March’s crop report was written barely a week after the Russian invasion of Ukraine. A month later and the level of uncertainty in both the grain market and the wider world has not subsided one bit.
Despite some talk of peace talks developing, many still place doubts on the reliability of Putin stepping back from his target of taking control of Ukraine. So, the extreme state of volatility mentioned in the March report is still very much at the fore, with records being broken across all grain values, and not by small margins.
Crop conditions
Weather conditions in March have continued to be favourable and are now allowing farmers to apply the first application of N, as well as some early fungicide and herbicide treatments onto crops. It is encouraging that these crops have come through winter in generally very good condition.
With fertiliser prices reaching extremely high levels, farmers may consider using less on their crops. However, due to the situation in Ukraine, the new values on new season crops are holding firm, so there could be a better reward for applying more fertiliser, despite the high input cost. Time will tell if farmers decide to go with this issue for further top dressings of fertiliser in April or May.
The kind growing conditions in March have presented growers with the opportunity to progress with the sowing of spring cereals into good seedbeds. In Scotland, the last couple of weeks have seen over 60% of the spring cereal acreage sown. Hopefully, this will help these crops have a better potential to yield given they will have a longer growing season compared to being sown later in April.
Markets
Crop 2021 harvest
Throughout March, offers of both barley and wheat from farmers have proven quite scarce, which gives concerns about the ongoing availability of supplies to carry through to harvest.
The result of this lack of supply against demand has seen the values of both old and new crops wheat and barley move considerably and break records by a substantial amount as merchants attempt to cover their commitments.
We have seen a peak in soft wheat prices as high as £350 ex-farm being offered, with barley hitting £290 ex-farm. As much as possible, end markets are resisting following these prices and merchants are looking to bring wheat from the south of England, where the markets are easier, by freight to calm the markets. However, freight is expensive, so this option is proving challenging.
Crop 2022 harvest
Although not quite as volatile as this season’s crop values, the new crop 2022 prices have reflected the substantial rises during March with wheat futures for Nov 22 reaching a high of £270. This has since eased back but is still trading around £253 which will keep ex-farm prices trading around £255 for Nov (£250 for harvest move). As time and this war goes on and opportunities in Ukraine to get their spring cropping sown are missed, there will be reviews ongoing as to how much an effect that will have to their exportable surplus and thereby the world price on wheat and maize. So much depends on the outcome of peace talks and at the point of writing it is next to impossible to assess which way they will go.