•  UK feed wheat futures (May-22) closed up £3.90/t on the day, to settle at £311.00/t. Nov-22 gained £3.05/t, closing at £267.00/t.
• May-22 Paris rapeseed futures closed at €926.50/t yesterday, down €68.00/t. This was after trading as high as €1021.75/t earlier in the day.

UK Cereal Supply and Demand Estimates

AHDB has released its latest 2021/22 UK cereal supply and demand estimates. This includes estimates for wheat, barley, maize and oats. To no surprise, the current volatility in Ukraine has impacted forecasted trade for all commodities, while rising feed costs is impacting animal feed demand.

Below is a roundup of the major changes in the latest balance sheet release for all cereals.

Wheat

While the supply and demand balance is revised up from previous estimates to 2.164Mt on the back of increased imports and a reduction in bioethanol demand, it remains the third tightest on record. This estimate is 51% higher than last season. However, exports are forecast to more than double on the year, at 500Kt. UK wheat has priced very competitively of late due to the price difference between Paris and UK futures. From July to January, 261Kt of wheat was exported, with reports of a strong export pace since.

Closing stocks are forecast at 1.664Kt and with an operating stock requirement of 1.5Mt, this would leave just 164Kt of free stock to be carried over into next season. The latest forecasts confirm what is already known, the wheat balance this season is on a knife edge.

There are a few key watch points which may affect UK wheat supply and demand going forward:

• Demand by the bioethanol sector
• Spring weather conditions for turning out livestock
• The impact of the war in Ukraine on trade

Barley

Demand for barley by the brewing, malting and distilling (BMD) sector is expected to return to near pre-pandemic levels this season. While remaining down on the year, demand for barley in animal feed is expected to increase from previous estimates on the back of slightly higher fed on farm usage.

With significantly lower availability year-on-year, and demand not retracting to the same extent (due to higher BMD usage), the balance of barley supply and demand is forecast at 1.801Mt. If realised, this would be the tightest balance since 2012/13. Similar to wheat, we have seen UK barley pricing very competitively for export, leading to full exports estimated at 750Kt. End-season stocks are now forecast at 1.051Mt. With an operating stock requirement of 800Kt, the amount of free stock left to be carried into next season is estimated at 251Kt.

Maize

Maize has fallen out of favour this season with animal feed producers due to its relative price compared with wheat. This was accelerated at the end of February, after Russia invaded Ukraine. In the latest estimates, Maize imports are forecast 31% lower than 2020/21, at just under 2.0Mt. . Domestic consumption is also expected to fall on the year driven by higher prices. With Ukraine taken out of the equation, the global supply of maize is very tight. However, if tensions subside in Ukraine, as well as a suspension on the US maize tariff as of 1 June, we could see more maize available.

Oats

As reported earlier in the season, the 2021 oat crop hit record levels (1.1Mt). However, some question whether this figure may be too high? For the purposes of the balance sheet, the official Defra production figure is used. Given the large availability of oats this season and the relatively inelastic demand domestically for the grain (there is only so much that can be fed on farm), oat exports are now forecast to reach 100Kt. End-season stocks are currently forecast at 175Kt, the highest level on records going back to 1999.

BPS data can be found here: https://www.gov.uk/government/statistics/farming-statistics-crop-areas-in-england-sourced-from-basic-payment-scheme-data-compared-to-the-june-survey-of-agriculture-2015-2021

UK cereals supply and demand estimates here: https://ahdb.org.uk/cereals-oilseeds/uk-cereals-supply-demand-balance-sheets