Despite significant recent rain in places, it has been very variable and localised. It has come too little too late for many crops, particularly up through the midlands and into the east and north east. Grass growth has remained poor in areas also, which has led to supplementary feeding of concentrates and strong feed demand. However, it is disappointing to see some advice instructing livestock farmers to use imported feed sources with dubious sustainability standards, such as palm kernel and soya hulls when native feedstuffs are available.
The recently released preliminary BPS figures from DAFM show a slight reduction in the overall cereal area for 2020. However, as expected Winter crop plantings are down over 40%. Although most of the lost area was made up with Spring crops, the lack of Winter crops and the prolonged dry conditions will see overall crop production down below 2 million tonnes.
Green harvest prices for barley and wheat remain in range of €135 – €142/t and €155 – €162/t respectively. Due to the continuation of the low US maize price, the automatic mechanism calculating import duties was triggered again, raising the import duty on maize into the EU from € 5.27 to €10.50/t
The FOB Creil malting barley average price is currently at €172/t. Prices rose significantly following a decision by the Chinese to put an 80% tariff on Australian barley, which led to Chinese demand for French malting barley. With a lot of social establishments now reopened across Europe and with some Irish pubs reopening on June 29th, this should help malt demand.
Irish Native / Import Dried Feed Prices 18/06/2020
|Spot €/t||Nov 2020 €/t|
|Feed Barley||167-170||168 -170|
|FOB Creil Malting Barley||172|
Wheat and barley harvesting have begun in parts of the US, France and Russia. Due to recent beneficial rainfall across Europe and the Black sea region, EU wheat prices have fallen to 3-month lows. However, yields in the EU are expected to be down significantly on last year on Winter and Spring crops due to the wet Autumn and Spring followed by very dry conditions from late Spring onwards. World demand for wheat is very strong, however, stocks are at record high and the wheat price is coming under increasing pressure in the feed market due to the relatively large price gap with maize.
US maize prices are off their historic lows due to the increase in ethanol demand as world economies reopen following the pandemic. In addition, US maize plantings have again been revised downwards and there is some concern for continuing dry weather across that mid-west and northern plains. However, with world maize production expected to be near record highs and the reduction in industrial demand, it is difficult to see much more upside in prices from here, unless there is a significant weather event in the US.
In the soybean market, markets have been supported due to increased Chinese purchases. However, like maize, it is difficult to see any major upside in the market due to projected production levels in the US.
With EU rapeseed production again revised lower, futures prices have remained strong. Over 60% of the rapeseed production in the EU goes into biofuel and this market is expected to remain robust once all economies in the EU fully reopen.
IFA Grain Chairman Mark Browne said the continuing drought is having a severe impact on the tillage sector. Recent rains have been too little too late for many crops. At best, many growers will have significant yield reductions while in other situations, entire crops are a write-off.
“The situation is particularly critical right up through the midlands and into the east and northeast where growers, in some cases, have practically closed the gates on crops which may not be worth harvesting,” he said
The Chairman said that the combination of dry conditions and the reduction in winter crop plantings of over 40% are sure to result in a severe decrease of straw supply.
“It is estimated that barley straw availability will reduce by 300,000 tonnes and wheaten straw by 200,000 tonnes compared to last year. This is almost a 50% reduction in supply,” he said.
The IFA Grain Chairman is calling on merchants and feed mills to prioritise Irish grain and pay sustainable grain prices to Irish tillage farmers.
The import of cheap maize is compounding the current situation.
He said, “Quality assured Irish grain must not continue to be dictated by the price of third-country feedstuffs, which do not conform to the regulatory and environmental standards, demanded by the EU Commission and the Irish Government”.
“The Farm to Fork Strategy element of the European Green Deal is aiming to make food systems fair, healthy and environmentally-friendly. There is nothing fair about targets in the Green Deal, which will increase the regulatory burden and undermine local tillage framers while continuing to allow access to non-EU feedstuffs produced to different standards,” said Mark Browne.
Finally, the IFA Chairman called on the new Government to support the tillage sector.
“They cannot ignore the strategic importance of the sector to the broader agricultural industry, and the critical role native grains play in Ireland’s food provenance credentials, in addition to its low carbon footprint. Irish tillage farmers were disproportionately affected by the current CAP due to convergence and greening measures; therefore, any further reduction in supports or increased regulation under CAP 2020 cannot be tolerated.”
Due to the continuation of the dry weather, feed demand has remained strong considering the time of year. If this dry spell continues, we will see an increase in the demand for supplementary feed as grass growth is adversely affected. The weather is beginning to have an effect on crops, with rainfall figures in areas of the midlands and east at record low levels for March and April. Parts of north Dublin have only received 45mm of rain in March and April and 4mm so far in May. This area would typically receive 160mm on average over these three months. At this stage rainfall amounts are actually lower than the bad drought year of 2018, however, on the plus side, crops were planted earlier this season and are better established than two years ago.
The figures on 2020 cereal plantings will soon be available from DAFM. They should show a cropping area for the main cereals of approximately 260,000 ha which would be similar to last season. In general, the reduction in Winter cropping area has been replaced by Spring crops. The combination of some poor Winter crops; the increased ratio of Spring crops and the possibility of an impending drought could see the production tonnage dropping below 2 million tonnes versus the 2.35 million figures in 2019.
While a considerable amount of barley remains in store, the stocks are lower than last year. IFA Grain Committee Chairman Mark Browne has called on feed mills to use Irish grains as feed merchants are now producing rations which contain little or no Irish grain and have replaced it with maize grain from non-EU sources.
The FOB Creil malting barley average price remains at €168/t. The plantings of malting barley have increased across the EU this season however some of this area increase has been mitigated due to the possibility of lower yields due to the dry conditions.
Irish Native / Import Dried Feed Prices 15/05/2020
|Spot €/t||Nov 2020 €/t|
|Feed Barley||167-170||164 -168|
|FOB Creil Malting Barley||168|
The wheat market reacted negatively to last week’s USDA’s report on the global wheat market outlook. They expect global wheat stocks at the end of the 2020/21 marketing year will rise to a record-large 310 million tonnes, up from 295 million at the end of 2019/20. However, these projections are based on best case scenarios and obviously weather could still play a part. The gap in prices between wheat and maize/barley is also significant and this could prove bearish for the crop. In relation to market positives, although parts of the Europe and the Black seas regions have received much needed moisture this may have been too little too late. In addition, exports of wheat from Europe have again been revised upwards which will leave less carryover stock going into the new season.
The USDA report proved somewhat benign for maize which is a slight positive. US maize prices are at historic lows due to the drop in ethanol demand and the prospects of record US plantings. However, prices have stabilised and market ending stocks are lower than predicted in the previous report with expectations of increased Chinese imports. Some market commentators predict US maize plantings to be lower than the governments figures and with ethanol demand picking up as economies reopen there is some optimism in the market.
In the soybean market, the USDA report was considered supportive with US production, US 2020/21 ending stocks and global ending stocks coming in below trade estimates. The increase in Chinese purchases is also seen as a positive for the market. Soymeal prices have continued to decline as world supply chains have returned to normal. As biofuel use begins to rise again rapeseed futures have remained strong. With EU rapeseed production predicted to be at historic lows of 17million tonnes, and with the EU’s main importer Ukraine also predicting lower production, spot prices should remain strong for the foreseeable future.