Tag: beans

UK Grain Markets

The barley harvest is underway in England, although progress has been stop-start due to regular rain.  According to the Environment Agency, in the month to 18th July, England had received 111% of the long-term average rainfall for July.  As well as increased lodging in barley and OSR, the higher rainfall will be causing some concerns around grain quality.

With large ending stocks from the 2022/23 season anticipated, and the UK not currently export competitive, the price of feed barley has continued to fall.  So far in July (to 21st July) feed barley has averaged £146 per tonne, down £10 per tonne on the June average.  Initial assessments of malting crop quality have seen lower retentions (percentage of sample retained when passing over a 2.5mm sieve – minimum typically 85-90%) .  This has reportedly led some maltsters to lower intake standards for the current crop.

Feed wheat prices have increased latterly, due to the ending of the Black Sea Grain Initiative.  Ex-farm feed wheat (nearby) was quoted at £180 per tonne, on 21st July.  Milling wheat was worth £243 per tonne.

Oilseed rape values have also increased, with Paris rapeseed futures briefly exceeding €500 per tonne for the first time since March.  Ex-farm oilseed rape was quoted, on 21st July; at £385 per tonne, up from an average of £330 per tonne in June.  Price increases have been driven by the tightening of soyabean markets, and concerns over availability of Ukrainian oilseeds.

Pulse markets were also stronger in July.  Human consumption demand has remained somewhat limited, with difficulties in accessing North African markets.  However, some feed compounders have reportedly included pulses in rations, with global protein values increasing.  Feed beans and feed peas have average £259 per tonne in July.

UK Grain Markets

UK cereal and oilseed pricing continues to face pressure from global market conditions.  Ex-farm feed wheat (nearby) was worth £179 per tonne in May.  This is down £9 per tonne on the April average price.  The price of feed wheat has now fallen more than £40 per tonne since January.  Milling wheat continues to hold a strong premium over feed wheat, extending to £70 per tonne on average in May.  Feed barley prices averaged £165 per tonne in May, with the discount to wheat narrowing.

AHDB published its latest UK supply and demand estimates for the 2022/23 season. The estimates highlight the increased ending stocks for both wheat and barley. Large cereal crops from harvest 2022, have been met with weak animal feed demand. The ongoing challenges for the pig and poultry sector resulted in a further cut to wheat demand of 130Kt.

The challenges for animal feed demand will carry into the new season. With large carry-in stocks and crops generally looking healthy, domestic prices will need to remain export competitive.

The value of Oilseed rape has fallen to the lowest point since October 2020, at £345 per tonne ex-farm in May.  Prices have continued to fall throughout the month, reaching £330 per tonne, delivered into Erith, on 24th May.  Oilseed rape prices are being undermined by large EU carry-in stocks for the new season, with the EU expected to harvest its largest OSR crop since 2014 (20 million tonnes).  Wider oilseed market fundamentals are also pressuring OSR prices, with the USDA forecasting a 40 million tonne increase in soyabean production in 2023/24.

Bean and Pea prices have bucked the trend of other combinable crop markets, with both commodities gaining £7 per tonne, month-on-month.  Feed beans were quoted at £228 per tonne and peas £234 per tonne.

Grain Market Update

In February’s Bulletin we highlighted that the fast pace of imports of Ukrainian crops into the EU was pressuring prices.  This came to a head in April with Poland, Hungary, Bulgaria, Romania, and Slovakia announcing bans on the import of Ukrainian agricultural goods.  The EU has proposed measures to guarantee that crops moving into those nations are re-exported and do not remain in those five domestic markets.  In addition, the EU has proposed the provision of €100m to compensate farmers in those nations.  At present there is no agreement on whether this deal will be accepted.  The news of the bans initially supported prices, but they have subsequently fallen.

Further uncertainty for grain markets has been caused by the 60-day terms the Black Sea grain corridor now operates under.  Comments suggesting the G7 would ban exports to Russia, were reacted to by former Russian president Dmitry Medvedev with suggestions of the Corridor agreement being scrapped in retaliation.  This has served to support grain prices in the short-term.  Overall, the situation in the Black Sea remains a dominant driver for grain and oilseed markets.

