Gleadell Viewpoint Autumn 2013

AUTUMN 2013

By Appointment to her Majesty The Queen.

Supplier of Quality Seeds Gleadell Agriculture Ltd Lincolnshire

VOL 11, ISSUE 2

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Putting one global harvest into perspective www.gleadell.co.uk

My last article for Viewpoint was titled ‘History tells us that it’s a world market’ and the last few months have certainly rammed this point home to all of us involved in combinable crop marketing.

The plantings, crop conditions and yield estimates of all major crop-producing regions of the world have been in focus since early summer, as the need for a good worldwide harvest has probably never been more important after the droughts and weatherimpacted harvests of 2012.

extent, the price pressure that has been a daily reality for all grain markets since July 2012.

So, as I write this in September, what are the key points to note from the harvests that we have seen and are about to see? Perhaps most fundamentally, US farmers planted a lot of corn and soy in the spring and early summer. Despite wet weather hampering the timing of these sowings a huge acreage did get drilled. With regard to corn in particular, the crop came through the summer in reasonable shape, with confident expectations that stocks will be rebuilt significantly during the current marketing season.

The reality of this expectation has released, to a large

However, one good global harvest does not mean that price volatility and the need for future large harvests have gone away. We estimate that global consumption of wheat and corn will rise this season by more than 80m tonnes compared with 2012/13.

This means we will need to see continued increases in crop size in future years, while prices will have to be good enough to ensure that crops are planted.

Contents 02

Gleadell’s traders examine how the grain, oilseed rape and pulse markets are likely to pan out over the coming months.

In addition good, or much better, harvests in Russia, the Ukraine and across almost all the EU have added to the supply side of the balance sheet. Even the UK harvest has been better than many feared was likely.

David Sheppard, managing director, Gleadell Agriculture

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Xtralite, our new mobile-optimised website, provides growers with instant access to their account information from any smartphone, tablet or desktop computer.

Xtralite is based on our tried and tested Xtra system. However, it has all the advantages of an app, being quick and easy to navigate. And, with the help of our farmer focus group, it also contains some significant new features that allow growers to keep tabs on all their dealings with Gleadell wherever they are.

Target pricing allows our farmers to set a value

GleadellAg

@gleadells

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SPOTLIGHT ON SPRING SEEDS Spring cropping can spread technical and financial risk very effectively. Viewpoint reviews the latest Null-Lox and other spring barleys and pulses.

There’s a host of other new features too, such as passport printing, payment advice, contract records and full analysis reports for export loads.

Growers with a Gleadell Xtra account can access the new Xtralite website at www.gleadellonline. co.uk using their existing username and password.

New customers can register on the same site or email Xtralite@gleadell.co.uk to request access.

Xtralite is also available through the Gleadell app.

Fertiliser in focus Fertilisers currently represent very good value – the big question is demand and when it will return in volume.

Plus - Gleadell Bioenergy service expands.

for their grain, oilseeds or pulses in any month.

Grain management is another new feature that allows farmers to view stocks in each store and allocate individual contracts (including non-Gleadell ones) to particular stores.

INNOVATION IN SEED Bayer CropScience has launched its oilseed rape seed business in the UK. The company’s Julian Little explains what growers might expect from a Bayer seed offering.

Xtralite – meeting the needs of busy growers Farmers who do business with Gleadell can now manage their crop sales and seed and fertiliser purchases from any mobile device as effectively as they can from the farm office.

MARKET OUTLOOK

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GLEADELL AROUND THE COUNTRY Contact details and locations of all our offices and other facilities around the country.

Mike Thompson, finance director

Gleadell Agriculture Limited

MARKET OUTLOOK

Feed grain Forecasts of record 2013/14 global wheat and corn crops have eased market concerns over tightening stocks witnessed during 2012/13.

The resulting increase in corn reserves in particular has been the catalyst for weaker commodity markets. They are expected to increase over 20% year-on-year which, combined with abundant wheat stocks, provides a bearish outlook. While the weather still leaves some uncertainty over final production numbers, adequate reserves are likely to limit price rallies, even with the re-emergence of China as an apparent major grain buyer this season.

improved domestic crops from key importing countries, reducing their requirement for large-scale imports, especially with cheaper feed grains (barley and corn) readily available.

