The grain markets continue to focus on the developments in Ukraine, where the conflict taking place there continues to create uncertainty. There are also concerns about the accessibility of wheat that is currently in storage in the country, as well as issues around the crops for the upcoming harvest.
The last two weeks have seen indications that Russia could allow the exporting of wheat. However, this has been followed by more negative reports stating that it is less likely due to the US and other countries supplying arms to Ukrainian forces. Naturally, this has added to what is an already volatile situation in the grain markets.
May has seen more favourable crop growing conditions that have helped cereal crops move towards harvest showing good potential.
The rain at the start of May proved useful to reduce any drought concerns over some of the crops in the south of the UK. While temperatures are not yet soaring to the highs we have had in previous summers, there is a good amount of sunshine and, with continuing steady supply of moisture, the hopes are for a good grain fill during the summer.
With winter barely reaching ear emergence in mid-May, we are now seeing signs of it reaching maturity. It is also notable that winter wheat and early sown spring barley are also ahead of where we would expect them to be. So, if the summer weather allows, there could be a substantial harvest in August.
Despite the high fertiliser costs, the vast majority of crops have been given close to the optimum level of AN since the end market values for the cereals are supportive of targeting healthier yields. Disease levels remain quite low but, again due to the higher value of the new crop grain, farmers are keeping the crops covered with robust fungicide treatment when the weather allows.
2021 Crop harvest
The majority of May saw the grain market continue to maintain prices around the record values we had seen in April, between £350-£360/t, which also supports feed barley values over £310 ex-farm.
Towards the end of May, it became apparent that more of the positions in pre-harvest homes were being covered and the prices on wheat and barley began to settle back downwards, albeit with June wheat trading closer to £330-£335 ex-farm. Since there still seems to be wheat being offered into the market, it is accepted that the top of the market has been achieved and the last of the season’s grain will now be supported by the prices being bid for the new crop coming into the 2022 harvest.
2022 Crop harvest
As mentioned earlier, the news that Russia was considering allowing access to export grain from Ukraine, followed by a U-turn, has caused considerable fluctuations in the wheat futures/
Between Monday 30th May we have seen a drop in Nov 22 futures from £320 down to £297 followed by a recovery on 6th June at £317. This volatility is making decisions extremely difficult for buyers and sellers alike.
While there were concerns of dry weather affecting crops earlier in May, the Nov 22 positions reached highs of nearly £350 in the middle of the month but better rainfall in Europe and US has eased concerns on crop performance which has allowed the market to fall back. There is still time yet for the weather to have its say on how the harvest prices will develop and this, along with the Ukraine war, just confirms my view that this season has presented, and will continue to present, the markets with the greatest uncertainty we have seen in at least a generation. Testing times!