Spring Grain Market Outlook 2023 roundup: Grain market daily

• Old-crop (May-23) UK feed wheat futures closed yesterday at £191.70/t, near unchanged (down £0.15/t) from the day before. New-crop (Nov-23) futures closed yesterday at £205.70/t, following the same movement as old crop from Monday’s close.
• Global wheat futures felt pressure yesterday, as the market focussed on the negative economic sentiment in markets, as well as ample short-term supplies. Though losses were likely capped by concern on whether the Black Sea Initiative is extended mid-May.
• Russia continues to reaffirm their position that the Black Sea Initiative (Ukrainian export deal) is not working from them, after the UN handed over proposals to improve and expand (Refinitiv).
• Poland have said they will keep the ban on imported Ukrainian grains to the end of the year today, despite the European Commission’s proposed emergency measures released last week.
• Paris rapeseed prices (May-23) fell €16.75/t yesterday, to close at €442.25/t. New-crop futures (Nov-23) fell €21.50/t over the same period, to close at €442.00/t. Rapeseed followed downwards momentum across the oilseed complex, including pressure on Chicago soyabeans, Malaysian palm oil and brent crude oil. Crude oil felt pressure from concerns for the global economic outlook.

Yesterday, we held our 2023 Spring Grain Market Outlook webinar, with around 250 people tuning in at the peak. If you missed it, don’t worry - you can watch the webinar back on YouTube, with the video detailed below. Below is a roundup of the key points from yesterday’s presentations.

Cereals and oilseed market outlook – following fundamentals

Looking to the new season, large wheat supplies are expected in the EU and UK. The EU are expecting a heavy wheat balance next season, with large carry-in stocks from Ukrainian grain imports and large forecasted crops. For 2023/24, the UK’s wheat carry in stocks are currently forecast to be the largest since 2016/17, could large carry in stocks pressure our domestic harvest price? When is stored old-crop wheat going to be sold? The UK saw strong winter cropping for harvest 2023 too, and reports point to the potential for good winter grain yields with some watchpoints for disease management in winter barley. Though wet weather has delayed spring drilling. The next crop development report is provisionally forecast for release this Friday (28 April).

While short term volatility in grain markets is likely, as we head towards the renewal date on the Black Sea Initiative (Ukraine grain deal), longer term fundamentals point to a more bearish price outlook, with ample global grain supply expected for next season (2023/24). However, some key watchpoints remain, including demand– could we see rebound on lower price averages? Where will the price floor be? Weather remains crucial too as always. Finally, the renewal of the Black Sea Initiative and the war ongoing in Ukraine are things to watch going forward.

For rapeseed, a similar story in the EU can be seen. Rapeseed availability is expected to be plentiful in the new season, with a bigger crop due. On top of this, the US is also expected to be well supplied with soyabeans next season. In the UK, area is forecasted to increase for harvest 2023, though development has been variable. Some failed rapeseed area has been reseeded, to spring crops such as barley.

Like grains, watchpoints remain for price direction including the demand outlook, and the ongoing war in Ukraine. However, with northern hemisphere oilseed supply looking boosted next season, the sentiment in rapeseed markets going forward is more bearish.

Finally, in the webinar we discussed input costs and margins. Margins look squeezed for harvest 2023, with input costs remaining high but prices lower. Lead Analyst Millie emphasised the need to look at farm performance to manage risk during these challenging times.

Filling the funding gap – exploring SFI and Countryside Stewardship

Next in the webinar, Amandeep Kaur Purewal​ (Senior Analyst – Trade & Policy​) discussed options for farmers in public payment schemes under the Environmental Land Management Scheme. Amandeep emphasised that the new schemes are not a direct substitute for direct payments. However, some case studies were showed to display possible payments and net profits from entering the SFI and Countryside Stewardship schemes. For these slides, please follow this link.

Ultimately, Amandeep concluded farmers will need to look at a variety of options to full the funding gap created from phased out direct payments, to make a well-informed decision. This includes looking at: SFI/Countryside Stewardship, productivity gains, diversification as well as taking advantage of private markets like carbon markets. 

Understanding carbon markets

Finally, Sarah Baker (Head of Economic Analysis​) explained the work the AHDB are doing around carbon markets, as well as the foundations on what carbon markets are and why they matter to farmers.

Sarah also outlined the Defra Nature Markets Framework, detailing market rules around stacking/bundling, additionality tests and combining public and private finance on areas of land. The core principles of nature markets, to secure integrity were also explained. No double counting as well as showing additionality are essential in these markets.

If you would like more information on carbon markets, follow this link to the AHDB website. Additionally, for more information on the Nature Market Framework, please follow this link.

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