Tag: harvest

Harvest 2021

Following the poor crop of 2020, the harvest of 2021 was always likely to yield more positive results.  However, initial output figures from Defra were lower than some had expected.  The table below highlights the arable results from the 2021 Survey of Agriculture and Horticulture, showing crop production and area figures for the main crops in the UK.  The data is provisional, with final results due to be published on 16th December.  Figures for both Wales and Northern Ireland have been rolled forward from last season.

Wheat production was seen increasing by 45% year-on-year to just over 14 million tonnes.  This was primarily driven by a rebound in area following the difficult drilling campaign in 2020.  That said, average yields were lower than some had expected.  Yields in the south and east of England were seeming affected by the damp and dull summer.  Lower bushel weights and higher moistures were seen for many; Defra standardize wheat production to a 14.5% moisture.

For barley, lower production is no surprise, particularly given the large reduction in spring barley area.  The drop in area is countered by stronger yields, particularly for Scottish spring barley.  As a result, total barley output is just over 190,000 tonnes lower than the 2016-20 average at 7.1 million tonnes.

Once again, the challenges for oilseed rape (OSR) are evident.  With cabbage stem flea beetle (CSFB) still a huge challenge for many growers, the area planted to the crop fell to just 306,000 hectares.  This means the area planted to the crop has now fallen 399,000 hectares in the last ten years.  Even with an improvement in yield, production is seen below 1 million tonnes for the first time since 1989.  With OSR prices very firm at planting, will we see a rebound in acreage, despite the challenges of establishing the crop?

Oats have continued to gain acreage in recent years, owing in part to the challenges of growing OSR.  Production increased for the third year in a row.

Harvest Progress and Market Situation

The British harvest was start-stop in the first half of August, but in the last fortnight, considerably better progress has been made in most parts of the country.  The brief but frequent showers, enough to stop any harvesting for the day, appear to have reduced harvest quality to a degree.  This means there could be a greater than usual percentage of feed wheat and less milling grades.  Our crop projections and the recent planted area information from Defra (see other article) suggest a small wheat surplus meaning export parity for feed wheat and millers looking around for suitable samples for their grists.  Therefore, an increase in the price spread between feed and milling wheat grades might be expected.

Feed wheat prices have shot up another £20 per tonne this month.  This is because of serious weather problems in multiple grain-growing parts of the world.  Both North America (Canada and US included) and South America have had serious droughts this year decreasing the yields considerably.  Russia, another major grain producing and exporting country has also suffered from serious rain shortage and their crop harvest is emerging as much smaller than previously thought.  Not only have prices been increasing, buyers are looking to secure grains further ahead than usual.

Our uneasy weather has also extended into France, the EU’s largest wheat producer.  Reports suggest that wheat harvested in France is of generally lower quality than usual too.  This means that we could expect more feed wheat in Europe than normal, and consequently less milling wheat.  Again, this will only extend the milling wheat premium.  This year could turn out to be an exceptional year for some who have good yields, reasonable quality and market their grain well.

The oilseed rape market has also had an excellent month, back up to £500 per tonne delivered.  The underlying soybean market is rising fast with production difficulties in America.  Additionally, China, with the largest herd of pigs in the world (ever other pig is Chinese), has experienced its pig herd growing by a third this year alone.  Imports of soybeans are therefore rising fast.  On top of that Canada, the largest oilseed rape producer and exporter in the world is also facing difficulties.  It usually produces in excess of 20 million tonnes; current estimates suggest output will be 16 million at best this year, and possibly as low as 12 million; a massive reduction of global supply.  This bodes well for the few who grew oilseed rape this year.  We believe a considerably greater number of farmers are likely to plant it this autumn, in the hope of another good season.

Harvest and Arable Markets

The harvest is in its early stages, with approximately a third of the winter barley in the Southern regions cut so far (it was three quarters this time last year).  At this stage of harvest, high variation of yield and quality is easy to observe.  We will refrain as the first fields present an unreliable bellwether for the rest of the harvest.  This is particularly as light southern soils often reach harvest before the heavier soils, and show greater yield variation, especially in years when drought has played a part in the year.  However, reports from most regions suggest that conditions are good, yield potential remains high and certainly far better than last year for most growers.

UK wheat markets have risen by £5 over July, but it has been an up and down month.  This has taken other crops with it overall.  Across the world, harvest is moving North.  Most winter wheat in the US has been harvested now.  The springs in northern USA and Canada will be next.  These crops are parched and yields are expected to be low.  Yields across Europe are generally good though.