The EU harvest is almost complete. It is bigger and of better quality than expected, despite the hard winter and spring weather. Early fears over lower proteins, especially in France, were premature – as the harvest progressed north ‘export spec’ proteins were reported. Exports have been brisk, with commitments running well ahead of last year, although Black Sea/Balkan

Milling wheat

with protein levels in particular lower than last year, specific weights have shown a marked improvement, offering millers greater extraction rates.

What a difference a year makes! Exceptionally large ending stocks of imported quality wheat at the end of 2012/13 put UK milling premiums on the back foot early on this season, a stark contrast to the heady values seen 12 months ago.

Whilst imports last year reached record highs of 2.95m tonnes, quality wheat shipments continued to arrive during harvest and through the new-crop transition period, keeping supply positive. However, the millers’ appetite for home-grown wheat is expected to return, thanks to better baking properties, which will limit imports to an estimated 1.3m tonnes. On paper, opportunities will come for small volume exports of UKS and UKP wheat sometime this season. But, with UK supplies presently at a

Although sample results are far from homogenous

Malting barley

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With the UK area reported higher than previously thought, and yields approaching the five-year average, the UK should produce a wheat crop of about 12.5m tonnes. Nevertheless, this is down from 13.3m tonnes last year and the lowest for a decade.

premium to Europe, we need to gain confidence in yield and production forecasts first.

Whilst premiums have fallen a long way from the highs of last year, prices appear to have settled since the harvest excitement. However, history serves to remind us of past volatility – both up and down.

Jonathan Lane, trading manager

good-quality barley will have to go for feed.

Growers on buyback contracts have yet again outperformed the open market by some distance. There will be opportunities for those not on a buyback contract, but mainly for low-nitrogen spring barley and these homes, when they appear, will fill very quickly.

Organics Despite genuine concern over crops sown last autumn we have seen much better yields and quality this harvest than expected. Unfortunately we have also seen a huge fall in price, in line with conventional produce.

However, feed wheat and barley are generally looking quite good, though in some areas bushel weights are still coming in below the necessary standards. Milling wheat varieties so far are meeting millers’ requirements, with protein content higher than expected.

There is some good quality malting barley around, although nitrogen levels are testing higher than normal.

Milling oats once again are in good demand as bushel weight, colour and stain have met the required standard. The only concern millers have is admixture of black seeds, which cause discolouration in the end product.

Pulses will always find a good home due to limited home-grown supply.

As always it is important to know what quality you have before selling your produce.

There are many varied outlets requiring different quality specifications, which will add value and help maximise your returns.

Brian Wilburn, organic trader

situation in Egypt so far have not materialised and business appears very much as normal.

This year’s pulse harvest looks first-rate, thanks to good combining conditions and excellent quality.

It is also turning out to be a relatively good year for peas, with Daytona being the outstanding variety with good colour retention and uniform size.

Human consumption beans are probably the best quality we have seen for many years, although small beans look like they could be more common this year as late drilling and hot conditions caused plants to stress. This has been offset to some degree by better-than-average yields in many parts of the country.

Consumers have been active, especially in the Middle East. Initial concerns about the political

Oats Oat plantings in autumn 2012 fell by 25% due to relentless rains. Combined with the drop in winter wheat acreage this presented growers with space to increase substantially the spring oat area.

In addition, growers in some regions were reluctant to plant spring malting barley and for them spring oats were an obvious substitute.

A shortage of seed was overcome by imports to satisfy this demand and a tranche of new varieties was trialled overnight. As August approached, several surveys supported this increase and on-farm prices eased accordingly.

Quality in England has not lived up to expectations. There has been a significant range of bushel weights, with no variety

We would stress the importance for buyback contracting in 2014-15 and we are able to offer a full range of competitive varietal terms for large blues, marrowfats and beans.

With plenty of good quality beans and peas around buyers are certainly relaxed in the execution of their contracts. For the industry it has the effect of very good publicity and hopefully bigger orders for next year.

