considerably month-on-month.

The latest cereal and oilseed ex-farm prices are in Key Farm Facts.  Physical prices have not fallen by as much as futures prices, month-on-month, highlighting the impact that speculative trading can have on global grain pricing, and the tighter nature of the UK physical market.

AHDB has published its latest supply and demand estimates for cereals in the 2023/24 grain marketing season.  The figures show a reduction in the size of the 2023 wheat crop to 14 million tonnes (from 14.1 million tonnes).  There is also a significant increase in imports of 300,000 tonnes.  With demand falling for wheat from both millers and feed manufacturers, the additional imports are added to estimated stocks.

Any impact of a smaller crop from 2024, will already be priced in to markets in the UK.  As such, it will take the crop outlook worsening further, relative to current trade estimates, or a change in the global picture, for prices to rise.

Globally, maize remains in the driving seat.  The USDA increased its forecast of US maize production in 2023 and global maize ending stocks, in their January World Supply and Demand Estimates.

Emergency Sugar Beet Seed Treatment

Defra has authorised the emergency use of a neonicotinoid seed treatment on sugar beet seed in 2024.  This follows an application from the NFU and British Sugar.  However, Syngenta’s Cruiser SB, which is used to protect crops from virus yellows, will only be allowed under strict conditions.  This includes requiring the predicted virus incidence level to be 65% or above, as determined on 1st March 2024 by the Rothamsted YV forecast model.  If the threshold is reached, further conditions will be applied to the use of the seed treatment to minimise the risk to the environment.  This includes a maximum number of seeds planted per hectare and restrictions on farmers planting flowering crops in subsequent years in any field where treated seed has been used, allowing time for the chemical to break down.

Beet Price Deal

British Sugar and the NFU have finally agreed on a sugar beet price contract for the 2024 crop after months of tortuous negotiations.  The headline price is £40 per tonne – the same as last season.  There will also be an option for growers to choose a core price of £38 per tonne plus a market-linked bonus.  A further option is a contract that links the beet price to the futures price of processed sugar.  This will be limited to 35% of a growers contract tonnage.  A yield protection scheme will be offered at a cost of a £1 per tonne reduction on the price.  Growers within 20 miles of any British Sugar factory will receive a local premium of up to £2, based on distance to the factory.  The cash advance option, late delivery allowance, and frost insurance are on the same terms as 2023 crop.  Following the delays and issues with agreeing a price this year, both parties have committed to a shorter timeline next year which will see a conclusion of negotiations in time for an offer to be made by the 30th October at the latest.

Biofuels Boost

The UK will continue to have access to the EU biofuels market following a last-minute change of policy.  Biofuels being used in Europe have to comply with the EU’s Renewable Energy Directive (RED II), which sets standards – including ensuring the fuels have been produced in a sustainable way.  UK Farm Assurance schemes such as Red Tractor have meant that UK production has been compliant up to now.  However, from the end of 2023, the EU said it would only recognise schemes accredited in Member States.  This would have locked the UK out of the EU market and potentially had an adverse effect on grain prices.  The EU has now postponed the implementation of the new rules.  It is not yet clear, however, how long the delay will be for, or what processes the UK needs to follow to ensure long-term access.  

 

 

UK Arable Market

Whilst the weather might have slightly improved since the storms of October, ground conditions have not.  With many fields, particularly in the Midlands, still having standing water on them, the opportunity for winter cropping is falling.  In addition, there is the challenge of planting behind root crops and maize, still to be lifted/ cut.

The AHDB has published an updated Early Bird Survey estimate of cropping this month.  This shows that, before the bulk of the poor weather, farmers planned to plant 3% less wheat for harvest 2024.  Given the unfavourable conditions since that survey was conducted the decline in area is now likely to be far greater.  Industry sources suggest a fall of around 15% and this is contingent on significant areas of wheat being planted in January and February.

Whilst area may be down 15%, further questions will be asked of yield.  Some fields that were drilled prior to the storms are patchy and will yield lower.  Time will tell as to how the UK wheat crop will perform on average.