Every July/August, the world looks carefully to see how closely harvest matches demand and earlier projections.  We hear about dry conditions around the world and the fragility of the food supply chain comes to mind.  The harvest in the Northern Hemisphere over the next two months being so critical to the survival of the ever-growing population.  There is no room for complacency and severe global drought would indeed cause problems across many countries (half of all grain stocks are hidden in China).  However, a number of economists have been proven wrong throughout history by projecting the inability of agriculture to meet the needs of its population.  Currently, stock levels and crop conditions are good and the first real indication of such a situation would be a strong rise in grain values.  This is not happening as we move from old crop (import parity) to new crop (export parity), with the associated price adjustment as we move to exporting wheat again.

Oilseed rape harvest is pressing on, whilst the price is being pulled by good soybean crops in America (North and South) and very dry Canadian OSR/Canola crops.  Within a month, this will be cut and the impact will be assessed rather than estimated or forecast which is what the currently fluctuating markets are based on.

June Arable Update

Much of Britain now probably has sufficient soil moisture to see the combinable crops to harvest, especially oilseed rape and barley.  We are projecting crop sizes of 7.1 million tonnes (mT) for barley (1.2 million less than 2020); 15.1 mT of wheat, approximately 50% rise on last year; 1.1 mT for OSR, 100,000 tonnes more than last year and about 100,000 tonnes more oats at 1.1 mT.  Overall, including ‘other cereals’, we are anticipating 26.7 million tonnes, up from 22.8 mT last year.  The figures are based on our expected crop areas and average crop yields 2014 to 2019.  This represents no records in either direction.  Whilst the crops areas appear relatively ‘typical’ we note there are still a lot of farms whose rotations are not back to what the management would have hoped for.

Old crop wheat prices have fallen £10 this month, slightly less than last month’s fall.  Old crop and new crop always come together so when new crop harvest starts, they are the same.  The fall is of little significance as so little is left.  With such a large price spread between old crop and new crop, few farmers have held on to grain.  New crop wheat values have fallen a Pound or so over the month, but have remained in a tight price range (£9.00 per tonne) since early April.

Across Europe, crop walkers have been reporting good yields pretty much everywhere.  The French for example estimate over 80% of their crop is in good/excellent condition, this compared with 56% last year.  Further afield, there is some concern that American crops are rather dry, but nobody is panicking yet.

In the table below, we have updated previous years’ data with the AHDB estimates and our own thoughts and calculations for the 2021 harvest and its subsequent marketing year.  We think that the UK will revert back to being a net exporter of wheat, having imported more than we exported last year.  Export Parity (i.e. the price grain needs to be to be sold out of the country) tends to be lower than import parity (the price it has to be to stop imports from coming in from elsewhere).

The barley market is currently quiet, as the buyers are waiting to see what the new crop brings.  UK barley is too dear compared with that from other locations to attract exports.  It is also too close to wheat price for most feed mills.

The UK OSR crop is looking rather well as it starts ripening.  This will be difficult to see for so many growers who decided not to grow it this year.  One has to ponder how many growers will return to OSR this autumn for next year?  We expect a rise in cropped area.  Prices have shot up in the last month from already high levels.  Normally we would expect oilseed rape to sit at about 2 to 2.2 times the value of feed wheat.  We are currently between 2.5 and 3 times, depending on date of movement, making the comparative gross margin of OSR quite attractive.  UK OSR is also trading at a premium over Paris rapeseed prices.  This is because we have imported so much (over half a million tonnes) this season.  This is mostly from beyond the EU.  For those planning next year’s rotation, remember price relationships will be quite different by the time they are sold.

Grain Market Briefing

In early May, wheat hit contract highs, for example £192 per tonne for November 2021 London futures.  Since then, markets have fallen by £20, leaving the same delivery position worth £172.  Values throughout the world have fallen in a similar manner.  Global sentiment is mostly driving this.  Weather conditions have improved for crop growth as lots of rain has arrived  – not just in the UK but around the world.  Record yields of wheat are now projected for the forthcoming US harvest. Coceral, the European Association of Grain traders, has increased its European harvest projection from 126 to 131 million tonnes of wheat; a substantial uplift in a single month.

