First things first – the window for Countryside Stewardship applications is now open!
As of 11th February, farmers, woodland owners, foresters and land managers now have the ability to request 2020 application packs. Information and forms are available on the gov.uk website and you can also ask for your application pack by email, choosing whether to receive it electronically or by post.
World wheat markets have managed to achieve modest gains this week, supported by ongoing strong international export trade but lacking any fresh price drivers. Futures remain a good 4% below their January highs. China remains a primary focus, with the combination of their wheat buying activity, the coronavirus outbreak and their trade deal with the US creating a recipe of uncertainty.
Following the signing of 'phase one' of the US/China trade deal, US traders expected to see a wave of wheat buying activity as China began their obligation to purchase US agricultural products.
Following losses of 4% during the last third of January, around £2 per tonne has been added to world wheat prices since the market closed on Friday.
There is little fresh news to influence prices but wheat exports from the EU and Ukraine continue to move at a strong pace. EU exports climbed to 16.4 million tonnes by the 2nd February, compared to just 9.9 million tonnes at the same time last year. Despite strike action hindering logistics, French ports shipped their biggest volume of wheat for six years during January.
Having rallied to 18-month highs early last week, world wheat markets have subsequently taken a negative turn with US Chicago Board of Trade (CBOT) wheat futures leading the move lower.
Expectations for sizeable US wheat export trade to China following the signing of 'phase one' of the US/China trade agreement so far has failed to materialise, triggering a fund sell-off. The worsening coronavirus outbreak has added to the negative market sentiment with a perception that it will inhibit trade to China. European markets have followed and London wheat futures have now lost £7 from the recent highs.
At this point of the year, I find that New Year's resolutions tend to have gone one of three ways. They are either still going strong (well done if that's you), have merely been forgotten about, or have fallen at the wayside because although you tried, one small blip meant you had to shelve it for next year so you can try again.
While I'm often in the group who start with the best of intentions but don't quite see them through, there is one 'resolution' that I simply haven't been able to ignore: adapting to change.
This year, food production is under pressure from many different angles and regardless of your view on the validity of change, we can be certain that UK agriculture will need to adjust in order to survive and thrive
European wheat markets traded steadily lower this week in the wake of last Wednesday's global price spike. Many of the supportive factors remain in play, but uncertainty over US-China trade talks and nervousness surrounding the Coronavirus outbreak were enough to spark a round of fund selling in agricultural commodities, including Chicago wheat and corn.
Data from Brussels put EU wheat exports 70% ahead of last year's pace and this looks set to continue, with French wheat currently the cheapest in the world. Despite this, Matif mirrored Chicago, trading €5 lower in the aftermath of last week's 17-month highs.
The International Grains Council (IGC) published its world Supply & Demand report this week, in which it cut consumption by two million tonnes and year-end stocks by one million tonnes on its previous estimates. However, consumption at 755.9 million tonnes is a record level and 17.6 million tonnes up on last year. Stocks are seen at 271 million tonnes which is also a record high and 5.7 million tonnes up on the year.
Despite world wheat stocks being seen to reach record levels on paper, world wheat prices rallied further this week, driven higher by the fast export pace from the world's major producers. Ukrainian wheat exports have reached 15.6 million tonnes so far this season – 4.2 million tonnes ahead of last year.
US, French and London wheat futures markets have all continued to rally this week, reaching highs not seen for almost a year and a half.
Following the signing of the 'phase one' trade deal last week, the US market is firmer as a result of expectations for export trade to China. Support there also comes from their export pace which is running 15% ahead of last year.
French wheat futures are higher on strong EU export demand which, at 15.7 million tonnes so far this season, is running 71% ahead of last year. The strike action that is crippling French export facilities is also creating a technical rise in French wheat futures as shorts try to buy back their positions in the nearby contract.
The rain we've experienced over the last year has left many areas very wet and soil more vulnerable to damage. A planned and careful approach to spring operations could minimise soil damage and even start remediation in some cases.
Many soils will not have adequately dried out and compaction is accentuated by tyres that are too hard and high axle weight. Every effort must be made to use the lowest appropriate tyre pressures for each field operation and to minimise total axle weights, if necessary by carrying part loads of seed and fertiliser to the field. Only radial tyres should be used, cross ply tyres and particularly the super single tyre, found on heavy goods vehicles with tyre pressures of 70 plus psi, should never be used on arable land.
US wheat futures markets continued to rally earlier this week, reaching 14-month highs ahead of the US and China signing 'phase one' of their trade deal. Bullish traders were encouraged by the view that, in its part of the agreement, China would make significant purchases of US agricultural products and start buying notable volumes of US wheat.
However, the text of the agreement stated purchases would be made at market prices based on commercial considerations. In other words, wheat purchases would only be made if the wheat was needed and prices were favourable.