Looking ahead to the global supply and demand picture for next season (2023/24), the global grain stocks picture was eased slightly in the latest International Grains Council supply and demand figures, owing to greater maize production, particularly in the US.  That said the overall picture remains tighter year-on-year.  With weather concerns in part of the US, particularly for wheat, any adverse weather would support prices.

UK grain prices moved higher following the uncertainty around Black Sea grain movement.  UK feed wheat (ex-farm, nearby) was quoted at £190 per tonne in the week ending 21st April.  This is up around £8 per tonne on the month.  The milling premium also extended slightly, quoted at £61 per tonne.  Feed barley has struggled to find demand in 2023 but has been able to compete into export markets recently.  The feed barley price was quoted at £170 per tonne, on 21st April.

Oilseed rape prices have fallen since the start of the year.  However, concerns around dry weather in Argentina has continued to cut soyabean production forecasts supporting the wider oilseed complex.  Oilseed rape prices have risen by nearly £30 per tonne, month-on-month, to £380 per tonne.  That said, expectations remain for bigger global rapeseed crops in 2023/24.  Also, a bumper Brazilian soyabean harvest is expected which adds pressure vegetable oil markets.  Oilseed rape prices may be supported in the longer term with the EU Parliament backing a ban on imports linked to deforestation, including palm oil and soya. Companies selling into the EU will now have to provide verifiable information that goods were not grown on land which has been deforested after 2020.

Pulse prices have been stable month-on-month, with pea and bean prices unchanged at £226 and £220 per tonne, respectively.

The last month has been a busy one for the majority of arable farmers, the wet conditions of March have led to a backlog of planting and spraying.  While April conditions have not been ideal they have at least allowed field work to continue.

UK Grain Market

Cereal prices in the UK have followed the direction of EU and US markets over the past month.  Ex-farm UK feed wheat was quoted at £182 per tonne, on 22nd March 2023; this is a fall of £36 per tonne from the beginning of March.  All cereal prices will have recovered some of this lost ground to the end of the week, but remain pressured.  The potential for further downside movement will depend on domestic and global crop conditions.  That said, if Russian rumours of a minimum price for exporting materialise there may be a new floor in the old crop market.

The milling wheat premium remains strong, in spite of cheaper fertiliser, at £56 per tonne over feed wheat.  Whilst fertiliser prices have fallen owing to large domestic and EU stocks, many arable businesses will have bought cover for this season months ago, at much higher pricing.  As such, the sharp decline in crop pricing will have a significant negative impact on potential returns for harvest 2023 (as shown by the budget for Loam Farm in the following article).

Feed barley prices continue to decline owing to a lack of demand both domestically and for export.  The value of ex-farm feed barley had fallen by £32 per tonne, from the beginning of March to 22nd March, in an attempt to remain export competitive.

Oilseed rape has seen by far the largest declines in price, since the beginning of the year, the value of ex-farm oilseed rape has dropped by £145 per tonne, to £350 per tonne.

Pulse prices have declined to a lesser extent than cereals and oilseed rape.  Feed beans and peas were quoted at £220 and £226 per tonne, down £32 and £16 per tonne on the month.

UK Grain Market Update

UK feed wheat prices followed European grain markets in February.  Values increased through the first three weeks of the month, before falling on weak EU import demand.  UK ex-farm feed wheat was quoted at £224 per tonne, on 24th February 2023.  This is up almost £11 per tonne on the end of January, but down £9 per tonne on the week ending 17th February.  Milling wheat continues to attract a strong premium of £57 per tonne.

The discount of barley has extended further.  Feed barley was quoted at £203 per tonne on 24th February, an increase of just £2 per tonne on the month.  Demand for barley for both feed and export remains poor.  Data from AHDB shows that animal feed production in July to December 2022 was down more than 5%.  Larger declines were seen for pig and poultry feed, down 12% and 9% respectively over the same period.  Usage of barley was down nearly 23%.