This time of year is traditionally volatile for grain prices.  This is partly on technical issues to do with tying up the paper transactions associated with the old crop.  It is also as rain or no rain push markets around.  The market swings are often greater than the benefit or damage the rain has on growing crops.  It is not only the effect on crops that are already in the ground.  The rain that has fallen in the US Midwest, the grain basket of the West, allows ideal conditions for maize and soybeans planting too.

Old crop wheat Futures expired in May, at the time £25 per tonne higher than new crop.  Therefore, it must be assumed that all barns have been emptied with that size of price drop.  This should allow ample time to clean them and ensure they are in top condition for the 2021 crop.

Feed barley has slipped in line with the decline of wheat price this month.  Malting barley premiums are mixed.  This is partly as the UK anticipates a smaller and far more manageable barley crop in 2021 than the mammoth crop last year.  It is also in reflection of the current ideal barley ripening weather conditions in Central Europe.  The high proportions of barley used in feed rations in 2020/21 are being reduced in preparation for the smaller 2021 crop.  Demand is thus likely to be lower this coming marketing year.  Growing and ripening conditions are good for barley throughout Europe. Some harvesting might even have started by the next edition of this bulletin.

In the 2020-2021 marketing year, China moved from importing no more than 5 or 6 million tonnes of maize each year to importing 25 million tonnes.  The USDA has projected a similar level for 2021-22 (harvest 2021), but some analysts believe they have already booked approaching that amount.  This suggests their maize importing might continue rising in the coming years, in a similar manner they did for soybeans over the last couple of decades to world-changing levels.  This could tighten supply in 2021/22, potentially pushing the whole grain price matrix higher.

Oilseed rape price has also declined, albeit by proportionately less than the cereals market.  It is easy to note that OSR has fallen £20 this month.  But also remember it is £60 per tonne higher than three months ago, even after the recent fall.

Harvest Progress & Autumn Plantings

Harvest Progress

Normally at this time of year, the lion’s share of harvest is completed.  But with intermittent rain preventing significant progress in many parts and a considerable proportion of crops being spring sown, there is still ample to do.  A roundup of the harvest so fr is set out below.

Rather inevitably, it has been uneven, more so than usual.  In parts of the South and East, where more winter crops were drilled, harvest has progressed the most, indeed some might have all-but finished.  Further into the Midlands, West, North and Scotland, it is only just starting, partly as rain has hampered progress, partly because there is more spring cropping here.  Growers on lighter soils appear to have experienced greater yield reductions, suggesting the spring drought was more damaging to crops than the winter rains were; at least for those that made it through to harvest at all.  It’s an interesting turn of fortune with light-soil farms coming through the autumn drilling challenges well, but overall might have suffered greater yield reductions.

On the whole, many growers have a higher winter wheat yield than they thought likely back in February before the rain stopped, but many fields are patchy.  Most still agree yields will not quite reach the 5-year average.

Oilseed rape has been overwhelmingly poor and most opinions canvassed suggest a national yield of perhaps 2.5t per Ha will be as good as it gets.  The official yield will be affected by how much land farmers decided to re-classify as fallow or was re-drilled in the spring.  Plenty of farms drilled 120% of their farm this year; their failed OSR area eventually harvesting a crop of beans or spring oats.  Oats are looking well nationally, especially springs.  Windy rain might blow some yield from the ripe top heads.  Similarly, beans are looking good overall, especially spring beans.

This is a time for harvesters to consider the order of their harvesting. If multiple crops come ripe at once, not only should they consider the total value of the crop in the field, but the potential lost value from a 1-day delay in the field. For example, if beans and feed wheat are both ready to cut, the wheat might represent greater value per hectare, but the delay in cutting the beans might lose more value from discolouration than a similar delay in the wheat.

Autumn Drilling

So what are growers going to do this Autumn?  Most people are expecting a serious decline of OSR cropped area.  A lower drilled OSR area is very likely, but it is possible that for harvest 2021, the volume of OSR might actually increase.  We estimated a 25% write-off from this year’s OSR crop that did not reach harvest.  If next year, the percentage written off falls to a more typical 7%, then a decline in planted area from our estimate of 495,000 hectares in 2019 to a possible 410,000 this autumn would still leave more harvested winter OSR as the table shows.

