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- Northern Hemisphere wheat harvest progress
Early UK wheat harvest results suggest huge variability in terms of yield and quality, with wide-ranging proteins grabbing the headlines thus far and testing generally lower than at this stage last year. The Hagberg falling numbers and specific weights reported also reflect a less-than-ideal growing season and, with a mixed short-term weather forecast, this may continue to be the case.
Elsewhere, FranceAgriMer estimates 57% of soft wheat to be in 'good' to 'excellent' condition. This is a 2% improvement on last week, bringing the harvest to 71% completion. Although this is well behind last year's rating of 75% of crops rated 'good' to 'excellent' at the same stage, it's encouraging to see quality improving as harvest progresses.
A similar theme continues to develop in Russia where roughly one-third of the wheat crop has been harvested at an average yield of 3.47t/ha, which makes it currently the lowest yield in six years. As such, it's no surprise that the International Grains Council (IGC) made a notable cut in its estimated world wheat production this week, dropping its prediction by six million tonnes to a total of 762 million tonnes, with cuts seen for Russia and the EU.
- UK wheat prices stabilise
Domestic wheat prices have stabilised this week despite a fluctuating exchange rate, with small volumes of November London International Financial Futures and Options Exchange (LIFFE) trading at a very tight range between £166-168/t. Delivered markets also remain quiet, with a fine balance of well covered consumers in the short- to medium-term and farmer sellers who are keen to get crops in the shed before committing more forward grain, despite attractive ex-farm prices. This year's smaller UK wheat crop leaves supply and demand at a deficit, meaning imports will factor largely in final figures. Until consumers move and we build a clearer picture on harvest yields and quality, markets will remain subdued.
- Mixed results as expected on winter barley
Yields and quality vary considerably across England. Light land with little chalk or clay content is suffering the most, while more moisture-retentive soils are doing better. Bushel weights range from 58-68kg per bushel, doing well overall. In general, the south coast counties are producing the best yields, benefitting from the rain that fell more regularly in the spring. On the malting varieties, nitrogen levels are on the higher side and range from 1.60-2.0N. Screenings are low as would be expected from a crop with fewer tillers.
- Spring barley maturing in mixed fashion
Crop on the light lands of the East and West Midlands of England are seeing cases of secondary tillers of varying difficulties but, outside of those areas, crop seem to be maturing well with little secondary growth. The best crops are expected to originate from the southern counties in terms of yield and nitrogen levels, but spring barley north of the M62 should also perform reasonably well. Crops in Scotland are progressing nicely.
- Market prices steady
The first vessels are starting to arrive to collect feed barley against earlier sales, with more expected to arrive over the coming weeks. Price movement to the ports is mostly dependent on the sterling weakening or strengthening. UK barley is the cheapest in the EU, but demand is limited due to the large crops in Spain and Ireland and the uncertainty of meat demand in the EU caused by a slow recovery of eating out following lockdown. Feed manufacturers are buying against sales to livestock producers only and look likely to maintain this strategy.
- Prices firming
Domestic markets have risen £10/t since the start of this month, benefitting from a combination of a 1% softening in sterling and a €4.00 rise in the Paris futures market, returning some confidence to the demand side of the market. The realisation has finally hit that UK rapeseed yields from the 2020 harvest are going to be nothing special.
It is still too early in the harvest to start forecasting final crop sizes but, despite the crop's legendary ability to recover from setbacks, it is already clear that the poor autumn conditions coupled with the unusually dry spring have taken their toll.
- Good harvests expected in Canada and Australia
There is a window of opportunity for growers right now, with firmer prices required in the short-term to tempt sellers to maintain the flow of supplies from the smaller crop. However, this is countered by the knowledge that the value of sterling might not always be the farmer's friend and that the cost of imports will generally act as a ceiling on the market. It is widely known that supplies from Ukraine will be restricted due to the country's much smaller crop this year, but good weather in Canada, where 77% of the crop is rated 'good to excellent', and the potential for an Australian crop that is 50% up from last year, point towards an easing of supply restrictions as we move into the last quarter of 2020.
- Global oilseeds stocks building
Focusing on the bigger picture, there is a frequent switch in demand between the various vegetable oils depending on price, meaning the price of oilseed rape in particular is largely determined by the price of competing oilseed supplies. It is estimated that the world's production of all oilseeds in 2020/21 will rise by over 29 million tonnes and that stocks are likely to increase by approximately six million tonnes by the end of the season. This development is driven mainly by a much greater global soybean crop, supported by sunflower seed production which will see an increase for the third year running. These factors will ultimately place an import replacement ceiling on domestic prices as the 2020/21 campaign progresses.
Whilst the dry spring may have led to the expectation of an early harvest, the inclement conditions which followed have pushed back crop development and subsequent harvest dates. Harvest progress is yet to pick up any speed this week - pulse harvest reports could be counted on one hand.
- Mixed international pulse news
The French pea harvest has now finished. Yields are down, mostly due to a combination of drought and high temperatures. Meanwhile, the Faba bean harvest is just starting in France, where there has been an increased planting area of 70,000 hectares.
In June, the Australian production forecasts were released, pegging an area of 235,000 hectares with a production estimate of 402,000 tonnes. The main production areas in Australia are doing well, although some areas in the north require rainfall.
Canadian pea production is looking positive and is predicted to rise to over 4.2 million tonnes. In stark contrast to the successful pea production in Canada, production in the USA is expected to fall by around 25% to 800,000 tonnes.
- Stable values in UK market as trade slow
Buyers and sellers continue to be cautious in an unpredictable market that is influenced by a magnitude of factors - particularly the Covid-19 pandemic and Brexit.
New crop feed bean values are trading at around £190-200/t, while feed peas are coming in at around £10/t lower. Nominally, new crop large blues are worth £230-260/t, depending on specification and visual appearance.
There is renewed hope that this year's pulse crop could yield well. It will be interesting to watch this over the coming weeks.
- New crop contracts available
Pulse contracts from Frontier for crop 2021 are available and proving popular as growers look to secure some stability in difficult market conditions. Ask your Frontier farm trader or agronomist for details.
CF Fertilisers has indicated this week that it will be increasing its pricing on the week commencing 27th July for Nitram, as well as for sulphur and NPK grades. This news comes on the back of global urea values increasing due to a large Indian tender of around one million tonnes. Offers so far are only for 115,000 tonnes due to production challenges and lack of supply. It is worth bearing in mind that UK offers remain very competitive against both urea and European prices for ammonium nitrate products. It is likely that we will see other suppliers increase prices in due course.
As mentioned last week, values on potash and phosphate remains flat but, with the fast-approaching establishment window for oilseed rape and early cereal establishment, it is worth noting that availability will become key. There are also signs that DAP is starting to pick up in price, which will affect the pricing on popular NPK grades. Growers are advised to order now for their early drilling requirements. As ever, currency and gas pricing will be significant factors in the second half of the year.
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