Tag: wheat
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).
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
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.
Grain Market Update
The 2024 harvest of wheat in the UK has been pegged at 11.1 million tonnes. This is down 20% from the 2019-2023 average of 13.9 million tonnes. This overall production figure masks regional variability in both planted area and yields for 2024. The wet weather that plagued last year’s crop will have wide-ranging implications across regions and individual farms. Cashflow of some businesses is likely to be challenged with less tonnage available to be sold and ex-farm feed wheat prices only £6 per tonne higher than October 2023, at £183 per tonne.
The cumulative effects of last season’s rainfall and the wet autumn this year are driving concerns about the 2025 crop. Met Office data for September suggests that much of England received 200% of the 1991-2020 average rainfall for the month.
The wet weather of last season and this has led some to alter establishment for this year, dusting the cobwebs off the plough, and hitching up the tine drill in an effort to avoid a repeat of last year.
There is some reflection of expectations of a reduction in wheat output in 2025 in global grain pricing. At the end of October, the value of new crop (November 2025) UK feed wheat futures was around £12 per tonne higher than nearby futures. The cumulative impact of a tighter supply and demand of global grains in 2024/25 and challenging establishment for 2025/26 offer an opportunity for growers to lock in an early price around the £185-190 per tonne mark for feed wheat, depending on location.
Elsewhere in the world, dryness appears to be the primary concern. There are challenges for establishment of winter wheat in Russia. Lack of rain in the US is advantageous for the maize and soyabean harvests which are well ahead of average pace. That said, it could check the progress of wheat planting and development.
Rapeseed prices are well ahead of year-ago levels, averaging almost £390 per tonne ex-farm across October. Rapeseed production was down significantly in the UK, EU, and Ukraine in 2024. Furthermore, expectations are for a smaller rapeseed area again in the UK for harvest 2025. However, with a plentiful soyabean crop in the US and Brazil, strong availability of soyabean oil could partly erode the premium that rapeseed currently has.
