Agribusiness News April 2024 – Cereals

1 April 2024

Global wheat production holds steady

Global wheat production in 2024 is forecast to increase by 1% over the previous year but will fall short of the record output reached in 2022, according to a report from the Food and Agriculture Organization (FAO). The FAO report noted that in the United States and Canada, two of the world’s largest wheat producers, plantings are down but anticipated yields are up due to improved weather conditions. For 2024, FAO pegs US wheat production at 51.5 Mt, which would be above last year’s total and the recent five-year average. Canada, meanwhile, is projected to harvest 33 Mt in 2024, despite a 2% contraction in wheat plantings.

Also contributing to the FAO’s projected global wheat output of 797 million tonnes is Russia, where an increase in output is expected due to favourable weather conditions. China, where strong domestic demand and an increase in the minimum purchase price have supported an expansion of the area planted is spurring an expected rise in production; and Pakistan, which is expected to increase production to 28.3 million tonnes in 2024.

With wheat planting having been disrupted by heavy rains in several of the European Union’s key wheat-producing countries, particularly France and Germany, the FAO expect output in the EU in 2024 to fall slightly to 133 million tonnes, adding that falls are also expected to play out in the UK.

UK wheat imports to export ratio 10:1

Recent weakening of sterling against the Euro and US dollar makes imported grain into the UK comparatively more expensive. This means UK prices can rise (hence the recent lift in Futures values) before being capped by the cost of importing grain.

From July 2023 to January 2024, wheat imports totalled 1.25 Mt, up 55% on the year, and up 13% on the previous five-year average. Full season wheat imports are expected to reach 1.73 Mt, up 28% from last season, and would leave the wheat carryover at 2.83 Mt, 31% tighter on the year. The current value of Nov ‘24 wheat futures at £191/t compared to May ‘24 values, at £170/t, reflects this tighter situation. So far this season (Jul 2023 -Jan 2024), UK wheat exports have totalled 165.7 Kt, down 78% on the year, and down 64% on the previous five-year average. As well as not pricing competitively on the global market and reduced demand for European wheat; a tighter year on year wheat balance is also contributing to the downturn in exports.

Harvest 2024 areas reviewed

After heavy rainfall through the autumn and winter, the updated Early Bird Survey shows considerable falls in winter cropping, including wheat, winter barley and oilseed rape. The UK wheat area is now expected to fall 15% year-on-year to 1.463 Mha.

This year, the total barley area is estimated to rise over 8% to 1.236 Mha, with sharp falls in winter barley, down 22%, offset by considerably higher spring barley planting up 29% year-on-year to an estimated 881 Kha.

Overall, the total UK oat area is estimated to rise by 26% to 209 Kha, just shy of the 210 Kha harvested in 2020.The total area of OSR for harvest 2024 is estimated to be 28% lower than planted in 2023.

Consultation on bioenergy

Although as a more environmentally friendly alternative to fossil fuels, Scotland’s energy framework already heavily incorporates bioenergy, derived from organic materials such as trees, plants, and food waste; proposals are being sought regarding the sustainable utilization of bioenergy, which encompasses the cultivation of crops suitable for conversion into electricity, heat, and fuels.

The newly proposed strategy outlines how bioenergy can contribute to the emission reduction efforts and advocates for dedicating specific agricultural land to the cultivation of bioenergy crops.

The 12 week consultation period ends in mid-June, with the Scottish Government seeking input on both the potential benefits and obstacles associated with utilizing biomass for fuel, as well as the feasibility of utilizing land for the cultivation of perennial energy crops to meet domestic energy needs.

mark.bowsher-gibbs@sac.co.uk 07385 399 513