Harvest Update

    Harvest 2012 will be one that many farmers would prefer to forget.

    Although crops came out of the winter with excellent yield potential, most have failed to deliver. The record rainfall and lack of sunshine from April onwards caused problems establishing spring crops and placed huge disease pressure on growing crops, resulting in some very disappointing yields.

    In general, winter barley was one of the better performers in terms of both quality and yield. Most of the malting samples made the grade, with a clear trend towards low nitrogen contents. As a result, premium margins have come under pressure, but the underlying feed base has supported overall prices.

    Oilseed rape proved to be a mixed bag, with yield reductions stemming from small seed and lodging. Following last year’s bumper yields, where 2t/acre seemed common, the drop back to the longer-term average of 1.4t/acre seemed even more severe, with low oil contents adding insult to injury. 

    As I write, wheat harvest is largely done in the South, but is still going on in earnest further north. Yields and quality could be charitably summed up as disappointing, with extreme variability but an average yield reduction of 20%. Low bushel weights have been the biggest problem, with many samples below the basic feed standard of 72kg/hl. Markets and associated price deductions are developing to cope with this specific issue, and there will doubtless be many conversations between sellers and merchants about forward sold contracts, both in terms of volume commitments and quality specifications.

    On the plus side, spot and forward prices have reached contract highs, and for unsold crops there is the opportunity to offset the yield reduction. In the early market there has been good demand for good quality wheat, with decent milling premiums available. However, with our lower domestic quality, imported wheat may become a feature this year.

    The strong grain prices, which are predominantly related to the bigger global picture, are also providing opportunities in the 2013 crop market. Understandably, many would-be sellers are nervous after this year’s experience.

    On the flip side of the coin the high prices are certainly not helping livestock producers, particularly intensive pig and poultry units, whose costs of production are so closely linked to feed utilisation and price.

     
     

    Key contacts

    Andrew Wraith

    Andrew Wraith

    Director
    Food & Farming

    Savills Lincoln

    +44 (0) 1522 508 973

    +44 (0) 1522 508 973