Varying crop conditions cause wheat and barley price fluctuations

This year’s UK harvest is expected to have a smaller wheat crop and a larger barley crop compared to the previous year, according to AHDB.

The domestic grain market has seen both wheat and barley prices fluctuate during June as UK crop conditions have been varied, with some regions, such as South West England, receiving large volumes of rainfall during June, helping crops in many areas improve after the extremely dry spring. Other regions continue to feel the impacts of the dry spring and wet winter which is limiting crop potential.

AHDB analysts Alex Cook and Charlie Reeve predict that looking forward for UK barley prices, it is likely that market will remain pressured throughout the autumn due to a large spring barley crop, creating a necessity for exports .UK barley prices will therefore need to remain competitive in the export market, as they will be competing against a large European and global crop.

The main price drivers will be changes in currency and prices trends in the wider global market.

International grain markets have gone through a period of steady decline during June, although stocks in some of the major exporting countries are anticipated to rise, with strong southern hemisphere wheat production especially in Australia.

Additionally, demand for ethanol in South America has been showing signs of growth in June compared to the especially low levels seen in May. However, it is still likely to be a long time until ethanol production returns to the high levels seen before the pandemic

Proteins

In June, global oilseed prices started strong, seeing rises over the first half of the month. This was largely due to an increase in US soyabean export sales to China, and the easing of lockdown measures in the EU and US.

Recent increases in coronavirus infection rates across the US, Asia and the EU have pressured global oilseed markets. Favourable weather for soyabeans across the US MidWest also offers a degree of pressure. As such, oilseed prices have fallen back from earlier month highs.

Many growers across the east of England expect to start harvests later this week or the beginning of next, dependant on weather. Oilworld forecast the UK rapeseed crop at 1.12Mt , marking potentially the lowest production figure in over twenty years.

“What this means for feed markets is perhaps a greater reliance on imported protein meal,” Cook and Reeve explained. “Furthermore, the temporary closure of the Erith crushing plant could affect meal availability for surrounding feed manufacturers.”

With a decreased availability of domestic rapeseed, imports are likely to increase in volume to supply the deficit. As a result, UK rapeseed prices are more likely to price at import parity levels, with Ukraine and Australia likely origins.

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