With some winter barley crops likely to receive their pre-harvest treatment over the next couple of days, the expectations that this season's harvest will be one of the earliest ever is looking more likely. Now we just need the weather to play favourably so the maturity of the crops progresses without too many set-backs.
Our last two reports have focussed heavily on the consequences of the rather extreme conditions this year's crops have had to endure and rightly so. With such wet months in the autumn and winter followed by 2 of the driest months (April and May) on record, it can be no surprise that there is great difficulty assessing much other than a poorer than average harvest on the horizon.
June has been a much more 'balanced' month with fluctuating temperatures, reasonable rainfall along with the odd sunny, warm day thrown in too. This has been welcome but is far too little, too late to really help the majority of cereal crops.
With most crops moving steadily toward ripening, it is beginning to be even more obvious where the issues are with the winter barley crops. The thinner patches are more distinct again and the variation of maturity in many crops is more noticeable. Previously aired concerns about grain quality are still prevalent, so there are many worried farmers looking apprehensively toward what they are likely to be cutting in a few weeks’ time.
Most crops are through flowering stages now and will be setting the grain sites over the next week or two. This is a critical stage of development to try and salvage a reasonable crop from a difficult season. Just as with barley, it will be important to have the weather favourable between now and harvest. With such limited yield potential from such a large proportion of the crops, getting beneficial harvesting conditions is much more important than any previous season. If conditions are favourable, it will keep drying and handling costs to a minimum and prevent a poor harvest being an expensive one as well.
The more variable weather in June has probably benefited spring barley more than the winter crops since it has come at a time to allow some late tillering which could have tqo opposite effects. Firstly, on a positive note, there is a chance of improving the yield potential of the crops somewhat but secondly, on a more negative basis, it may impinge on the quality of the sample at harvest with greater variation in maturing grain. This latter effect may have some consequences on samples achieving the critical standards for the malting market. In more extreme cases it could prevent the grain from making quality enough to receive their contracted premiums which could mean a devaluation in the crop value of over £50/tonne. As with the winter cereals, it is shaping up to be an early harvest for spring barley and it is likely that the majority of the crops will be completed harvest in August, weather permitting.
The report in early June indicated a continuing firm base on the prce of wheat for the 2020 harvest crop due to the weather stressed crops. The June rain has lead to an anticipation that some crops across western Europe are likely to have benefitted from the wetter conditions. This means that the November 2020 futures have eased from highs in the mid-£170s and slipped back to the mid-£160s, where it had been for much of April and May.
Other factors which have held the futures in check include a large tonnage of corn in US markets and larger than average expected harvest in Australia combined with the better weather seen in Europe also being favourable to Russian crops. Even with a relatively weak currency, which normally pushes prices higher, there has been a notable slide in wheat values for 2020 crop over the past couple of weeks.
The prospects for the market to gain any meaningful momentum in the next few weeks are limited and, unless something quite unexpected appears on the scene, it is likely that the Nov futures will continue to trade in the earlier established range between £160 -£170. The continued reaction to the Covid-19 pandemic is certainly not helping the market to improve either, with both the distilling industry and the bio-ethanol producers trimming back on their demand for wheat at the current time.
As stated in the previous reports, the scale of sown area down to barley will certainly limit the potential for that market to improve. Again, the pandemic effect on the alcohol production has reduced maltster demand quite considerably leaving the potential for much of the uncontracted spring crop to be looking for an alternative home. This is despite all the comments on the likely poor performance of both winter and spring barleys. Prices look like starting in the £115-£120 ex farm region with potential to slip once combines roll.
An outcome of this situation, where farmers are going to be hit with poor yields, poor price and possible poor quality along with an unknown cost of drying and handling, is one where significantly more wheat is sown this autumn at the expense of both winter and spring barley. This could put a different complexion on values toward to 2021 harvest - but that's for another day!