Possible 2021 Oilseed Rape Area, ‘000 Ha

Many growers are removing oilseed rape entirely from their cropping.  Simply replacing it with another break crop may not solve the problem.  Other break crops such as pulses are available and offer soil and following-crop benefits too.  However, they might not demonstrate such high potential gross margins and could also become squashed in the rotation, affecting their long-term yields.  Some farmers are increasingly collaborating with nearby dairy or AD farmers to offer wholecrop rye, grass fields, as well as other cereals.  Interestingly, the harsh winter of 2012 led many cereal farmers to grow (spring) oats.  Their positive outcome meant that oat area has been higher than pre-2012 every year apart from one.  A surge in oat area this year too, might see something similar happen – depending on market demand.  Spring barley area has also been on an upwards trend with possibly a million hectares being harvested in the current year.  The gradual rise of spring crops can also be seen by a slow decline in winter cropping including wheat which, until 2008, topped 2 million hectares on a few occasions, and now averages 1.8 million.  Spring crops not only help tackle persistent grass weeds affordably, but are cheaper to grow and spread overheads at crunch times of the year.  Perhaps this year will accelerate this long-standing trend.

Arable Market and Harvest

UK Combinable Crop Harvest – What Should We Expect?

The harvest is in its early stages; for some the oilseed rape and barley is gathered, for others it has just been desiccated or is still ripening.  At this stage of harvest, without fail, commentators remark on the high variation of yield and quality.  The first fields always show variation in performance, and even in consistent years, the first fields present an unreliable bellwether for the rest of the harvest.  This is particularly as light southern soils often reach harvest before the heavier soils, and show greater yield variation, especially in years when drought has played a part in the year.  It would astound us if overall the combinable crop yields turned out high, especially the winter crops.  A good average yield of any of the main crops this year would either reset our expectations of what nature is able to do with plants in highly uncompromising conditions, or lead us to question the reliability of those calculating national estimates.

OSR

There will of course be some fields which just avoided being replaced in the spring, and harvest barely enough to justify the combine entering the field, but other fields will provide good crops.  Like all other crops, it is too early for any meaningful analysis.

Remember, the standard FOSFA contract for oilseed rape is for 9% moisture.  Oilseed rape is not accepted at moisture levels above 10% (or drying charges are incurred).  There is a gain of 1% in price for every 1% the moisture decreases to 6%.

Cereals

Some traders consider the winter barley harvest is 75% completed already (not the case round here by a long way – Ed).  Exports are taking place, both physical shipments and also orders.  UK feed barley is cheapest in Europe at the moment.  The demand for barley as animal feed (barley is generally for ruminants) seems to have dropped across some nations as people eat out less and therefore rely on white meats and vegetables in the home.  Demand for barley is thus down a bit.

Over the course of the last year, the price of wheat for this harvest has been gradually rising, albeit with considerable fluctuations from £140 to almost £170 per tonne on the futures market.  The prices for the 2021 harvest have remained highly range-bound between £150 and £155 per tonne.  The slowly declining UK and European crop size has been evident throughout the year, so prices have picked up, but so far of course, the crop for 2021 is unknown.

Globally

Most combinable cereals are grown in the Northern Hemisphere, so our harvest time will be more or less in line with most others.  Across the EU, harvest is quickly moving northwards.  In France and Germany, the two main grain producing countries, harvest is progressing in an average condition (not as well as last year).  The Russian wheat yield is reported as the smallest for at least 6 years, and smaller than initially projected.

Marketing

When it comes to marketing combinable crops this year, the focus may need to be more on the impacts of a Brexit than the actual marketplace itself.  Yes, we acknowledge similar comments were made following last season’s harvest and nothing happened, but Brexit has now occurred, and more importantly, a new trading situation will be implemented as of January next year.  This could possibly be trade with the EU without a trade deal.  These factors will affect the value of the marginal tonne (either exported or imported) which sets the price in the whole market.  We do not know the outcome yet, but farmers might consider this when planning on the date they fix the price of their grain (not necessarily the date of delivery).

Arable Market Update

This time last year we took a look at the global grain supply and demand figures supplied by the International Grains Council (IGC).  The IGC is a politically independent body, so therefore theoretically has greater credibility than the US Department of Agriculture, the other major organisation that publishes global grain statistics.  The only issue is that the IGC has a secretariat of about 20 economists, and the USDA, some thousands, with people on the ground in every region of the world.  In any event, the figures from the two organisations are often relatively similar!

