Although the arrival of a New Year marks the start of a new beginning for many, for arable farmers it alternatively marks the half way point of the current trading season which runs in accordance with the UK harvest (from July to July). The first six months of the current season brought an average although relatively successful harvest followed by a challenging drilling season here in the UK and following a well-deserved break over the Christmas period for many, now is a good time to look ahead to the remaining six months of the trading season.
Locally, many crops that were drilled prior to the early autumn wet weather look well and disease pressures are low. However, crops that were drilled slightly later as the wetter weather took hold have struggled to establish prior to winter dormancy and plant populations are low. Again locally speaking, I think it’s safe to say that many growers are hoping for a good, early spring either to fulfil rotational requirements with an increased proportion of spring cropping or to drill any areas which have simply missed the autumn window.
Further afield, there are several global issues to consider over the coming few months also; we may be in the thick of winter here in the UK but it is important to consider that there is always a combine rolling somewhere in the world.
Firstly, this season’s South American harvests are due to begin any time; Brazil usually begins harvesting both soybeans and maize corn in Jan/Feb whilst Argentina begins their harvests in early March. Both hold a significant market share in exports of both crops and any news regarding harvest progress, quality or quantity could add volatility to the global market.
Secondly, this season’s Australian wheat harvest is now well underway and is complete in some areas. For now, yield reports are extremely mixed but I think it’s safe to say at this stage that yields have disappointed; it will be worth keeping an eye on production figures over the coming weeks.
Finally, there is still a real need for a plentiful Northern Hemisphere harvest in 2018 despite record grain stocks. Global supplies are actually less ample than they appear due to the majority of stocks being held by China which are therefore classed as “unavailable” for trade. Long range projections for the US have already predicted that wheat plantings will fall to a historic low in 2018 which will place an increased reliance on Russian, Ukrainian and European crops this year. Any potential weather inducing quality or quantity concerns will be worth monitoring as they too could add volatility to the global market.
Current values for feed wheat are remarkably somewhere between the £140/T-£145/T ex-farm despite a lack of local buyer interest. The closure of Hull’s bio-ethanol plant for the “foreseeable future” is expected to add pressure to the market at some point, but current values would suggest otherwise. For those of you looking for short-term movement, these values could be worth taking advantage of. We certainly have an interesting few weeks ahead!