Ian Skinn, pulses trader

dominating the field. Millers have tightened their delivery specifications, which means merchant selection is crucial for successful delivery.

Scotland, however, has good quality with plump and well-filled grains.The North could have an export surplus of milling quality, which could compete with Scandinavia into the German market.

The oat area for harvest 2014 is expected to be sharply down as wheat claims back lost ground.

This, in turn, should bring the oat balance sheet into line.

Robert Leachman, oats trader

Oilseed rape Maltsters now cover most of their harvest to Christmas requirements on contract. If you are not on a contract these days you are effectively growing for the feed market, living in hope that your neighbour’s contracted crop fails – a real game of chance. You may also be growing a variety that your local market does not require.

This harvest can be described as a freak for malting barley, with a 103% increase in the spring area, excellent winter and spring yields averaging around 7t/ha and with vintage quality.

Last year England had around 1.2m tonnes of available malting barley with a demand of around 1m tonnes. This year demand is similar, but with over 80% of the crop acceptable for malting we have approximately 3m tonnes of malting barley to choose from. Unfortunately our competitors in the EU have also had a good crop so, unless we have a world problem, premiums will remain low and a lot of

The UK harvest has lagged behind previous years due to the late planting and development of the crop, although quality overall is decent and reaching export standard, despite earlier worries about weather damage.

Imports are projected to fall considerably from last season’s record 2.95m tonnes, leaving the UK with a small exportable surplus. With domestic use set to remain unchanged from last season (more industrial/less feed), the dynamics of the UK market may well be driven by the perceived expansion, or not, of the UK David Woodland, trader ethanol industry.

Global wheat output is estimated to be 7.5% higher at 705m tonnes with all major exporters, except the US, producing more. A rebound in EU and Black Sea production will increase export supplies and is expected to coincide with

And, with quality analysis and yields from the 2013 harvest much better than expected, milling wheat looks even more oversupplied, causing premiums to fall below the four-year average.

wheat continues to be aggressively offered.

Pulses

It is also worth noting that maltsters will carry over as much of this crop into crop 2014 as they can due to its exceptional quality, reducing demand for the new season crop.

There are various types of buyback contracts available, all priced to give good returns. Some carry no or little contract risk, so even the most risk-averse grower can plant their crop in confidence.

Stuart Shand, sales director

The rapeseed harvest throughout Europe has gone well. Crops in Eastern European countries achieved better-thanexpected yields and the EU is now forecast to produce a little under 21m tonnes, up 1.4m tonnes from last season.

However, despite the recovery in production we are still seeing some big question marks over demand and the European crush could well see a small decline as more competitively-priced sunflower and soy oil undermine demand for rapeseed oil.

Looking at the global picture, Canada is expected to produce the second-largest crop on record, according to recent StatsCan figures. However in Australia the weather has not been ideal.

A smaller area has been sown and production

is likely to decline to 3.5m tonnes from 4.1m last year.

With European rapeseed in the barn, the market focus will turn to the developing soy crop in the US – and the need for bumper production. Delayed planting in the US, hot and dry August weather in the US Mid-West and the threat of frost all have the potential to hurt soy production and the world can ill afford a supply problem.

So on one hand there is plenty of rapeseed and sunflower seed in Europe. On the other there is a potential threat to the very important US soy crop.

If production in the US turns out as hoped, there will be enough soybeans and prices in the whole oilseeds sector could slip lower. If there is a significant decline in US soy production, then the market could have seen the lows.

Jonathan Lane, trading manager Gleadell Agriculture

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INNOVATION IN SEED

Bayer CropScience invests in the UK’s farming future

The third milestone for 2013 has been the full

Looking forward there is an even more

commercial launch of Bayer CropScience’s

tantalising milestone to achieve: the

oilseed rape seed business here in the UK. In

development and commercialisation of

many parts of the world Bayer is known just as

Bayer’s wheat seed business. This is being

much for its quality seeds as it is for its crop

carried out in conjunction with key partners

protection business. It is, after all, the global

such as the CSIRO in Australia, Evogene in

number one in cotton and hybrid oilseed rape,

Israel, and the University of Nebraska in the

the number one hybrid rice producer outside China, and the fourth biggest vegetable seed business in the world.