As sterling continues to fall, ex farm rapeseed prices in the UK remain supported. Markets are also seeing strong demand from crushers for the winter period as vegetable oil markets continue to find good support.
This week will also see the 'phase one' agreement between the US and China as part of their ongoing trade deal negotiations. However, as Brazilian soybeans are currently cheaper than the US, it is unlikely that China will switch supply unless there is a significant increase in demand.
The world wheat market took a bullish turn over the festive season and that trend has continued during the first full trading week of 2020. The Chicago Board of Trade (CBOT) wheat futures hit highs not seen since last June. Politics, weather and trade have all combined to encourage prices to move higher.
US wheat futures found particular support when Donald Trump's administration confirmed that 'phase one' of the new trade agreement between the US and China would be signed on the 15th of January. Market bulls got very excited by this news, with rumours that China might fulfil its wheat import quota which would allow it to import up to 9.6 million tonnes of wheat in 2020.
This week the Department for Environment, Food and Rural Affairs (DEFRA) published its final UK wheat area, yield and production estimates for 2019. There were minimal changes to its provisional estimates but the report included a reminder of how significant the crop was at 16.225 million tonnes.This is just 58,000 tonnes below the provisional estimate – the largest UK crop since 2015 and 2.67 million tonnes up on the 2018 harvest.
Allowing for a minimal commercial carry out on paper, there is an exportable surplus of approximately 2.9 million tonnes. With 900,000 tonnes of that likely to be shipped by the end of this calendar year, there will be approximately 2 million tonnes to either compete for export or roll over to the 2020 season.
UK wheat markets were buoyed by strong domestic demand and optimism around global trade this week, with May '20 LIFFE trading up to £151.75 on Tuesday from last week's low of £145. The General Election result pushed sterling to its highest level since May 2018, peaking at $1.35 on Friday.
However, as the newly formed Conservative majority government looks set to rule out any further Brexit extension, some are suggesting this increases the chance of the UK leaving the EU without a trade deal. As a result, sterling fell back to pre-election levels and firmed UK grain prices.
Sterling reacted positively to the UK election result, gaining up to 2% versus the euro as the Conservatives secured a majority of at least 78 seats. However, this currency move is negative for wheat prices as it makes imports cheaper and exports more expensive. Wheat prices have had to adjust to counteract this, with London futures easing lower on Friday morning.
Nevertheless, the fall in UK prices was limited as European and US markets moved higher. US wheat futures rallied on more positive news over the US trade dispute with China.
Sulphur is a key component of successful crop production; as important as nitrogen when it comes to planning nutrient applications. A multi-nutrient sulphate fertiliser range from ICL called Polysulphate is one that we've recently introduced to our range and is something I am talking about to many of the growers I advise.
Two new Polysulphate products, PKpluS and PotashpluS are especially of topical interest to the increasing number of farmers considering spring pulses on the back of dismal autumn weather.
The United States Department of Agriculture (USDA) published their latest report on Tuesday. It had little effect on the soybean market as US stocks remained unchanged from the previous month's report. While global stocks were increased slightly, it wasn't enough to create any significant market movements.
In Europe this week, rapeseed prices traded at €399.75 which is the highest level since 2017. Analyst, Stratégie Grains, forecast the French 2020 crop to be 18.46 million tonnes.
If you are one of the many farmers with a Higher Level Stewardship (HLS) agreement from Natural England that is due to expire, it's likely that you will have recently received a letter inviting you to extend your contract for another year.
While this is a positive and sensible move by the Department of Food and Rural Affairs (DEFRA) and Natural England, especially while uncertainties around Brexit still unfold, it is only one option for you to consider. An 'agreement extension' may not necessarily be the best move for every farm business, or even for the wider natural environment for that matter.
US wheat futures from the Chicago Board of Trade (CBOT) put on an impressive performance at the end of last week. Last Friday, they jumped the equivalent of £5 per tonne and saw overall gains of 10% since mid November. The sharp move was allegedly brought about by Southern Hemisphere crop problems – particularly comments from Argentina suggesting that the main wheat production areas would see 37% yield losses.
However, these gains were not sustainable. US wheat quickly became uncompetitive in the global export market and CBOT futures have now all but lost last week's gains.
Despite a lack of fresh dynamic market drivers, US wheat futures have seen volatile trade over the past three trading days following their Thanksgiving break last Thursday. On Friday they rallied 20 cents per bushel – equivalent to over £5 per tonne – which raised overall gains to more than 10% since mid November. This was supposedly triggered by cuts to yields in the primary wheat production areas of Argentina.
However, yesterday all of the gains made on Friday were lost as it became apparent that US wheat is too expensive to capture any substantial share of the current export opportunities.