The value of oilseed rape was supported by rises in the value of wider global oilseeds throughout much of February.  Whilst prices fell towards the end of the month, ex-farm oilseed rape was quoted at £463 per tonne on Friday 24th Feb.  Prices are up on values at the end of January, but £30 per tonne down on the beginning of 2023.

The price of feed beans has continued to fall in February, at £243 per tonne, with poor demand.  One merchant commented on the difficulty in establishing new crop values also, given lack of trading activity and demand.  Pea prices have remained stable month-on-month, at £249 per tonne.

While output prices have fallen towards the end of February, so too have costs.  The price of ammonium nitrate for March delivery was quoted at £460 per tonne; a significant fall from the £700 per tonne quoted in January.  The impact of this on arable businesses will clearly vary greatly for the 2023 harvest, depending on the level of cover.  However, it is a promising sign for harvest 2024.

Rainfall in February was below average in many parts of the UK.  Whilst there is evidently ample time between now and harvest, there are have been some concerns expressed about these drier conditions, particularly given the droughts of last summer.

 

 

UK Grain Production & Markets

Defra have now published official figures for UK grain and oilseed rape production.  Previous figures had only covered England.  The latest figures show UK wheat production, in 2022, at 15.54 million tonnes.  This is 14% above the 2017-2021 average (13.65 million tonnes).  The figures include the second highest wheat production figure for Scotland on record, going back to 1999. The Scottish production figure, 1.00 million tonnes is driven by a record yield of 9.3 tonnes per hectare.

Total barley production is also up despite a fall in overall acreage.  This is driven by an increase in the proportion of winter barley grown versus spring, as well as a rise in average yields.  Total barley production is seen at 7.385 million tonnes.  Oat production is down year-on-year, but remains above 1 million tonnes for the fourth consecutive season.  Oilseed rape saw a resurgence in rotations in 2022, and the resultant production is seen at 1.36 million tonnes.  Production of OSR remains below the 5-year average however.

UK grain markets have followed the free-fall of global prices into December.  Ex-farm feed wheat (spot) was quoted on 16th December at £229 per tonne.  This is down more than £15 per tonne from the end of November.  The price of feed wheat is now only £10 per tonne higher than the same point last year.

Feed barley prices have followed a similar path, and ex-farm barley is now just over £1 per tonne higher than 17th December 2022.  The UK grain market is fundamentally better supplied than it was last season.  There is also the wider factor that global markets seem ‘comfortable’ with the current drivers of supply and demand, despite grain markets being tighter year-on-year.  The milling wheat market continues to hold a premium in excess of £50 per tonne over the feed market, an ongoing reflection of the lower protein crop harvested this year.

Oilseed rape prices also continue to fall, driven by expectations of large oilseed crop globally.  This is especially true in Brazil where soyabean production is forecast to reach a record 152 million tonnes; up from 127 million tonnes last season.  Ex-farm oilseed rape was quoted on 16th December at £463 per tonne.

Pulse markets continue to suffer from a lack of demand and have tracked other commodities lower.  Feed bean and peas are quoted at £255 and £245 per tonne, respectively.

UK Grain and Protein Prices

Recent rainfall has been beneficial, and planting of winter cereals is underway in parts of England.  The East in particular, however, remains very dry.  Primary cultivations are being completed, but increased fuel use and worn metal from hard ground is raising costs.

Unsurprisingly, UK grain and protein markets continue to follow global trends.  UK feed wheat values have moved back up to £260 per tonne (spot) for the first time since the beginning of July.  New crop (2023 harvest) values are likely to be around £10 per tonne below this value.  This based on the assumption that they are worth around £10 per tonne below November 2023 feed wheat futures.  In reality, it is hard to gauge a value for new crop wheat in such a high-priced market.

Milling wheat is currently at a £40 per tonne premium to feed wheat.  Early data from the AHDB Cereal Quality Survey shows that protein content is down this year; averaging just 12.5% on UK Flour Millers Group 1 varieties.  This does not necessarily mean that there will be an increased premium for ‘in specification’ wheat, with much depending on the performance of the crop in baking trials.  At the moment, the crop is thought to be performing well.

