Continental rain boosts future

DRAY WARM weather has continued all week in the west, but eastern areas have often been under cloud and cool sea air has been prevalent, though crops continued to develop and are looking well.

Compared to France and Germany, which have experienced some severe flooding, the UK has got off lightly, though heavy, patchy rain was forecast for the end of this past week.

Those continental worries have given a little filip to wheat futures, which, in Paris, hit a five-month high as the widespread flooding has raised fears of crop damage. The French farm bureau now rates the condition of the country’s soft wheat crop at 81%, well below the reading of 89% a year ago.

However, the damp weather has also encouraged the spread of insects, fungi and disease and a drop in yield is forecast. French winter rapeseed yields were forecast at 3.39 tonnes per ha, which is a 4.9% drop from last year.

This fall in yield will more than outweigh an increase in plantings, up 1.2% year-on-year to 1.5m ha, leaving total production down 3.7% at 5.1m tonnes. The EU rapeseed crop is still expected to reach 22m tonnes, however and the UK remains on target to produce close to 2.3m tonnes, even with some local areas of damage caused by flea beetle.

French winter barley yields could fall even faster – down 6.1% year-on-year, although increased plantings will limit the drop in production, which was seen down 0.5% at 9.5m tonnes.

Australia’s 2016 wheat harvest will be the best in five years as rains there continue to bolster crop hopes. Forecasters are looking at a crop of at least 26.1m tonnes, which would be the best result since the near 30m crop in 2011. It would represent an increase of 10.7% or 2.5 million tonnes on last year.

India’s wheat imports this season will hit their highest in 10 years, due to a second successive dry depressed harvest. The world’s second-ranked wheat growing country, after China, will import 2m tonnes of grain in 2016-17.

Forecasters estimate a harvest tonnage of 88m tonnes which is below the government estimate of 94m tonnes due to below average monsoon rains.

In the US, soyabean futures have soared on fears of a Midwest drought as well as weather issues with Argentina’s crop. Estimates for the Argentinean soyabean crop were 60m tonnes before the floods and the wet has knocked 8m tonnes off that, plus crop quality concerns.

The US is keen to meet the world demand which is now not available from other soyabean growing countries due to weather issues. Its winter wheat crop conditions are also under threat as a result of thunderstorms across the US plains, but the International Grains Council forecast a fourth consecutive wheat surplus but a finely balanced situation for coarse grains.

Global wheat production of 724m tonnes is now forecast to exceed demand of 718m tonnes in 2016-17, when a deficit had been expected.

But, the UK wheat market found support over the week as ongoing demand to ports and end of season requirement from consumers kept prices steady.

This cannot be said for the UK barley market. Consumers expect a big global barley crop this year and seem content to sit and wait to see what prices do before committing to any tonnage.

UK Liffe feed wheat futures were up £2.95 last week to £119.65 and earlier this week were up again by £1.85 due to weather issues around the world and weaker sterling which again dropped to below €1.30. Oilseed rape futures were up £7 and earlier this week were up again by £5 per tonne.

UK ex-farm bread milling wheat was down £1.10 to £119.40 and feed wheat was down 30p to £104.70. Feed barley was down 60p and oilseed rape delivered Erith was up £5 to £292.

Harvesting of the 2016 winter wheat crop is underway in the US, with 2% of the area cut by June 5. Progress has been delayed by rain, which has also given rise to quality concerns – usually 10% of the crop would have been harvested.