With some areas of Southern Scotland seeing record levels of rainfall this winter, it is good to report that the majority of winter cereal crops are coming into the spring in good condition.
Much of this is due to farmers deciding to sow wheat crops much earlier following a difficult 2020 harvest, which saw many crops forced into poor, wet seedbeds in autumn 2019. This decision is proving to be the right one.
Winter barley crops are also in good shape, although not as strong as the wheat crops and there are some reports of early rynchosporium and mildew. In both wheat and barley, the biggest issue has been the recent frost heave from the recent low temperatures affecting wet ground. However, there are only a small number of growers reporting this currently. Where water has stayed around for several weeks, there has been some crop loss, but again, the overall picture shows that this is only affecting a minor area of cropping.
Another factor worth commenting on is that virtually all the targeted area to be sown in winter cereals was achieved this season, very much different to 12 months ago where the wheat area, particularly in England, was vastly reduced from usual.
With early March conditions proving calm and settled, it is likely that a good proportion of cereals will receive a first application of fertiliser. However, should some of the stronger wheat crops receive this too much feed too early, there could be serious consequences on disease and standing ability later in the season.
If these dry conditions continue for another several days, we may even see some seed drills venturing out with some seed barley on the lighter, coastal areas.
The remaining few months of the 2020 harvest trading is showing the residual effects of the much reduced wheat crop. Levels on feed wheat trading comfortably over £200 ex farm, which is a substantial differential between this market and the 2021 values, with November wheat trading at £171 ex.
This is due to there being enough wheat from the coming harvest to move the UK away from the importing position it is currently in. It must be recognised that the country’s wheat stock will be zero at the start of the forthcoming season. This leaves the country very vulnerable to any conditions which will affect the harvest yield.
With the theoretical over-supply from the 2020, barley has quickly diminished due to the export activity. Expectations are that the price of barley will remain quite well supported into the forthcoming season. Current values have the crop at £165-£168 ex farm for feed barley and a harvest price of £145 for September.
As ever we need to keep our attention on what is happening elsewhere. Despite Australia reporting an excellent harvest, there appear to be issues in South America as well as several areas in the Northern Hemisphere. For example, Russia, which could have quite bullish consequences on market reactions.
With the COVID-19 pandemic still reaping its effect on certain markets, it is likely there will be a much-reduced demand for alcohol production again this coming season, which will take its toll on malting barley requirements. Whether this proves to have much of an effect on the barley supply/demand position in the UK remains to be seen but it is likely to affect the local situation in the Scottish market to a greater extent.
Without trying to be too judgmental on the forthcoming harvest, it is hard not to take a fairly bullish view to the general cereals markets given all the indicators at this point in time but as I’ve experienced in previous years, there are too many unknowns still to emerge to pass a firm view in a report such as this.