Agribusiness News December 2024 – Cereals

Slow Europe export pace

The International Grains Council tightened its global wheat outlook on supply concerns, while consumption remains firm.  Global grain ending stocks for the marketing year 2024-25 are projected to decline to a 10-year low and a 3.5% decrease from last year.  Total grains exports are similarly projected to dip year on year by 8% and, if realized, would be the lowest trade total in six years.

Geopolitics have dominated traders’ thinking in recent months, with the conflict in the Middle East joining uncertainty over Black Sea supplies as the Russia-Ukraine conflict rages on, clouding the overall supply and demand picture, and once again, adding ‘war premiums’ back into the market and firming prices over recent weeks.

The US market too has seen renewed strength, although current market fundamentals remain weak with exports having fallen below the pace required to achieve the current export projection.  Additionally, recent rain across the US plains has alleviated the drought area and allowed crop condition ratings to rise above those set at this time last year.

Europe has exported 30% less wheat so far this season compared to last and is expected to export 20% less across the entire marketing season.

The current export pace is clearly too slow and has been worrying markets and thus prices came under pressure through October /early November.  One of the major reasons is that demand from Algeria and Morocco has very significantly decreased.  Algeria has banned French origins and favoured Russian wheat amid diplomatic tensions and similarly Morocco has also turned to Black Sea wheat.

Gaining competitiveness out of the EU could however happen soon with a lower Euro value and the anticipation of higher Black Sea prices as cheap Black Sea supplies run out of steam.  Ukraine and Russia have produced nearly 14MT less wheat between them than last year, however, they have exported record volumes to date (up 58% and 6% respectively compared to last year).  Eventually, reducing stocks combined the higher export pace demonstrated to date, should logically, lead to higher freight-on-board prices at port.

Swing back to wheat for harvest 2025

UK wheat prices are now attaining a value sufficient to attract large volumes to ‘feed’ our domestic shortage.  To date, the UK has already imported 600KT from Europe and the expectation is that the UK will import up to 2MT this season.

Malting barley markets remain quiet with slow demand from both brewing and distilling industries.  Export markets meanwhile are not providing significant support for malting barley prices with plenty of barley available to maltsters in Europe.  New-crop market prospects for ‘25/’26 may be more promising due to a larger-than-expected winter wheat area planted this autumn (+5%) and an anticipated reduction in spring barley area (-13%) likely to tighten the balance sheet for malting barley.

 

Feed barley prices (currently at a £30/t discount to wheat) are likely to remain stable, as export demand, domestic feed demand and slow farmer selling support the market going into 2025.

Good quality oats and relatively low prices are helping to support milling oat values.  Millers are willing to build stocks, as lower hulling losses enhance efficiency and add value to the milling process.

Rapeseed prices have lost some recent gains, breaking the uptrend that had largely been in place since September.  While this serves as a cautionary signal, the market still reflects a relatively tight supply situation.

Mark Bowsher-Gibbs, mark.bowsher-gibbs@sac.co.uk 07385 399 513

 

Indicative grain prices week ending 29/11/2024 Source: SAC//United oilseeds/AHDB/Hectare)

£ per tonne	Basis		Nov ’24	Jan ’25	Nov ’25
Wheat	Ex farm Scotland		195	200	201
Feed Barley	Ex farm Scotland		165	170	171
Malting Barley	Ex farm Scotland			220
Oilseed Rape	Del Dundee		415	420	379
Beans	Ex farm Scotland		230