MMN November 2024 – Cereals Update

7 November 2024

UK Cereals Market Update and Global Impacts

AHDB have published the 2024/25 Early Balance Sheets for wheat and barley for the UK. Wheat production at 11.05Mt is down 21% on last year and despite the heaviest opening stocks for over 20 years, home produced availability for 2024/25 will be down 9% requiring an estimated import requirement of 2.63Mt.

A 3% and 7% increase in barley production against the five-year average in England and Scotland respectively, more than offsets declines in opening stocks and imports, therefore national availability of barley is expected to increase 1% to 8.49Mt. Domestic consumption on farm is anticipated to rise 8% as inclusion in rations looks more favourable to wheat given relative pricing. With human and industrial barley consumption set to fall 4%, net domestic consumption is forecast up 4% on 2023/24. UK malting barley demand is reported lower by 83KMt (4%) compared to last year and playing its part in stifling premiums.

Rapeseed, conversely, sees strong support despite poor crush margins, mostly driven by the fundamentals of supply and demand, and the expectation of lower global production this year into next is likely to keep prices supported.

Grain prices continue to be more limited by the lack of EU wheat competitiveness and poor barley export demand. Over the last four weeks the markets have drifted downward; Nov 24 London Feed Wheat Futures have lost £12/t and were priced in at £178.20/t, as at 5^th November. Currently Scottish grains are trading at a local premium (Basis) £10-12/t above the London Wheat Futures.

While weather conditions have globally improved everywhere in the UK, EU, US, Russia, Brazil and Argentina, expectations of reduced Russian exports due to export restrictions and lower production this year could support prices in the longer term.