forward increases in yield. In some countries these varieties will be genetically modified,

a bit of a surprise. So what might you expect

but recognising that there are market

from a Bayer seed offering? First and foremost,

acceptance or political issues in some parts

quality. Quality seed which delivers uniformity

of the world, including Europe, non-GM

be step changes in yield performance and the company will bring new traits to market. As well as producing hybrid varieties well suited to the UK grower, and providing the best agronomic

Who could have imagined, even a few years ago, a government interested not just in agriculture, but also in progressive farming?

implementing it on farm, either in the UK

outstripping overall inflation of 2.5%. Gone

or further afield.

are the days where the fall in food prices was a drag on inflation.

Another milestone of 2013 is the 150-year anniversary of Bayer. Starting out as a dye

The premise of this report is that the UK is

manufacturer, Bayer’s first crop protection

well placed in its ability to innovate in plant

product was an insecticide Antinnonin in 1892,

sciences and agriculture. There is also a

although perhaps its most iconic product was

belief that there are genuine economic benefits to be gained if innovation in this area is encouraged. By harnessing the activity of universities and research institutes,

aspirin, registered for the first time in 1899.

However, it is a testament to the innovation of the company that the brands that are most associated with Bayer today – Atlantis, the backbone of

In July of this year, the coalition government

combining this with the global reach of both

published its long-awaited Agricultural Technology

large and small companies and adding the

blackgrass control; Proline, the third generation

Strategy, probably the first plan of its type since the

help of some of the most innovative farmers

triazole fungicide; and best-selling SDHI

post-war push to produce enough food to finally

on the planet, the UK can be a driving

fungicide, Aviator – have all been introduced in

say goodbye to rationing. And it does not come

force for taking fundamental research and

the past 12 years.

nutrient use efficiency, as well as straight

of Bayer as a seed company might come as

management. In the medium term, there will

too soon – food inflation is running at 4.5%,

added-value traits such as drought tolerance,

But, in the UK and for much of Europe, the idea

for growers, which aids performance and

Bayer is well known for its agrochemistry in the UK, but not many farmers are aware it is also a leading global seeds business.

The company’s Dr Julian Little explains what lies ahead.

US; the result being new wheat varieties with

New wheat “varieties will have added value traits such as drought tolerance and nutrient use efficiency

”

Julian Little

wheat research is going on in parallel.

When it comes to innovation, producing things that farmers and growers can use in

Julian Little

the pursuit of safe, high-quality, affordable food, Bayer CropScience has been providing

advice on how to grow them successfully, Bayer

products for 150 years. There have been

will be using its expertise from its global business

difficult times in our ability to grow food in

to ensure that seed quality will be of the highest

the past; with an extra two billion people

standard to help maximise the performance of

on the planet in the next 30 years, the

the varieties that are being developed.

challenges have never been greater.

The introduction of new products to the market is always an occasion of note. It might be a new mode of action, or a new formulation improving a farmer’s ability to control a troublesome pest or disease; it might be for other reasons. What is key is the understanding that the purchase of a product from Bayer CropScience means a guaranteed reinvestment in agriculture: for each £10 a farmer spends on a product from an R&D company, at least £1 goes back into finding a new, improved product for the future. This contrasts sharply with generic purchases: for each £10 spent on a generic product, nothing goes back into fundamental research for new active ingredients.

And of course it is not just about bringing new innovations to the market; we also spend much time and effort keeping them available to farmers and growers, in the face of huge increases in regulatory requirements, especially in Europe. Take the case of neonicotinoid seed treatments such as Modesto and Poncho; despite our best efforts, we are seeing the loss of these key products in oilseed rape and maize, though we have secured seed treatments such as Deter in winter cereals. Despite our disbelief in the decision to ban such products in oilseed rape, we will make the necessary investment to produce the information that the European Commission needs so that we can re-introduce these products at the earliest opportunity.

