Weather to set the tone for grain market until harvest 

The UK looks set to start the new grain year in July with a big carryover of old-crop wheat and a far lower than average level of new-crop sales.

Growers’ reluctance to market new-crop grain has been driven by the appalling weather, leading to yield concerns, with many expecting a resulting price rise and holding out for £200/t.

That has now been reached, with harvest feed wheat values at £195-£210/t ex-farm midweek, and worth more in Scotland.

See also: Average arable performance will see losses from harvest 2024

The higher end of the range is in the North, which has strong demand and a wheat deficit and has been drawing a lot of grain from the South.

However, traders warn that the price upturn could easily reverse, as the market in the run up to harvest will be volatile, with every bit of crop news leading to paper trades by speculators and consequent market movements.

The market upturn of the past few weeks has prompted some farmer sales of both old and new crop with a huge regional variation in prices.

“Consumers are short and need to buy for July/August; farmers are long,” says Gary Bright, managing director of GrainCo.

On export markets, English wheat is still too expensive compared with other origins and imports are stepping up.

“The UK will be finely balanced and there’s a big import programme going on,” he says.

“It shouldn’t be the case that home-grown wheat costs the same as imports, but this year [harvest 2024] that may be the norm because parts of the UK will be short of wheat.”

However, the ability to import in large quantities is limited, with competition from other goods at ports. A period of price stability at current levels would lead to a good level of new crop ex-farm sales, he says, but growers will largely remain reluctant to sell while markets are rising.

“If the market falls, consumers will want to buy, farmers won’t sell and that will drive import volumes.”

Competing grains

“The price of corn is competitive and we’ve seen some consumers, including farmers, switching to ground corn and committing to 12 months’ supply at these prices,” Gary says.

As well as its price advantage, maize offers a protein benefit over wheat in certain uses. Some  poultry producers are also upping their maize use.

Simon Wilcox, manager of UK farm grain origination at Cefetra, says: “A fair chunk of ex-farm sales have been done over the past couple of weeks, but growers are still cautious.

“We don’t know what this weather will do to us and the outlook is very variable by land type, with light land generally looking OK but heavy land crops struggling.”

Barley

There is relatively little old-crop barley left, with values in a wide range midweek, at anywhere from £160-£180/t ex-farm.

New-crop feed barley harvest value was also very variable, at £162-£185/t ex-farm but mostly trading in the high £170s/t.

Simon says: “Barley could be plentiful. A lot rides on the outturn of the malting crop, much of which went in late, so there could be a lot of feed barley about.

“There is also a danger that corn will squeeze barley out of some usage and therefore pressure prices, so it would be sensible to cover say 20% of new-crop barley sales at these levels.”

Harvest 2025

There is little doubt that there will be a larger UK wheat area for harvest 2025, although the weather could intervene again.

The London futures market opened this week at £212/t for November 2025 feed wheat, a level which merchants and consultants say farmers should be looking at, given the likelihood of a larger crop.

Offers for harvest 2025 feed wheat midweek were £185-£200/t ex-farm.

Global factors

The US Department of Agriculture released its first World Agricultural Supply and Demand Estimates (WASDE) for the 2024-25 grain markets on 10 May.

These data are produced monthly and eagerly awaited by both physical and paper traders, with stock estimates for the end of the current grain year particularly important in setting the market tone.

End of current season wheat stocks are estimated to be 12m tonnes lower than last year, at 258m tonnes.

World wheat output from the 2024 harvest is expected to rise slightly, to a record 798m tonnes, with use also slightly higher, which results in a further drop in stocks, to 254m tonnes in 2024-2025.

Consumption is forecast to rise by 2m tonnes, to 802.4m tonnes, also a record. Higher output for India, China, Australia, Kazakhstan, Canada and the US is expected to more than offset reductions for Russia, the UK, the EU, and Ukraine, says the USDA.

Food, seed and industrial use of wheat is expected to continue growing globally, while feed and residual use is projected to fall because feed grains, especially corn, are expected to be more competitively priced than wheat.

The price rises of last week were driven by lower expectations for the Russian harvest, which saw market analyst SovEcon lower its forecast for Russian wheat production in 2024 from 93m tonnes to 89.6m tonnes.

This was the result of some of the country’s main growing regions seeing the driest April in a decade, followed by severe frosts in some areas.

The WASDE figures take the Russian wheat crop down slightly further, to 88m tonnes, a 3.3m tonnes drop on 2023 production.

The EU’s most recent Mars monthly crop monitoring report, published in late April, forecast soft wheat yields to rise 1% on the five-year average to 5.72t/ha.

Winter barley yield was put at 5.97t/ha, also up 1% on the five-year figure, while spring barley at 4.32t/ha represents a rise of 6%.

Dry conditions have reduced the yield potential in some southern regions, with winter crops in central Greece and Cyprus particularly affected, while in Sicily and eastern Romania rainfall arrived too late or was too little to fully recover water-stressed winter crops.

Severe, irreversible drought in large parts of Morocco and western Algeria has badly affected winter crops there.

The Mars report notes exceptionally warm spring temperatures in some countries, combined with adequate water supply, benefiting winter crops and creating favourable conditions for spring cereals.

However, persistently wet conditions in north-western Europe affected yield potential and hampered drilling, most severely in Ireland and the UK.

“Conditions improved somewhat in northern and part of western France, as well as in Belgium, the Netherlands and north-western Germany, but winter crops in inadequately drained fields are unlikely to fully recover from the overly wet conditions during autumn and winter,” says the report.