Feed barley is moving at a discount of approximately £20 per tonne to feed wheat, or £240 per tonne. The discount is at broadly normal levels, given the elevated price of grains.  Demand for barley will be lower this season owing to the reduced size of the pig herd.

Globally, it appears that there is going to be a much-improved supply of oilseed rape and other oilseeds this season.  This is primarily due to increased production, year-on-year, in Canada.  As a result, the price of rapeseed, nearby, has moved to pre-Ukraine war levels, to around £500 per tonne.

Feed bean values have moved back up with wheat values.  That said, pulse markets are thought to be well supplied, both domestically and globally.  Increases beyond those tracking wheat are unlikely especially given expectations of favourable weather for crops in Australia; a key export market competitor, during their spring.

Harvest 2022 and Prices

Overall

The UK grain harvest is all-but finished now and, overall, has produced excellent results.  Completion by the end of August must surely be a record?  The exceptionally dry and hot weather conditions have brought with it opportunities, but also challenges.  Almost all the harvest will have been gathered dry, but hot.  The grain drier was not needed to reduce moisture for almost all farms.  Yet some used them to cool grain.  Now the nights are cooling, farmers should be turning fans on to reduce the grain temperatures.  As frosts arrive this will be a useful time to cool the grain further.

Numerous farmers have experienced field fires with losses of standing grain.  At this stage we have no measure of how much has been lost in this way.  That risk is now subsiding, but farmers must pay attention to their straw stacks.  They should make more, smaller stacks than usual and preferably hidden from sight to as not to attract attention.

Wheat

Reports suggest this year’s wheat crop is excellent quality with a good yield.  After the dry conditions we have experienced since June, it is easy to forget the very useful spring rains we received as grains were starting to fill.  This was just as important as the ripening sunshine and the dry harvesting conditions we have had this summer.

Some reports suggest many farms have experienced greater than usual variation of  protein levels within the same varieties.  This means that grain sampling should be given particular attention this year.  Any additional mixing might be useful if this is possible, as segregating protein levels is difficult and probably now too late to do.

New crop wheat prices fell in the latter part of August.  Earlier in the month world grain markets were driven up by reports of very dry weather in the maize growing regions of the US.  In addition, China was claiming a wheat crop catastrophe, with very poor conditions, suggesting fairly extreme crop failure conditions.  However, it now turns out that China has harvested more wheat than last year!  This reduced forecast Chinese import demand.  Concerns around the Chinese economy have also dampened expectations of Chinese buying.  The last few days have seen rain in the Mid-west of the US which has eased concerns about the maize crop and pulled down all grains prices.

The other global factor of note is Ukraine.  Last month, we talked of how Ukraine and Russia had brokered a deal to allow Ukrainian grain exports to restart.  Grain was stuck in elevators, stores and farm barns.  We were skeptical it could be exported quickly or even reach the ports in many cases.  In fact, almost two thirds of a million tonnes were exported in the first three weeks of August.  Furthermore, the programme is continuing with expectations of 3 million tonnes going out in September.  Not only does this provide grain that the world market had largely written off, but also makes storage space for the new crop.  The Russian crop has also been good and exports have been high – partly making-up for the tonnages lost to the world market from Ukraine.

Barley

The UK barley crop is proving to be of a particularly high quality; most growers are thrilled with their results.  However, when everybody shares such success, the market reacts.  Indeed, the feed wheat:barley spread has grown to up to £20 per tonne and prices might have to decline further as UK barley is still not competing in the export market.  Furthermore, the malting specification, especially for springs is so good that many crops that would have achieved malting specification in previous years will end up being fed.  The malting premium has been falling as so much of the crop meets the required specification.

Reports from Scandinavia and other parts of the EU also highlight high quality and good yields, suggesting the UK malting barley crop faces some stiff competition in the marketplace this autumn.

Beans

Beans ripened almost too quickly this year.  Being usually among the last crop to go through the combine, their ripening from the high temperatures was a little premature.  Small bean size, especially in the spring beans, will have reduced the crop size to an extent.  Shattering bean-pods has also been an issue.  However, overall most farmers are relatively happy with their crops.

