The war in Ukraine is still a strong focus within the grain markets, however, little has changed since the April update other than Putin’s slight change in direction by reducing action around Kyiv and centring his military forces toward the Eastern territories of Ukraine. There is certainly no indication that hostilities will end anytime soon.
The Eastern areas of Ukraine that are now seeing the strongest areas of fighting are some of the largest wheat-growing regions in the country. Concerns are continuing that both production and movement of wheat will be seriously affected.
Another developing issue is the availability of fertiliser for European farmers to cover the next season, however, that is an issue for future reports as it will affect the 2023 harvest rather than the forthcoming one.
Taking all the factors into account, I expect to see the strong grain prices continuing into the foreseeable future.
April has seen continued favourable growing conditions, although, there is a concern in the south of England that growing conditions are now too dry and many crops would benefit from some rainfall. Some spring barley that has been sown later may struggle due to the dry soil conditions, but most Scottish crops are in good shape with the drier, cooler conditions keeping disease in winter crops lower. It is worth mentioning that there are some reports of Rhynchosporium in barley and easy Yellow Rust in wheat, so farmers are being advised to use robust protective fungicides to maintain crop health.
Nitrogen top-dressing has now been applied to all winter barley crops, with wheats receiving theirs over the coming week. Many farmers are continuing to apply close to their intended target N applications regardless of the high price of fertiliser as the crop potentials are good and the 2022 market value for harvest grain is very strong.
Spring barley sown in March and early April is progressing well with good ground coverage and plants at an advanced stage for this point in the year. Like the winter cereals, these crops are showing promise and the hope is that later sown fields don’t suffer from the dry conditions.
Record levels on pricing previously reported are continuing to be supported by the limited product being offered. This is coupled with world prices reacting substantially to the Ukrainian conflict.
Wheat prices, which hit £350/t during late March continue to trade at a similar level, but feed barley has moved upwards to trade at just over 300/t, although there are signs that barley is getting harder to place at these values. This could limit any further increases and may see it diminish somewhat.
Some wheat has been transported into the Scottish market from the south of England but this hasn’t, to date, had any appreciable effect on pulling prices down, it has merely prevented any further upward pressure.
Crop 2022 harvest
This is the area that has seen the greatest volatility over the previous month.
Following a quiet March, with prices on Nov 22 futures trading between £255-£270, the news from Ukraine and some concern around the condition of US wheat crops, have prompted a lot of support for the 2022 harvest. As I write, the Nov 22 futures is trading at £306.
The next two to three months will give a better understanding of how the war is developing and how the market in Nitrogen fertilisers will cope with the supply vs demand issues that appear to be looming.
As the media take hold of this sort of information. The markets will respond, so it shouldn’t be a surprise that I will not predict what will happen next, except hope for the best, but prepare for the worst!