Gleadell Agriculture

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GLEADELL UPDATES

FERTILISER IN FOCUS

Novel bioenergy service grows as industry expands As it enters its second year, Gleadell Bioenergy, a service for AD owners and contract maize growers, is evolving fast, reflecting industry developments and the prodigious growth of the AD plant network.

Since August 2012 the number of operational AD plants has increased from 73 to 113, with 100 more in the planning or build stages. The energy maize cropping area has more than tripled from about 6,000ha to 20,000ha, while information exchange and technology continues to

SPOTLIGHT ON SPRING SEEDS Spring cropping helps spread the risk Growers looking to spread both technical and financial risk might consider putting more of their farm into spring cropping this season.

One of the key reasons driving renewed

interest in this sector is the increasing problem of resistant blackgrass. It is now a major headache in many key arable areas and introducing spring crops into the rotation gives growers the chance to adopt numerous cultural and chemical control options before drilling the crop.

Other benefits include reduced input requirements and better conditions for the following crop,

perhaps through nitrogen fixing from legumes or from reduced pest and disease pressure after a break crop.

Spring cropping also enables growers to spread commodity risk and improve cash flow due to the reduction in time between applying inputs and combining. Better time management is another spin-off – spring crops help spread the harvest and farm workload.

Chris Guest, seed manager

develop dramatically.

The threat from wheat bulb fly?

Gleadell Bioenergy had a very busy first year advising growers on variety choice to suit soil types,

With more fallow land in the UK this season and root crops being quite slow to develop due to the early summer, the risk of wheat bulb fly attack could increase this season.

heat units and maturity and fertilisation, while maximising yields, lowering costs and reducing carbon footprint, this last area becoming an increasingly important issue in the media.

An early stance taken by

own political unrest, recognise that entering

GrowHow in May aiming to

Q4, granular urea is cheap compared with

make blue bag fertiliser

nitrates in Europe, which will help demand.

the first choice for UK

Buyers are starting to return, providing

farmers provided a good uptake of product throughout the June and July fertiliser period.

support for Middle East granular urea and

Null-Lox spring barley

this will spread to other areas. However, some factories in the Ukraine have shut

However, later-developing crops pushed

down completely as prices have fallen to

harvest backwards, delaying the finalising

around or below break-even.

As more AD plants take land to grow feed stocks,

of new-season cropping plans and any

the government is focused on ensuring crops are

further fertiliser purchasing decisions. This

grown sustainably. All energy crops may be scored

downturn in demand has been mirrored

for greenhouse gas emissions in the very near

in other agricultural economies, so rather

future. Using stabilisers such as Piadin not only

than buying more tonnes producers and

minimises losses through leaching but also reduces

distributors have been working through and

nitrous oxide emissions by up to 75%, bringing the

clearing elevated stocks.

GHG calculation well below the benchmark that may New maize varieties are being brought to the market

capacity. This and news of the Belarusian Potash Company breakup, both coming at

The big question is demand and when it

as breeders now push for maximum methane yield.

a time where demand has been low, has

will return in volume. India, which has been

Gleadell believes there is no ‘best’ variety but lots

forced most fertiliser prices downwards. We

putting off any tenders, will announce details

of good ones whose performance depends on soil

await some fresh impetus to surface to give

soon and is likely to set any floor in advance

type, field altitude, available heat units and irrigation

clear direction moving into Q4.

of North and South America returning to the

systems. All these factors should be considered

The start-up of urea exports from the

market. Europe has hardly started buying

when choosing the ideal variety.

– once we do see activity increase we may

Gleadell Bioenergy has an exclusive variety for

look back and recognise today as being a

the coming season. KWS Ricardinio (FAO 230) is

real ‘buy’ opportunity. We must be close to

a medium-maturity variety (four days earlier than

touching a floor – all fertilisers currently

Ronaldinio) with a 60t/ha + potential silage yield.

represent good value.

This will be a variety to look out for next spring.

significant. However, the fact that loading is restricted to just 1500t a day implies that less than 40,000t will be exported per month.

This is positive news for Egyptian producers who, despite being busy trying to fix their

Spring barley has been the real standout crop this season, once again showing its reliability and consistency within the farm rotation. The agronomic benefits from the Null-Lox types include faster establishment

Chapeau, a new variety, has been top of almost all our independent trials and looks certain to be the leading variety for next season and beyond. We have limited availability of this variety for harvest 2014.

