SPRING planting is progressing but recent wet weather has slowed things up and we are still getting cold spells which is not helping the new-sown crops establish well.
The total spring barley acreage is set to be more than 600,000 ha for the third year in a row and new crop buyers are not rushing to buy stock at this stage, as supplies look as if they will be plentiful in 2016.
The LIFFE feed wheat futures for May, 2016, have seen a £2.90 rise this past week to £106 and for November new crop futures are also up by £2.40 to £119.50. Forward prices are reflecting a big incentive for long holders to carry from this marketing year into next.
On the futures market, the premium for May 2017, over May 2016, is £20.20, which is a good return for those with available cash and plenty of spare grain storage. The market continues to be weighed down by heavy stocks, with little prospect of the UK being able to export a sufficient tonnage of wheat before next harvest to bring the market back into balance.
UK ex farm bread milling wheat was up 20p last week to £109.90 and feed wheat up £1.20 to £102. Feed barley was up 90p to £98.80 and weaker sterling helped oilseed rape delivered Erith to jump by £4 to £281.
German inflation and the ongoing Brexit debate has pushed sterling to a 16-month low of £1.25 to the euro and there are signs of it going down to £1.22.
World grain output is forecast to fall in 2016/17, but not by enough to force a decline in heavy global stocks. Production is put at 1.997bn tonnes, taking it back below 2bn tonnes for the first time in four years.
However, output at that level, down from 2006m tonnes last year, would remain in line with consumption – meaning no erosion of world grain stocks, which were forecast closing this season at a 29-year high of 466m tonnes.
Stocks of maize, wheat and soyabeans are up year-on-year and the greatest increase in stocks was seen with wheat, which were up by 20%. Soya grew by 15% over the same period, whereas maize grew just 1%.
The USDA’s latest stock release reported that maize stocks are now at 198m tonnes as of March 1, 2016. This is an increase of 61m tonnes, compared with March, 2013, when stocks were particularly low. Wheat was reported at 37m tonnes – the highest since March, 2011. Soyabeans have seen a general trend in greater stocks since 1943 and are at 42m tonnes today, the highest level since 2007.
The US wheat area is expected to hit a historical low in 2016. Total wheat plantings are expected to be 1.2m ha lower than last year’s planted area and, if realised, would be the lowest total wheat area since 1970.
The Ukrainian state weather centre has forecast the crop there at 1.7m tonnes, down 35% from 2015/16. This is based on losing 1m ha, or 20% of the winter wheat planted area due to insufficient snow cover over winter.
EU total wheat and barley yields are forecast to fall by 5% and 3%, respectively, in 2016 compared to 2015. Despite the fall on last year, both wheat and barley yields, if realised would still be higher than the five-year averages, at 5.7t/ha and 4.9t/ha, respectively.
US farmers will sow 96.3m tonnes of maize in 2016 which will be the third biggest area since World War II and will be an increase of 5.6m acres from 2015. This will see production of 993m tonnes, which would represent a rise of 21m tonnes year-on-year and the third biggest harvest on record – sufficient to lift world stocks to a high of 208m tonnes.
Global wheat production is expected to be at 713m tonnes which would be a drop of 21m tonnes year-on-year, but a figure only marginally behind consumption.