MMN September 2023 – Straights Update

Straights Update

Global News

• Ukraine’s wheat harvest was higher than expected, with a crop of 21.94mT and well above the 17mT estimated earlier this year. While this is similar to last year, the country’s crop in 2021 yielded 33mT. Domestic use is estimated at just over 8mT.

• The markets for soya and rapemeal are firming due to hot, dry conditions in North America, which is set to continue until mid-September. US soyabeans are still in the crucial pod setting stage where hot temperature can impact on yield. In early September, the soyabean crop was rated 53% good to excellent, down from 58% on the previous week. It is estimated that 38% of the crop has been affected by the drought conditions and continued weather concerns will cause some volatility in the markets, which will likely impact on UK markets.

• Forty-three percent of the US maize crop has been affected by drought although it is still on track for a near record crop, with a big crop also expected in Brazil. Despite the recent weather concerns, AHDB market reports indicate that the longer-term outlook for maize and soyabeans are bearish.

UK and Scottish News

• It has been a frustrating and difficult harvest throughout August, although September has provided some respite with much improved weather allowing good progress in those remaining crops to be harvested. Milling wheat is reported as very variable with 12% protein and sub 10% protein common in Group 1 & 2 varieties respectively, and Hagberg’s struggling where crops have been lodged. Distilling wheats need high starch levels relative to protein so good grain specific weight is desirable. However, given the wide fluctuations between dry and wet episodes over the growing season this year there is likely to be a greater range in specific weights across samples (the same applies to feed varieties). The spring barley crop is proving troublesome too, with secondary tiller growth resulting in uneven ripening, and desiccation will be delayed into September for some as a result.

• So far there has been mixed feedback for any spring malting barley harvested, with some reported high nitrogen crops, higher skinning and screening levels and potential germination issues from some of the later harvested crops. Buyers that are offered rejected malting barley for animal feed use should seek advice on the comparative crude protein and energy values compared to those expected of standard feed barley purchases. Maltsters are currently reluctant to change their specifications for quality before the bulk of the spring barley harvest is in the shed and can be assessed and this is therefore likely to be an evolving story over the next month or so. In summary, premiums for malting barley meeting specification are very strong and look overvalued amid low demand. At these levels the market is quickly finding the flexibility to fill in any supply side issues, the EU for example, sourcing 6-row varieties from France into northern Europe.

• Feed barley demand from compounders in the UK is reported as slow and farmer selling scarce as farmers focus on selling more attractively priced commodities.

• Domestic demand for beans remains high and prices are expected to continue to follow wheat in the short-term.

• UK oilseed rape yields are being reported as below the 5-year average (3.3t/ha) at between 2.7-3t/ha which gives the UK around a 35% import reliance this year. Europe appears to have fared better both on yield and oil content and prices have drifted lower as a result. Longer-term values will build in the output achieved from Australia and Canada’s harvests. The EU supply side will however remain underpinned by high opening stocks and substantial imports continuing from Ukraine.

• Ex farm prices for cereals and proteins are as follows:

Source: AHDB, Farmers Weekly

mark.bowsher-gibbs@sac.co.uk; 0131 603 7533

lorna.macpherson@sac.co.uk; 07760 990901