Twelve months ago, we discussed how wheat stocks were at their highest ever, in physical terms.  This year, running at 38 million tonnes (or 5%) less, the fundamentals are looking more positive for grain long-holders (farmers).  Furthermore, as can be seen from the change in pre-harvest expectations back in March 2018, to the last set of figures in November, the reality of what has been harvested in the 2018 year (and continues to be cut in the Southern Hemisphere) is lower than initial estimates; again, bullish for price.  The stocks to use ratio is lower than last year at 35.4%, but still considerably higher than the previous two years, suggesting accessing the right specification and location of wheat by consumers is unlikely to be challenging to buyers in the coming season.  A lower level of stocks held by exporters offers a glimmer of hope to those waiting for prices to rise, but it also suggests that importers have more stocks so might buy less.

 

17/18 figures forecast; 18/19 estimates   1 Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US    2 Argentina, Brazil, Ukraine, US    3 Argentina, Brazil, US

A look at the maize figures shows a different story; one of rising stocks and increasing availability.  This indicates that crops grown for energy alone (animal feed and bioethanol purposes primarily), are in relatively bounteous supply.  It suggests that the premium for milling varieties might benefit in the coming year.  However, in another interesting twist to the story, as stock levels are expected to be so much lower this year than for the last few (because of rising usage), the stock:usage ratio is seen falling.  Furthermore, the Egyptians (the world’s largest wheat importers) have been buying Russian wheat at prices above anything they have paid for 4 years.  This, coupled with a weakened Sterling because of recent political shenanigans, supports UK wheat prices.  We are still a long way from harvest 2019 (the IGC hasn’t even started to forecast supply and demand for it as yet).  There was a view that, barring major weather events, as we approached harvest 2019 there would be a downwards ‘correction’ in wheat prices as availability rose.  There is now perhaps a lesser chance of this happening. 

Barley markets are quiet ahead of Christmas, with few buyers or sellers, including no new export business. Premium samples of malting barley retain a good premium for those still unsold.

The oilseed marketplace has seen prices move a little more than grains this month, partly because of the Chinese/US politics which affect soy beans but also as the southern hemisphere crop is being harvested and some is already sold and loading for delivery into the EU.

UK Harvest Commences

UK Combinable Crop Harvest – What should we Expect?

The harvest is in its early stages; this year a little earlier than usual.  Over the last six weeks, the UK has received minimal or no rain (at least in England) with June receiving only 25% of the normal levels, and July just as parched so far.  Consequently, some crops across the country will have been too dry to yield properly.  Before that, of course, though March, April, and the first half of May, the UK received 50% more rain than normal, leaving those areas with strong soils and healthy levels of organic matter, with a long-lasting moisture reserve.

Crops were late emerging from winter dormancy or being planted often into cold, wet spring soils and so had a lot of growing up to do in a short amount of time.  This alone reduced expectations of harvest yield.  But it is possible that those crops on land strong enough to retain some moisture for a while may have done better than expected.  It appears that moisture held deep below the soil’s surface has, on may farms, been a lifeline for the survival of this year’s crops, with the sunshine and hot weather providing an opportunity for heavy, high bushel weight crops to develop.  It has been mentioned that this is the weather pattern that more continental countries experience every year, the Paris Basin included.  Crops on lighter soils though will presumably bring overall yield averages down.

OSR

More specifically, oilseed rape, whose harvest is now well under way, needed minimal swathing or spraying in many parts this year.  Some crops are dry but not completely mature, with brown seeds.  As yet, yields appear to have held up well, albeit maybe not a record season, even after moisture adjustments are accounted for.  Farmers should be careful not to harvest oilseed rape too dry as it can incur penalties if moisture levels are below 6%.

To recap, the standard FOSFA contract for oilseed rape is for 9% moisture.  You lose 1% of price if moisture goes up to 10% and gain 1% for every 1% the moisture falls down to 6%.  Below that point, it becomes difficult for a crusher to extract oils so could be unsellable.  Certainly, a penalty such as a blending charge with wetter seed would become payable.  It is worth getting the moisture right and if you’re not sure, keep it comfortably above 6%.

Barley

The barley harvest too is under way, with moderate to good yields, and excellent quality on the whole, although it is too early to reach big conclusions about national yields.  Bushel weights are high, meaning a greater tonnage might fit in the barn than usual.  It also means those farmers who take their own grain to a store, should beware of trailer weights; overweight vehicles tend not to be prioritised for tipping, or, if more road travel is required, not allowed back on the road.  Some hauliers might end up carrying too heavy a load; it is the driver’s responsibility and could be expensive to them.  It will catch some hauliers out.

Wheat

It is possible that the very first wheat crops are starting to be cut now, but it is too early to make any useful comments about it.  More next month.