Droughts shrink yields but prices to rise

The thousands of grain growers visiting the cereals event in Lincolnshire yesterday may have been surprised just how well the crops looked in an area supposedly suffering from drought conditions.

Jack Watts, marketing guru with the Home Grown Cereals Authority, described the crops as being "not as bad as I thought they might be". He was sure the UK cereal crop would be down, but was hesitant to say by how much it would fall. However, the results of a survey carried out by the NFU of England and Wales and revealed yesterday suggest the average English wheat yield this year will be down by 14 per cent to about 6.5 tonnes per hectare, which would rank among the lowest since the late 1980s.

Commenting on the survey, NFU combinable crops chairman Ian Backhouse said: "With the east of England experiencing its lowest rainfall for the first half of the year in over 100 years, farmers are clearly concerned about the impact on the ground of this abnormally dry spring." Based on analysis of these farmer estimates, UK wheat production could be down on the five-year average by about two million tonnes to below 12 million tonnes or 15 per cent below the five-year average of 13.738 million tonnes.

Looking at the possible prices for wheat, Watts believed that growers could expect a "relatively strong" price of at least 140 per tonne up until spring 2012. It would take at least until then for world markets to get back into balance he said, but he pointed out that Australian farmers are already increasing their grain plantings for the 2012 crop.

Meanwhile, oilseed rape crops seem to have survived better, with farmers forecasting English yields at 3.1 tonnes per hectare, 9 per cent down on the five-year average of 3.4 tonnes a hectare.

Plantings are believed to be significantly up on the five-year average, at 655,000 hectares in 2011, indicating a potential total production of 2.028million tones against the five year average of 1.762 million tonnes in England.