With a reduced area and likely lower yields, we will see a smaller wheat output from harvest 2024.  Prices for post-harvest 2024 will need to be high to encourage grain to be carried through from harvest 2023.

There are limited buyers of 2023 harvest grain at the moment.  This increases the amount of grain which could be carried into the new season.  If the trade is already working to 15% drop in crop area, the ability of prices to increase will be limited.  Also, it is important to remember that the global market will ultimately dictate UK price direction.

With an expected decline in winter cropping, attention will turn to spring cropping.  Certified spring seed availability is reportedly very tight, and prices are reflecting this.  Increases in spring barley are inevitable, but we have seen the impact of large increases in spring barley before.  There is only limited demand for malting barley, and, as such, those without a contract will need to pay close attention to the feed market.

The situation is not as severe as 2020, at the moment.  Wet weather during the planting window in 2019 resulted in a 24% drop in wheat area, and 19% increase in barley.  The result of this cropping change was an increase in the discount of feed barley to feed wheat of £26 per tonne, season-on-season.

With the drop in winter plantings, and price risk in barley markets, it is also likely we will see a noticeable increase in the area of oats, pulses, and possibly some land going into SFI.  It is important to pay close attention to margin impacts of any cropping changes, as well as considering the future impact of placing a proportion of productive land into an environmental scheme for a three-year period.

Sugar Contract 2024

There is still no agremeent on the price of sugar beet for the 2024 crop.  British Sugar has made a revised offer to growers of either a fixed price of £40 per tonne (the same as 2023) or a price of £38 per tonne with a variable market-related element.  It appears the main outstanding issue between British Sugar and the NFU is now around details of the futures-linked contract.  The parties continue to talk, but it seems arbitration to resolve the dispute becomes more likely.

Grain Market Update

Like the water sat on many headlands around the country, old crop wheat markets could rightly be described as stagnant!

Looking back across the May-23 UK feed wheat futures market, prices have been stuck in a channel from £194 to £204 per tonne since the beginning of September.  Prices are sitting in the bottom of that band presently and showing little sign of moving back towards the top.  This is partly driven by readily available Black Sea grain, keeping prices pressured.

The old crop market is also influenced by a large global maize crop, with the US harvest all but complete.  In November, the USDA added a further four million tonnes to its production forecast for the US, citing improved yields.  In total a further 2.5 million tonnes have been added to global maize ending stocks, compared to October’s forecast.  Ending stocks of maize, globally, are up 15 million tonnes year-on-year.

The new crop market is more interesting, unless you are looking out on waterlogged crops.  Poor weather conditions have led to estimates of a 5-10% decline in wheat area across the UK, France, Germany, and Ukraine (Openfield).  This is driving an £11 per tonne premium for November 2024, over current May prices.  Concerns are built into new crop pricing.  It will take a worsening of conditions to keep prices supported.

In the UK, grain markets are lacking activity.  There are reports of weaker demand for bioethanol production.  UK wheat prices are uncompetitive in export markets and prices are under pressure (see Key Farm Facts).  Milling premiums remain elevated.

Feed barley is at a more than £20 per tonne discount to feed wheat.  However inclusions in animal feed rations are already high.  As such, barley prices need to be competitive into export markets to generate extra sales.  Old crop malting barley premiums remain high.  With concern over winter wheat plantings, and a subsequent increase in spring barley plantings likely, new crop premiums may be lower.

Oilseed rape prices are benefitting from uncertainty over planting of soyabeans in South America.  The north of Brazil remains very dry, while planting progress in the south of Brazil has been delayed by heavy rains.  The pace has improved towards the end of November but remains behind average. While this is supporting oilseeds now, it could also hinder the maize plantings which follow soyabeans in spring, offering future support to grains.

Wheat Area Down in UK

The area planted to wheat in the UK is expected to fall by 1.3% according to the results of the annual AHDB Early Bird Survey of UK planting intentions.  The survey, conducted by The Andersons Centre with the support of the AICC and other agronomists, captures a snapshot in early November.  This is a crucial caveat to the survey, in that it reflects the time before storms Babet, Ciarán and Debi.