OSR and Drilling

The oilseed rape harvest was completed in record time.  This was the case throughout Europe as well as in the UK.  Not only is Europe reporting 10% more OSR than last year, but the Canadian crop is apparently half the size again from last year.  Australia too, is reporting 10% more area this year.  Even in Ukraine, where the crop had been partially written off, a reasonable tonnage has been harvested; more than one might have expected in the circumstances.  Prices have fallen in response and are now at or near to the levels in February – before the Ukrainian war began.  This is £220 beneath the highs of mid-May.

Little OSR drilling has taken place so far, with soils too dry to take the seed or allow germination.  What little rain has fallen has barely softened the tops of the soils, rather drained through the cracks in most fields.  Some are becoming concerned with this, although there is still ample time for rains to fall to allow satisfactory drilling and germination.

 

 

UK Grain Market Update

The UK grain and oilseed harvest is well ahead of typical pace. Much the UK barley crop and swathes of the Oilseed Rape crop have been cut. Many farmers are now well into their wheat crops some 7 to 10 days ahead of normal. Early indications point to high bushel weights among winter grain crops.

UK grain markets have tracked global prices in recent weeks. Both new and old crop wheat prices have fallen in response to the availability of grain in Europe and the US. UK feed wheat prices (ex-farm) were quoted at just over £242 per tonne on 22nd July. Milling premiums have also fallen back to around £25 per tonne, ex-farm. However, if high specific weights persist throughout harvest, diluting the proportion of protein, we are likely to see an increased premium for good protein levels.

Feed barley prices have been pressured downwards by harvest progress, quoted at a £31 per tonne discount to wheat, at £211 per tonne.

Oilseed rape prices have also fallen considerably over the course of the last month. Oilseed rape (spot) is now worth £534 per tonne, down from £596 per tonne at the end of June. This is in part  due to the move from old crop to new crop pricing. Similar declines have been seen in November 2022 Paris Rapeseed futures. This points to an overall easing in response to improved supply and weaker demand of oilseeds globally. An increase in oilseed rape plantings is anticipated for harvest 2023. However, a lack of soil moisture may cap these gains.

Feed beans and peas were quoted at £282 and £272 per tonne, respectively (spot, ex-farm). Prices are back to tracking wheat prices closely after wheat had opened up a large premium earlier in 2023.

Harvest pressure is inevitable at this time of year. A greater surplus of UK grain, either for export or closing stocks, is expected in the coming season. This will drive a closer relationship between UK and EU grain prices. While there is short term pressure in prices, long-term the global supply and demand of grains remains tight.

UK Arable Market Update

With harvest creeping ever closer, attention remains on the weather in the UK.  Generally, crops are looking healthy, benefitting from rainfall in the latter half of June.  Concerns had been growing around the heat in the middle of the month and AHDB’s Crop Condition Survey highlighted crops moving backwards to 24th May, relative to the end of April.

UK prices have recently fallen, tracking the decline in global markets.  Trade in old crop is now largely over and attention from buyers will be focused on new crop.  Demand for new crop, in particular barley, is likely to be lower next season driven by a decline in the size of the UK pig herd.

UK feed wheat values have fallen, November-22 futures closed at £282 per tonne on 23rd June, down almost £36 per tonne from the end of May.  November-23 futures have fallen by £20 per tonne to just over £248 per tonne.

Barley prices have also dropped, feed barley for harvest movement is trading at a £32 per tonne discount to wheat.  Malting premiums have reportedly firmed slightly although the feed base has fallen.  The winter barley harvest in the UK is now imminent.

Oilseed rape prices have responded to weakness in global vegetable and mineral oil prices.  Concerns over the global economic picture has been coupled with expectations of large soyabean crops in South and North America.  UK ex-farm oilseed rape prices have fallen £775 per tonne at the end of May to £596 per tonne, as at 24th June.  Field bean values have generally fallen with other output prices, albeit at a slower rate. As of 24th June, beans were quoted at £306 per tonne (spot, ex-farm).