As 2022 draws to a close, Cedric Porter reflects on the year and assesses 2023
Feed wheat prices were already above 200/tonne at the beginning of the year, having broken through that barrier at the end of 2020. But Russia鈥檚 invasion of Ukraine sent values soaring.
At the end of February they were 220/t, eventually peaking at more than 320/t by May. As the year ends, values have fallen to 230 to 240/t. Looking to November 2023, the London wheat futures market is at 230/t, while growers could lock in 220/t for crops delivered a year later.
Feed
Feed barley prices followed a similar path to feed wheat and are ending the year at 220/t, while malting barley was at 280/t in January and is ending it at about 270/t.
UK wheat production was up 12 per cent this year to 15.664 million tonnes (mt), estimates AHDB, which should mean there are 2.250mt available for exports, more than double last year. Production of all types of barley has increased by three per cent to 7.190mt , leaving 1.275m available for export.
Oilseeds have been on even more of a rollercoaster ride than cereals this year. At the start of the year the Paris November 2022 futures price was at 鈧�550/t (479/t) by the middle of May it had soared by almost 60 per cent to 鈧�865/t (750/t) before tumbling to 鈧�635/t when November actually arrived.
UK oilseed rape production is estimated to be 1.2mt in 2022, 20 per cent more than in 2021, the exportable surplus will be small as UK users turn to rape oil rather than sunflower oil from Ukraine.
Global influences
Global Influences
The war in Ukraine has dominated the global grain market in 2022. Russia and Ukraine normally account for a third of wheat exports and half of sunflower trade so it was inevitable conflict would disrupt an already tight global market which has tightened since.
The US Department of Agriculture estimates that the production of total grains (wheat, rice, grain maize and other coarse grains) has fallen by 2.1 per cent to 2.17 billion tonnes. Rising costs and pressure on supply means that, unusually, global use has dropped by 1.3 per cent. That leaves stocks of just 760mt, four per cent less than a year ago. At least a third of world grain stocks are in China.
As the year ends, the conflict in Ukraine is far from over, but Russia has agreed to allow Ukrainian grain safe passage out of the Black Sea, something that it also needs for the shipment of its record harvest.
Reuters reported Ukrainian crop plantings for 2023 harvest are down 30 per cent, while there are concerns about Argentina鈥檚 imminent crop, while a repeat of extreme weather in Europe and North America could further hit supplies and increase prices in 2023.
Graph
2023 cropping
Early surveying of growers by AHDB and consultants Andersons suggests the UK wheat area will be stable at 1.803m hectares, the barley area will be down 1.7 per cent to 1.089m ha, with a drop in spring barley area outweighing an increase in winter barley plantings.
Higher OSR prices appear to have outweighed fears of crop failure with the area of the crop estimated to be up 13 per cent to 415,000ha.
Other
Other crops
Oat prices have risen but not enough to persuade growers to plant more for 2023, with area down nearly 10 per cent. In contrast, pressure on values does not appear to have dissuaded growers from planting pulses with farmers valuing their nutritional role in arable rotations.
Poor prices, rising costs and more attractive prices of alternative crops mean that potato growers might plant less than 100,000ha for the first time ever in 2023. But the sugar area could be larger because of a commitment by British Sugar to pay more for beet.
Fruit and vegetable crops have been less profitable. Surpluses of soft and top fruit pushed down prices, while costs rose in a sector that continues to struggle to find labour. Meanwhile, the NFU has warned of a disastrous decline in UK vegetable production in 2023 as growers exit production amid substantial losses.
Richard King, head of business research at Andersons said 2023 looked to be tough, with higher costs whilst markets seem in decline.
鈥淭he BPS will continue to decline in England, but also by stealth everywhere else as inflation erodes its real-terms value.
鈥淎ll farms will need to think how this income stream might be replaced. Government support in other grants and schemes should be looked at closely. Some businesses will have good profits from 2021 and 2022. These need to be used wisely 鈥� perhaps paying down debt or investing for the long-term.鈥�
