Mixed results for world grain market supplies

Scotland’s cereal growers won’t be the only ones scanning the sky and checking the forecasts for good harvest weather over the coming weeks – as the finely balanced nature of this year’s grain market keeps traders on their toes and alert to any likely changes in global supplies.

Wheat harvesting

And despite a blip early in the week, drought-like conditions continued to threaten spring crops in the US Northern Plains, seeing recent rallies in futures price continue.

International traders indicate that the situation could provide a price stimulus if conditions fail to improve.

Giving an overview of the world market, Jonathan Lane, head of grain trading at ADM Agriculture, said that Australia’s 2021 wheat crops were enjoying favourable conditions with the country likely to be a major exporter of all crops in the coming year once again.

But concerns over the major wheat-producing areas of Brazil and Argentina had the potential to tighten the world balance-sheet for this cereal.

He added that Russia had harvested 37.2million metric tonnes of wheat (before drying/cleaning) so far this year, with an average yield of 3.48t/ha - down from 39.6mln t and 3.59t/ha over the same period last year.

And while the French harvest was running well behind that of 2020, with crop conditions deteriorating, the overall harvest was still predicted to be close to earlier estimates at between 37 and 37.5mln tones.

However, the EU’s crop monitoring unit MARS reported that exceptionally high rainfall in much of France, Germany and the Ukraine was likely to have a major effect on quality rather than on yields.

That potentially means a higher availability of feed wheat and less milling wheat for export or domestic use.

Looking at the feed barley market, which hit the floor at harvest last year, AHDB analyst Anthony Speight said that despite increased UK wheat production and reduced barley production, the balance of supply looked set to swing marginally in favour of barley, due to the relative tightness of opening stocks.

“This would lead to the suggestions that barley, while not at the large discounts we have seen to wheat for the 2020/21 marketing year, will still be at a relatively strong discount,” he said.

However, Speight admitted that there was still time for this to change as the harvest developed.

He added: “With barley playing such a strong role in feed rations in 2020/21, the flexibility of diets to adjust back to increased wheat inclusions will also be a key watch point early in the season.”

On the wider weather front, SEPA yesterday repeated their warning on water use, despite recent heavy rainfall in many areas.

And calling on those currently irrigating crops to do all they could to conserve supplies, the body’s chief executive, Terry A’Hearn issued a warning.

“If you work with us and try to do the right thing in this next period, you will find a helpful and supportive regulator.

“If you deliberately do the wrong thing by the environment and other water users, then you’ll get the uncompromising regulator your behaviour deserves."