Irrespective of the conditions of the storm, winter plantings were already expected to decline owing to the wet conditions which have persisted since harvest.  The area planted to winter barley is expected to fall by 6%.  Much of the fall in winter cropping will be replaced by spring barley (forecast up 13%) or oats (up 12%).

With prices having tumbled from their post-Ukraine invasion high, it is no surprise to also see the area intended to be planted to OSR falling by 16%.  This will also include a proportion which has already been written off, with flea beetle and slugs enjoying the mild post-planting weather.

Time will tell as to whether all the wheat area intended is planted.  Weather conditions between now and mid-January will be pivotal.  In addition, close attention needs to be paid to the condition of crops in the ground (see accompanying article).

A further update, with regional detail will be produced in mid-December, once Defra publish a full UK crop area figure.

Crop Conditions Update

It has been a challenging start to the 2024 season for many, to say the least.  Persistent rain during and post-harvest has been followed by storms Babet, Ciarán and Debi, leading to some crop casualties already.  For many, this year has marked the most significant challenge to the drilling campaign since 2019, although rainfall has largely been less persistent.

Andersons has compiled a crop condition assessment for the AHDB, summarised below in the order of planting.

Winter Oilseed Rape

Generally, the winter OSR crop can be split into three groups according to when it was planted.  The earliest established crop is generally in good condition, having rooted into good moisture and developed well to stave-off pest pressure and subsequent rains.  If anything, some of these crops are too far forward.

Crops established around the August Bank Holiday went into drier seedbeds, owing to the one week of very hot weather this year.  These crops are in far worse condition, with cabbage stem flea beetle migrating at a similar time.  Slugs have also been a significant issue, with mild evenings and wet weather.  Many regions have already written off considerable areas.

The final group is the late-August/early September crop.  This has generally established well, although root development was hampered by colder conditions and the crop isn’t as far forward as it should be.  It remains to be seen how these crops get through the winter given some of thier poor rooting.

Generally, more OSR will be written off this season than normal.  In addition, CSFB pressures are being seen further North and West than in a typical season.

Winter Barley

The winter barley crop was generally looking good, up until recent rainfall, having been established in reasonable conditions.  That said, with some crops sitting in water-logged soils, yellowing has been seen.  Crops should recover, although if biomass development is hindered,yield prospects may be too.

Given the moisture this autumn, good, stale seedbeds and weed control were achievable for many. Hopefully this will result in lower grass weed pressure than last year.

Winter Wheat

Wheat is undoubtedly the crop of biggest concern.  Whilst the AHDB Early Bird Survey estimates a planted area of 1.698 million hectares, much of this will have been either undrilled or not very well established by the time the rains hit in October and November.  Typically, by the end of October we would expect much of the winter wheat crop to be planted.  Regional estimates of planting vary from 70% to 85% on average.

Concern over the potential for crop failure is reported across many regions by businesses of all sizes. Some of the worse hit wheat is in the Midlands and the North East, where there is expected to be a degree of write-off.  What this crop is replaced with remains to be seen and will depend on how much of a field is written off.  Where headlands and wetter patches are affected, there may be an effort to re-establish wheat.  Failing that, a rise in fallow, or generally thinner, patchy, low-yielding crops are to be expected.

Pest pressure for wheat has also been considerable, with reports of the worst slug damage some have seen for 10 or more years.

Glyphosate

The EU has re-approved the authorisation of Glyphosate for a further 10 years.  In a vote to approve an extension of the licence for use, Member States failed to reach a qualified majority.  It therefore fell to the EU Commission to make the final decision.  With no scientific evidence to prove negative effects from the weedkiller, its licence was extended until 2033.  The previous extension in the licence was only for 5 years.  However, some additional restrictions were placed on its use.  The most important was a ban on its use as a pre-harvest desiccant.  But individual countries could still licence it for this use if it is felt necessary for good agronomic practice.  Of course, the UK now has its own pesticides regualtion regime and is not directly influenced by what happens in the EU.  However, with Europe concluding that glyphosate is safe to use and, presumably, the issue not being re-opened for 10 years, it makes it more likely that the chemical will continue to be available to UK farmers.