Established varieties Cheerio, Cha Cha and Charmay have all once again had a good season and, looking further ahead, it is good to see an excellent set of varieties in the pipeline out-yielding the current standards.

soon be set.

We now have confirmation of more urea

new facility in Algeria in late September is

The Null-Lox varieties have once again had an excellent year, demonstrating their remarkable consistency across a range of soil types and across three very different seasons since they were first grown in the UK.

and earliness of harvest, sometimes 7-10 days ahead of conventional varieties.

Calum Findlay, fertiliser manager

Rob Buck, fertiliser trader

Spring peas Last spring we saw many new pea growers after poor autumn and winter weather took its toll on winter crops. Peas are an excellent choice with a range of varieties to match soil types, geographic location and premium markets.

is early to harvest and has excellent standing power (a very important trait) along with a solid agronomic package. Daytona outclasses all other current varieties for colour retention, securing good premiums for growers. It is consistent and reliable.

For late autumn-drilled crops or spring-sown crops in high-risk positions it could be worth using Austral Plus seed treatment. Wheat bulb flies lay their eggs into bare soil so crops sown behind fallow or crops like vining peas, sugar beet and potatoes are at the highest risk of attack from the larvae when they hatch between January and March.

Spring barley Odyssey from Limagrain looks to be the variety of the moment, accounting for most interest from the end-user/ consumer and farmers alike.

Being a non-glycosidic nitrile (non-GN) variety, Odyssey is suitable for both brewing and distilling. This and its good yield data mean the variety is sure to be popular.

Odyssey is provisionally approved by the Institute of Brewing and Distilling (IBD) and is attracting good demand, particularly from distillers.

Kabuki is the established marrowfat pea that continues to deliver on yield, agronomics and, most importantly, quality, ensuring growers maintain the headline contract price. Kabuki is the earliest pea to harvest and offers a very attractive gross margin opportunity.

Other varieties with high yield include

Among the large blues, Daytona is the market leader for quality and consistency on farm. Daytona

good quality data.

Sanette. This is awaiting IBD testing and could be a useful brewing variety.

Another to watch is KWS Irina, which boasts good yield figures along with

Gleadell Agriculture

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GLEADELL AROUND THE COUNTRY

5

… IN YORKSHIRE

YORKSHIRE OFFICE

1

3 Foxoak Park, Common Road, Dunnington, YORK YO19 5RZ

… IN THE MIDLANDS MIDLANDS OFFICE

T 01904 486790 F 01904 486791

62 High Street, St Martins, Stamford, Lincolnshire PE9 2LQ T 01780 758040 F 01780 758041

2

6

... AT IMMINGHAM

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… IN LINCOLNSHIRE

… IN THE NORTH-WEST NORTH-WEST OFFICE Suite 15, West Lancs Investment Centre, White Moss Business Park, Skelmersdale WN8 9TG

LINCOLNSHIRE OFFICE

5

T 01695 722725 F 01695 722074

2

Lindsey House, Hemswell Cliff, Gainsborough, Lincolnshire DN21 5TH

6

T 01427 421200 F 01427 421230

7

8

3

1

… AT AVONMOUTH

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3

8

4

… IN EAST ANGLIA AND at GREAT YARMOUTH

EAST ANGLIA OFFICE Beacon House, Turbine Way, Swaffham, Norfolk PE37 7H­T

4 … IN THE SOUTH

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SOUTHERN OFFICE The Old Dairy, East Farm, Codford St Mary, Warminster, Wiltshire BA12 0PG T 01985 851600 F 01985 851610

www.gleadell.co.uk

DISCLAIMER: Prices quoted are indicative only at the time of going to press and subject to location and quality. Gleadell Agriculture cannot accept liability arising from errors or omissions in this publication.

HEAD OFFICE Lindsey House, Hemswell Cliff, Gainsborough, Lincolnshire DN21 5TH

T 01427 421200 F 01427 421230

Gleadell Agriculture Limited

www.gleadell.co.uk