Cereal prices have dropped sharply this year as global production appears abundant, so what impact will this have on the viability of different crops?

Input costs – particularly fertiliser – have eased, but gross margins are likely to be significantly lower than last year, says Andersons consultant Graham Redman, who compiles the John Nix Pocketbook.

He has based initial forecasts on a feed wheat price of about £135/t, compared with £155/t this time last year; with oilseed rape values having fallen from £340/t to £285/t, including bonuses.

See also: Prospects look good for oilseed rape harvest

Although fertiliser costs have dropped from about £325/t to an estimated £285/t, agrichemical costs are slightly higher.

With milling wheat premiums having widened to £19/t over feed, milling wheat has overtaken feed wheat as the top winter financial performer this year. Based on provisional costings, Mr Redman expects milling wheat to yield a gross margin of £629/ha, with feed wheat not far behind at £627/ha.

Changing figures

“Of course, we are still 13 months away from the 2015 harvest. These figures are therefore likely to change significantly – and of course the variation of gross margins on different farms is considerable,” says Mr Redman.

He adds that one important consideration is the presence of dominant grassweeds, such as blackgrass, and severe cases will incur additional costs.

Winter oilseed rape looks to be third most profitable crop, at £530/ha – a much greater discount to wheat than last year because of the sharper drop in sale values.

“Last year oilseed rape prices reached an unprecedented high compared to feed wheat – now they have dropped back to more usual levels, around double the feed wheat price,” says Mr Redman.

Winter oats come next, at £486/ha, with winter beans at £483/ha and malting barley at £473/ha. Feed barley is pegged at £445/ha with winter linseed bringing up the rear at £404/ha.

Finger on the pulses

Of course, when planning rotations, growers must also consider spring cropping options – and the top overall gross margin this year goes to marrowfat peas at £744/ha, says Mr Redman.

“However, you need to have a contract before growing marrowfats, and must be able to demonstrate that you can grow pulses very well – so while it’s a decent gross margin it won’t be available to many people,” he added.

Other pulses are also climbing up the gross margin rankings, with blue peas in fourth place at £548/ha, and spring beans eighth at £490/ha.

Spring malting barley is pegged at £507/ha, spring wheat at £495/ha, and spring oats at £426/ha. Spring linseed looks very much the poor relation at £316/ha, tailed only by spring oilseed rape at £312/ha.

One of the great advantages of growing pulses is that they qualify as ecological focus areas under the CAP greening regulations, as well as helping growers to meet the three-cropping rule.

Greening measures will account for about 30% of the basic payments available, so as well as generating good gross margins pulses will also secure valuable support payments, says Roger Vickers, chief executive of Processors and Growers Research Organisation (PGRO).

“Pulse crops need no nitrogen fertiliser, improve soil fertility and leave residual nitrogen for succeeding crops. They provide a wider harvest and drilling window, improve disease and pest breaks and improve the productivity and economic value of subsequent crops in the rotation,” he says.

“Add to this the strong market demand for pulse grains at home and abroad – and an increasing differential between pulses and wheat and oilseed prices – and the argument for pulses is increasingly compelling,” Mr Vickers adds.

Winter beans can be drilled up until early February if required, and growers concerned about access to land in the spring will be secure in the knowledge they have the crop in the ground, he says.

Beware blackgrass

Growers with blackgrass problems, however, may be better off opting for spring crops, says independent agronomist Ruth East.

“Get the land prepared in September, plough it well and plough it dry. You cannot farm by chemistry alone,” she says.

Blackgrass-prone fields should not be put into oilseed rape under any circumstances, as growers will just not be able to control the grassweed, she says.

This year’s crops are about seven days ahead of normal, so an early harvest could be on the horizon.

“That could be helpful if you want to get oilseed rape drilled. However, slugs could be a real problem unless it dries out – we had 30mm of rain the other day and I’ve never seen slugs like it,” she adds.

“If it is wet at drilling, get the seed-bed really firm and put slug traps out – if they are active then put pellets on before you drill,” Miss East says.

Growers shouldn’t be tempted to drill winter barley too early, due to the risk of barley yellow dwarf virus in a mild winter.

“Drilling later will help with blackgrass control too. Choose aggressive varieties that tiller well – and consider the dormancy of the blackgrass as well – that will determine when you put your pre-emergence herbicides on,” she adds.

Performance averages

When choosing any variety, it’s important to look at the average performance over a number of years, rather than just the latest results, says Miss East.

“Choose something that has good disease resistance. There’s no point going for a high-yielding variety with poor disease resistance – if you get your spraying timing wrong it could be a disaster. Instead, go for something slightly lower yielding and cheaper to grow – it’s less risky,” she says.

Quality is another important consideration. “Look at the specific weights of each variety; if you have low specific weights then the yield will always suffer and you will really struggle to sell the crop,” Miss East adds.

Securing a contract will be crucial for winter malting barley growers, as the market has shrunk so much in recent years, says Stuart Shand, director at Gleadell Agriculture.

“Demand is dropping year-on-year – this year the market will take about 300,000-330,000t, compared to 535,000t in 2008,” he says.

The main malting varieties are Venture, which makes up 13% of the total winter barley market, with Cassata at 4%, Flagon 3% and Pearl 0.5%.

“Malting barley only makes up 19% of the winter barley crop – if you’re using farm-saved seed I wouldn’t even bother sowing Pearl or Flagon. Apart from a small amount of Cassata under 1.6% nitrogen, most of the demand will be for Venture,” he says.

With feed barley priced between £12 and £20 below feed wheat, malting barley growers would be well advised to secure a contract with the premium based on wheat futures, says Mr Shand.

“There have been contracts at £5-10/t over wheat futures, which makes a malting price of about £151-156/t for November 2015 – a £25 premium over feed barley,” he adds.

In the feed sector, Tower and hybrid varieties are likely to be most popular, he adds.

“Over the past five years I don’t think there’s been one when it hasn’t been safely in the barn early on, which reduces the risk of weather losses and makes for an early entry to other crops,” Mr Shand says.