Gains despite grain market pressure

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Despite further pressure having been added to wheat markets with higher US end of season wheat stocks reported in the October USDA update, plus further Black Sea grain coming to the market, the latest AHDB market update (13th October) shows a slight improvement in grain prices. This comes after the USDA cut its forecast for US maize and soybean production.

It triggered price rises on the Chicago futures wheat markets. UK feed wheat futures (Nov-23) closed yesterday at £192.40/t, a slight gain on Tuesday’s close, while the May-24 contract closed at £196.40/t.

Defra and the Scottish government released provisional data crop areas, yields and production this week. This information gives us a first insight into what the UK production is for 2023 harvest. Data is still to be released for Wales and NI.

UK wheat production is estimated at 14.1 Mt for 2023. This production figure is below initial expectations; trade estimates were sitting around 16 Mt+ at the end of spring. However, the lower wheat area year-on-year, combined with a large variation in yields nationally, means that the UK wheat surplus might be lower than initially anticipated

Paris rapeseed futures (Nov-23) closed at €411.50/t yesterday, down €8.25/t on Tuesday’s close. Rapeseed followed the pressure in Chicago soyabean futures.

Chicago soybean oil futures fell $2.14/t on Thursday (12th October). Weaker Ukrainian and Russian currency giving a boost to sunflower seed and oil exports from these countries, applying significant pressure on the wider oilseed complex. This pressure is worsened by increased Ukrainian export capability, and an estimated record export of sunflower oil from Russia, up 0.8 Mt from last year.

UK OSR production is estimated at 1.2 Mt for 2023, down by 154 Kt from 2022 harvest. Despite an increase in area, OSR production has reduced from poor yields nationally. There has also been huge variation, with yields averaging as low as 2.6 t/ha in the Eastern region of England but as high as 4.0 t/ha in Scotland.

Despite an increase in the total barley area, production is estimated at 7.0 Mt for 2023, down from 7.4 Mt harvested in 2022. The UK average spring barley yield has reduced year-on-year, driving the production cut.

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