ADAS harvest report
With a rain interrupted first week of August ADAS estimate that about 60% of winter barley had been cut, withyields close to the five year average (6.2-6.4 t/ha). An estimated 35% of UK winter OSR area had been harvested, again with yields close to the five year average
Very little wheat, spring barley or spring OSR had been cut.
Wheat prices rebound
Strategie Grains have lowered their forecast for the UKwheat harvest to 14.32mt with yields now projected at 7.27t/ha.
November 12 LIFFE wheat futures have moved back up to £195/t whilst November 13 futures have moved up to £167/t.
Markets are awaiting the next USDA crop reports out tomorrow.
European harvests
The French harvest is progressing well with yields better than expected. Official estimates put the wheat crop up 8%on last year's drought affected crop whilst the spring barley crop could be up 80%. Maize yields may be lower.
The German winter barley is expected to be a little lower but spring barley yields should be up. Wheat harvesting has only just started. OSR yields are up perhaps nearly 10%.
Crops in the Ukraine are all but harvested and much lower output is projected with the IGC looking for a 40% drop in wheat and a 25% drop in barley production.
As mentioned elsewhere the Russian harvest has been hit by heat and drought so wheat production could be down nearly 25%.
In Kazakhstan the wheat crop may drop by a massive 50%+ from last year's recordalthough this would be near the level of 2 years ago and stocks are high.
Cropping comment
In their quarterly review Velcourt make several important comments, notably about weed control. They say a complete re-think of black-grass strategy is required in some parts of the country where ineffective autumn herbicide programmes combined with the failure of Atlantis has led to huge weed populations and some crops being sprayed off; it could potentially render some areas uncroppable. As later drilled crops remained much more disease free, so serious thought needs to be given to drill timings and autumn resources. They refer to the need to consider combine capacity as well as drying and storage provision given the wet conditions. They also reference the severe pressure on industry gross margins due to disease and lost yield potential, especially where high rents are paid.
For sugar beet development has been slow and sugar levels threatened by low sunlight so it looks to be an average year. For potatoes they note blight pressure and estimate that plantings could have been hit by 5% by adverse weather whilst 2% of the crop could have been lost to waterlogging.
UK to see no growth
The Bank of England has further reduced its expectations of GDP performance and now expects no growth in 2012 – a year ago it was predicting 2%. Whilst the Governor has been consistently gloomy, the Bank’s forecasts been consistently optimistic; part of the explanation is that the forecasts are based on past experience when recovery came much quicker. Other recessions were also not accompanied by a developed world currency crisis on the scale of the euro problems. At this time the Bank is looking for a 2% rise in GDP next year (down from an expected 2.67% 3 months ago) but there is plenty of warning that underlying issues are yet to be tackled. The Bank had already responded to the slowdown by introducing more QE and it is yet to decide whether it plans to increase funding even further or reduce interest rates even more.
Are there any brighter spots? Well expectations for inflation have been decreased – there is some room for scepticism here as this is an area where the Bank has been consistently and badly wrong but not only is demand weak but the pound is stronger, at least against the euro, so imported inflation could ease, whilst of course on a simple mathematical basis some previous price rises will drop out of the comparisons. Also the National Institute for Economic and Social Research believe total payments for mis-selling protection plans (which could reach £15bn) could end up boosting the country's growth by more than 0.2% of GDP.
Potato round-up
The GB potato crop continues to be hampered by poor weather for some growers which explains the average price last week being 40% up on last year at £192/t and the free supply being a whopping 126% higher at £212/t. As well as poor development and some losses the area originally planted is estimated to have fallen by 5.5% to 121,300 ha according to the Potato Council.
Arable farm returns
The HGCA no longer publish their arable farm model but we have obtained the equivalent data to enter an estimate for 2012/13 based on the calculations previously used. This is merely indicative being based largely on November futures prices and trend yields.
Milk matters
Milk production was running slightly ahead of last year after the first 3 months of the milk year but has since fallen back with deliveries down around 5% in recent weeks.
Global food prices rise
The FAO food price indexshot up6% in July on the back of higher grain and sugar prices; this follows 3 months of welcome decline.
CAP progress
For anyone wondering how the CAP reform is progressing, well Brussels is on shut down but the revelation that MEPs have tabled some 7,000 amendments points to the potential complexity.
Russian harvest down
Despite flash flooding and deaths in parts of the country, much of Russia remains in a heat wave which has lowered expectations for the harvest and raised the spectre of export bans. This week the government ruled out any immediate restriction but the grain export availability looks likely to be restricted to 10-12mt with the production held to 75mt. The government has announced the sale of official stocks to ensure sufficient domestic supply.
Welsh farm statistics
Anyone looking for basic statistics on farms and farming in Wales can find them here: http://wales.gov.uk/docs/statistics/2012/120627farmfacts12en.pdf