Crop Report: October 2019
With very minor levels of harvesting still to be concluded in certain parts of Scotland, some of Caithness barely half way through, a picture of a significantly large yielding crop has been materializing. This has been shown with the recent figures from government expressing a wheat crop for UK in excess of 16.2 MT and barley production of 8.2 MT which are pretty large figures and not really helped by the uncertainty surrounding Brexit. The Scottish harvest figures haven’t been circulated at this point but reports are supporting a similar situation North of the Border.
Given the advantageous sowing conditions for both Autumn and Spring crops this season, along with warm, dry weather for much of the growing season, the potential for a large harvest was always on the cards and, although there was rather poor conditions through late June, much of July and especially early August, the crops of all cereals have performed consistently well across all main arable areas of Scotland. Many reports have seen winter wheat exceeding 12 T/ha and spring barley exceeding 10T/ha. Although this obviously hasn’t happened across all farms, the general trend has been for a larger than average harvest for the majority.
One consequence of the poorer weather toward to point of crop maturity has been slightly lower specific weights in winter wheat and spring barley. With some exceptions, the lower weights haven’t dropped below market thresholds but have certainly stopped a large harvest from being an even greater one.
As would be expected the market response to the large tonnages being produced has been to soften quite considerably. Feed barley in particular has been hit with values dropping ex farm during the pressure period of August to late September with only minor signs of recovery creeping in during October. Wheat markets for feed/distilling are holding slightly steadier with central Scotland prices trading around £135 ex farm for October. This follows on to the very lowest point in the market around mid £120’s in late August when there was a great degree of uncertainty in the scale of the harvest and many traders didn’t know what they would do if yields continued as they had from the early cut crops. Although it has been a large harvest, it hasn’t continued to develop at the rate the earliest harvested crops indicated and we have reverted to looking at a big, but not too substantial, tonnage of wheat to deal with. Quality wheat with milling quality and/or high Hagberg are dictating higher premia than seen for several seasons which is indicative of how the weather affected crops at early harvest time.
The barley situation is slightly different given the scale of the demand for malting in Scotland. With both yield and quality at the better end of the scale, this large but finite market has been over-supplied so there is more barley entering the feeding market and there will also be a carry-over of quite a large tonnage which may impinge on malting premia for 2020 harvest. The overage coming into the feed market has so far been absorbed by compounders and export shipments but prices have been depressed as mentioned earlier. Some spring barleys are struggling to make a healthy specific weight but generally all winter barleys are comfortably making quality specifications.
Markets going forward are much harder to call at present with so much uncertainty in the short to medium term but it is very unlikely the market will do anything other than recover on barley, albeit probably not very strongly, and wheat will follow currency and world supply/demand reports ongoing so could fluctuate somewhat through this season. Looking further forward, autumn sowing is proving very challenging throughout much of UK so, without much sign of improvement, there may be stronger figures shaping up for 2020 harvest markets which in turn could lift the longer terms current season values next spring/summer.