Harvest proceeding as expected

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Harvest in the UK  is still progressing at a rapid rate due to the exceptional weather, although rain in some areas by today (Friday) will have slowed progress down a little.  Many farmers are reporting their earliest start to the wheat harvest ever.

UK Markets have been mixed over the past week due to uncertainty over macro-economics, weather and the Black Sea situation.

Chicago wheat futures (Dec22) edged up $2.76/t, but Paris slipped €7/t and London (Nov 22) lost £7.30/t.

Global wheat prospects remain mixed. Russia’s IKAR agricultural consultancy has raised its wheat production estimate for the country to 90.5mt, up 1.8mt on its previous figure. Export potential is put at 45mt.

Better reports from France

French farmers had harvested 50% of this year’s soft wheat crop as of 11 July, with reports of much better crops in the north and east of the country. Early harvest reports from Germany show an optimistic outlook for wheat yields and quality, offsetting earlier concerns from some farm groups.

The recent heatwave has allowed UK farmers to start harvesting wheat and, although early results show much variation on yields, quality so far appears to be very good.

Conversely, Canadian traders report that crops are still behind their normal stage of development due to adverse weather conditions across many of the provinces. In addition, Rosario Grain exchange now sees Argentina’s 2022 wheat production at 17.7mt, from a previous estimate of 18.5mt, citing lower plantings and dry weather for the decline. Buenos Aires Grain Exchange kept Argentina’s 2022 wheat planting area unchanged week on week at 6.2m ha.

Jonathan Lane, ADM Agriculture’s head of grain trading, says: “Talks about establishing an export corridor from Ukraine to ease the wheat backlog are ongoing. President Putin had said establishing such a corridor would depend on additional lifting of restrictions on Russian exports, including finance, payment, freight and insurance.

“Analysts report that the Russian-occupied peninsula of Crimea is shipping more than 50 times the volume of grain it usually does at this time of the year, raising suspicions that seized Ukrainian grain is being taken abroad.

“The EU has decided to amend Russian sanctions by unfreezing funds in seven Russian banks, provided they can prove the funds are being used for agricultural products. Chinese customs data showed June’s wheat imports at 520,000t, down 31% year on year, with the year-to-date imports reported at 4.94mt, down 8%.”

Egypt’s state buyer GASC is in private talks with several companies to import wheat. It has not purchased any tonnage in its latest tender due to high prices amid limited offers. Meanwhile Pakistan has purchased 300,000t of wheat at an international tender, with a further 200,000t tender due to be issued on 25 July.

Oilseed rape

US weather is still forecast hot into the weekend, but then predicts isolated showers in most places and cooler temperatures for the next few weeks. As such, some weather premium is starting to come out of current prices. Funds continue to reduce market longs in beans and oil.

Soybean ratings fell 1% this week from 62% good/excellent to 61%. In South America, consultant Safras estimates the 2022/23 soybean crop could reach 151.5mt, up 20%.

China’s lockdowns continue to plague the country’s economy. Just shy of 20% of the population remain confined to their houses. Manufacturing is affected and product demand is still poor. In addition, China’s farmers are experiencing extreme heat and heavy rainfall, which seems to be worsening year on year. After nearly two months out of the US market, USDA confirmed a new crop soybean sale of 136,000t yesterday.

Energy markets rallied again before closing sharply lower in the last two sessions. Russia re-opened the Nord Stream pipeline on Thursday following routine downtime.

Malaysian palm oil prices closed down 1.95%. Indonesia has decided to cut export taxes and is rumoured to have delayed the increase in biofuel mandate to 35%.

Canadian canola futures closed lower this week after heavy rain spread across Alberta and Saskatchewan over the past few days, which will help crops. Canada’s agriculture ministry reported that most crops in Saskatchewan are in fair to good condition.

Will Ringrose, ADM Agriculture’s head of oilseeds, comments: “Matif rapeseed traded lower again, back close to levels seen before Russia’s invasion of Ukraine. Better EU rapeseed yields added to ample seed supply on the nearby positions, pushing prices lower. Low water levels on the Rhine are causing logistical delays, but prices are now a long way from the season’s highs, which is not enticing any farmer selling.”

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About Author

Editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is an avid follower of Stoke City.