The weather, coupled with the ongoing uncertainty around events in Ukraine continues to play havoc with the expectations around yield, quality and market values for the 2023 harvest. It is rare to have a settled market and a comfortable feeling about how crops will perform. Currently, we are as far from either of those as we have been for a while, so there are plenty of challenges ahead.
Crop conditions
The end of May bought warm dry conditions, which continued through the first three weeks of June when concerns were raised on how this would affect the cereal crop performances.
The majority of winter crops have coped well with these warm dry conditions and actually benefitted from the large amount of sunshine putting energy into the plants, which should help with grain fill and weight.
Winter barley advanced steadily in June, with many growers in the south of Scotland now expecting to start to harvest around mid-July, weather permitting. Crop potential is looking promising with the main concern being lodged crops if there is heavy rain between now and harvest.
Likewise, winter wheat benefited from the sunny June weather, with most crops passed flowering and heading towards grain fill, which the recent rainfall will also help with. With disease still relatively light, most wheat crops have now received their head spray. This gives extra insurance to ensure good grain quality.
Things aren’t quite so rosy with spring barley though and there is still a distinct difference between spring barleys across the country. Early established crops are generally still coping reasonably well whereas crops that were sown later have been showing different levels of stress from the recent dry weather. It is expected that spring crops will struggle to yield up to average levels due to thin crops with few tillers, which could lead to tightness in the barley market. This situation could be exacerbated by high nitrogen and screening issues in the barley which is leading to quite a few concerned malting barley buyers as we head into the harvest.
Markets
As we approach the tail end of the old crop market, the difficulties being experienced at the end of May have continued to create problems for grain traders across the UK. Very little domestic demand and poor export interest have combined on both wheat and, particularly, barley to provide very few opportunities to trade at any reasonably healthy values.
Old crop barley is still reliant on the farm-to-farm trade and values remain below £150 ex-farm. Wheat markets aren’t much better with only small parcels of contracts coming forward for July and early August and plenty of grain still being offered although we have seen the base price for July improve from last month to around £195 ex-farm, it is highly unlikely that all grain looking for a home before harvest will be successful. It is still felt that there will be a carryover of old crops into the next season.
The new crop is currently showing very wide differences between barley and wheat values. Again, a lack of domestic interest in feed barley is forcing traders to look closely at the export market and, despite greater than expected demand from south Europe, prices remain very weak at £150-£155 ex-farm for Aug/Sept movements.
Wheat futures markets have once again shown great volatility in recent weeks. Only about a fortnight ago, there were bearish reports being circulated expressing great maize sowing conditions in US and wheat across Europe looking very promising. However, more recently there have been events in Russia and weather concerns for dry conditions in parts of the US and Canada causing crop stress and these factors pulled Nov wheat futures up to a recent high of £211. Now, with some rain being forecast and the Russian issues being resolved, markets have once again fallen away to trade at futures levels back below £200 (at the point of writing £195), which is leading to ex-farm feed wheat values for south Scotland at £201 ex for November.
As in so many reports in the past, it is next to impossible to ascertain what will happen next, either climatically or politically, to drive these markets up or down.