As we reach the end of September, the 2017 harvest is still
very much alive. Having boldly claimed at the end of August that ‘September
will be the month’, I can probably count on one hand the number of actual
combining days there has been. At the time of writing there is still both
spring and winter wheat, spring barley and winter and spring beans left to cut.
Any hope of malting or milling premiums for these crops has long since
disappeared and it is ever increasingly becoming a salvage operation.
The difficult weather is also starting to have a potential
knock-on effect for next year’s harvest; Oilseed rape (OSR) drilling has been
abandoned and land ploughed for winter cereals will need an extended period of
dry weather if it is to be drilled as intended.
Wheat markets have firmed a little over the latter half of
September; the fundamental demand from both Ensus and Vivergo mean that feed
wheat is always in demand. Depending on locality to either plant, values for
November range from £144 to £142 per tonne. It is hard to see this demand
waning a great deal and with plenty of consumer-buying still to take place, the
downside looks relatively limited. The greatest threat to domestic wheat prices
comes from overseas, with the pound strengthening against both the euro and
dollar Russian wheat is only £4/t above UK values.
Barley has also firmed a little, supported by increased
consumer buying and a slightly smaller feed barley crop. Depending on locality,
November feed barley is worth between £125-127/t ex farm. Again, the upside
will be limited, especially if wheat values remain relatively static. It’s
worth noting that in July, as wheat peaked at £153/t for November, feed barley
was worth £30/t less. Now, the differential is as little as £15/t (depending on
location). With this in mind, it could be argued that barley is a better sell
in the short-term over wheat, having closed the gap to wheat so significantly.
Oilseed rape (OSR) has suffered somewhat over the last month
with November values falling to £314/t at the time of writing; a drop off of
over £10/t. This can largely be attributed to imports of foreign OSR depressing
the UK market, but with few farmer sellers, it is difficult to see these values
being eroded too much more.
Due to the inclement weather, the spring and winter bean
harvest has been a little stilted. Human consumption beans will be worth around
£180/t with feed beans at a £25-30/t deduction. It remains to be seen what
effect the weather will have had on the quality of the spring bean crop and
subsequent premiums for human consumption quality.
Early-buyers of fertiliser have certainly benefitted this
year with UK AN likely to be around £230/t onto farm when new terms are
released. Urea is a similar story with values up to around £260/t as buyers
chase to cover their sales – values are expected to drop back a little though
once trade has settled down. In May, I
mentioned that given the historically low price-ratio between November’17 wheat
and Autumn UK AN (1.27t of wheat to buy 1t of UK AN) it was a good time to buy
fertiliser and sell wheat against it. Looking at that ratio now, with a £50/t
increase in the price of UK AN and little change in the value of November’17
wheat, it would require 1.60t of wheat to buy 1t of UK AN.
The inclement weather is certainly starting to make growers
rethink additional seed requirements for autumn-drilling. It is more likely now
that growers will shift to varieties with a more ‘flexible’ drilling window
such as Siskin or J B Diego which can easily be drilled throughout autumn and
into winter.
Tel: 0191 4287700
