At long last the east of Scotland and North England have finally experienced several dry(ish) days. This has allowed the ground to dry enough for both winter crops to receive fertiliser and, in certain cases, spring crops to be sown.
Although soil conditions have improved, moisture-wise, the soil temperature is still rather low for this stage of the spring. This has helped a good proportion of farers to restrain themselves from sowing spring barley. This has meant there is likely to be approximately 50% of spring barley in the ground. In comparison, last year, practically all spring cropping had been sown by this point and gone into much better conditions that than the current wet, cool seedbeds.
In the March report, we focused on the damage done by the wet winter conditions to cereal crops. A month later much of the surface water has receded, it is still difficult to get a proper picture of the potential of these winter crops. This is due to the ground only recently drying and the cool soil temperatures holding the spring growth in check. Most crops have only just received a first application of fertiliser. This, alongside a lack of time and good conditions hasn’t allowed for the crops to respond massively yet.
Winter barley - More advanced crops are finishing tillering and starting stem extension. Although not noticing a very rapid growth yet, most crops have improved in colour having taken in some fertility from applied fertilisers.
Winter wheat - Most crops beginning to tiller and, as with the barley, are looking much healthier colour than they were in early March.
Markets - A further month on since the last report and the full effect of the Covid-19 pandemic is still not really understood. This past month has seen very volatile markets with lots of factors and great uncertainty having various effects on the grain prices.
The drops on wheat pricing experienced at the end of February levelled off during early March although there were still sudden changes, many triggered by the rapid downturn in fuel prices. A significant fall in the value of Sterling in mid-March saw a very sharp increase in wheat futures, rising £6 in one day, pushing wheat values for 2020 harvest crop to over £170 ex farm. With the virus beginning to affect businesses that handle wheat on a large scale in Scotland, such as grain distilleries, with several closing or reducing throughput, there has now been a rationalisation of the market again since those heady heights and the trade is back at looking around mid-£160's for harvest - Nov 20 positions for wheat.
Feed barley continues to trade well below the wheat values with old crop still just over £130 ex farm (some companies are being more aggressive in this market anticipating a late shortage in barley and are currently paying £135-£136 ex farm). Our own expectations are that there should be sufficient barley to cover demand through to new crop so don't expect the price to firm much more. It is harder to place the new crop barley price at this time since much will depend on how well export markets develop in the current circumstances. However, it is expected that the large differential between wheat and barley will remain at similar levels.
With so many factors changing practically daily in is very much harder to call where the markets are going. There is likely be a larger carry-over of wheat than planned from this season into next due to the fall-off of demand in Scotland being experienced just now. With the 2020 harvest potential showing significantly lower than average wheat tonnages there is an unanswerable question on the level of imports the UK is likely to need to cover the anticipated shortfall due to this increased extra carry-over tonnage. As ever the trends in currency and other commodities will play major parts in the trends we will encounter going forwards.