Market Report
Grain
market report
At the beginning of September wheat prices rebounded for a short time, and it has attempted to rebound a couple of time since, but it seems we are still waiting for the rebound we are hoping for. As ever, there are multiple factors affecting the current grain markets.
There are ongoing weather risks affecting several regions. In Russia and Ukraine, rainfall in September was less than 20% of the normal amount, compounding an earlier summer shortfall. As a result, planting is slow, and crop emergence is patchy, potentially leading to the smallest winter planting area in over a decade. Brazil is also experiencing severe weather conditions, with the driest soils in 40 years and minimal soybean planting, as farmers await a change in weather patterns.
France, Germany, and Ukraine are reporting very poor-quality milling wheat, with only 30-40% meeting milling standards. In Ukraine, millers are urging the government to limit milling wheat exports.
Geopolitical and economic factors are also poised to impact grain markets. The ongoing situations in Ukraine and Israel, along with the Middle East crisis, could drive crude oil prices back to recent highs. Meanwhile, China
has announced strong stimulus measures to boost domestic consumption, and central banks have started a new cycle of lower interest rates. These factors could influence commodity prices. Despite a bumper harvest in the US and adverse currency movements, there may be favorable shifts in commodity prices.
Source: ODA UK Ltd
DEFRA Underspend
DEFRA appears to have consistently underspent on the farm budget during the Agricultural Transition. This shortfall risks being reclaimed by the Treasury due to the Government’s spending pressures. These figures are detailed in The Farming and Countryside Annual Report, published in September.
DEFRA planned to spend £2,267 million on farming and the environment in 2023/24, falling short of the £2.4 billion per year promised by the previous Government. The Department actually distributed £2,136 million, resulting in a £131 million shortfall. This adds to underspends of over £100 million in both the 2021/22 and 2022/23 financial years, where spending was £2,294 million and £2,230 million, respectively.
This funding, promised to the farming industry, has not been fully paid. There has been suspicion that deductions in the Basic Payment Scheme (BPS) starting in 2021 created a fund that DEFRA struggled to ‘recycle’ through other schemes, particularly due to the slow
start of the Sustainable Farming Incentive (SFI). The Department has been somewhat opaque about the budget, but these figures seem to confirm the suspicion. It was hoped that underspends in earlier years would be rolled forward for use in later years, once schemes like the SFI were fully operational. However, recent reports suggest that the Treasury is considering using some of the underspend to cover shortfalls elsewhere in the Government. This does not bode well for the next allocation of agricultural funding, which may be announced with the Budget on 30 October.
https://www.gov.uk/government/publications/farmingand-countryside-programme-annual-report-2023-to-2024
Sustainable Farming Incentive 2024 Offer
The sustainable farming incentive 2024 offer is still under a controlled roll out, you can apply for this if you have been invited to after completing an expression of interest. DEFRA are almost ready to fully roll this out and make it available to everyone without having to complete an expression of interest.
For anyone who is looking for advice on which options are available to them, please get in touch with a member of the Agri-business team.
Harvest 2024 Round Up
The cropping year leading up to the 2024 harvest has been challenging for everyone. Following one of the wettest winters on record and a similar weather pattern into the spring, predicting crop yields was difficult.
For those who managed to plant winter crops, winter wheat yields were surprisingly good in some areas but quite average in others. Winter barley, however, ranged from average to disappointing. On the other hand, spring crops benefited from the continued rain throughout their growing season.
The table below shows average yields collected from Fisher German clients for the 2022, 2023, and 2024 harvests. As expected, winter crops yielded less in 2024 compared to previous years, while spring crops performed better.
Rothamsted research –Cell Grazing
A recent four-year study compared cell grazing and set stocking. Cell grazing involves moving animals to new pasture every 1-2 days. This method resulted in substantially higher pasture growth. By the third year, cell grazing areas supported double the livestock per hectare compared to set stocking and produced 140% more liveweight per hectare.
Despite more intensive grazing and higher stocking densities, soil carbon content increased in cell grazing enclosures while it decreased in set stocking areas, indicating higher levels of carbon sequestration. These results provide strong evidence that “It’s not the cow, it’s the how.”
https://www.rothamsted.ac.uk/news/ cell-grazing-supports-double-livestockhectare-set-stocking-and-deliversenvironmental
We were all hoping for a better start to the season as the soil has taken quite a hit in the last 12 months, rectifying this is very important to give the soil the best opportunity to recover from this. However, the very recent rain was not what we needed to do this, fingers crossed October gives us the weather we need to give the opportunity to get a good seed bed for drilling winter crops.
Countryside
Stewardship Capital
Grants is still available
Capital grant applications are available year-round. These stand-alone agreements last for three years, giving you ample time to complete the work. Capital grants support a range of farming and environmental improvements, including air and water quality, boundaries, hedgerows, and natural flood management. Popular options include:
• Hedge laying
• Planting new hedgerows
• Fencing
• Concrete Yard Renewal
• Roofing over sprayer washdown areas, slurry stores and livestock gathering areas