The AHDB has delayed its release of the 2020/21 cereals balance sheet projections, due to concerns over the accuracy of Defra’s on-farm data collection. The forecasts are usually published to coincide with the annual Grain Market Outlook conference, which took place virtually this week, but will be at least a fortnight late.

The recent reduction of the 2019/20 cereals ending stock from 5.08 million tonnes to 4.13m tonnes – a 955,000 tonne cut – was greeted with some scepticism by traders. The weakness appears to be in Defra’s collection of cereals production and fed-on farm data – while the traded and import/export volumes are measured, the farm data relies on survey responses.

AHDB cereals analyst David Eudall says the board’s Market Intelligence unit is discussing the issue with Defra in trying to resolve the residual stocks disparity. It is also addressing some concern over the Defra 2020 cereals and oilseeds estimates – some traders fear the wheat figure of 10.1m tonnes is too high, and could be some 200,000 tonnes less, due to the significant regional weather variations experienced in the 2019/20 growing season.

The AHDB concedes that the figures are based on a smaller sample size than in previous years due to the Covid-19 restrictions. Also, the 2020 Northern Ireland and Wales production estimates are not yet available and have been carried over from 2019 – when this year’s estimates are included, the totals could go down. Mr Eudall stressed that the harvest figures are provisional, and the final estimates due in December could be different.

Whatever the final figure, AHDB analyst Helen Plant told the online conference that the UK’s wheat and oilseed rape production for 2020 is clearly down and will require imports to make up the shortfall – with maize likely to feature. Meanwhile, there is a large barley crop, with record production in Scotland. This has severely depressed malting barley values while feed barley inclusions in compound rations are expected to return to 1990s levels.

There are several other factors affecting cereals markets apart from supply and demand fundamentals. A prolonged further period of Covid-19 restrictions would affect food service demand – malting barley demand dropped sharply in the spring and has yet to fully recover with only 80% of outlets reopened.

The demand for wheat for bioethanol fuel and starch manufacture also fell due to the pandemic – with Roquette now consulting over the closure of its 250,000-tonne starch factory intake at Corby. The spring lockdown saw flour demand move from food service to home baking, which saw some logistical problems in servicing the small bagged market – but the lower quality 2020 milling wheat harvest would need more imports if demand sustains.

Meanwhile the end of the EU withdrawal period draws near, with no EU trade deal yet agreed. While quality wheats can move into the UK tariff-free from the US and Canada, subject to quality specifications, leaving the EU with no-deal means a €93/tonne tariff on barley exports to Europe. Processed cereal products such as malt and flour would also be subject to EU tariffs.

And currency movements will also be influential, warned Ms Plant – especially with volatile political factors such as the UK:EU trade negotiations and the US presidential election. Sterling devaluations support UK wheat values.

Looking ahead to harvest 2021, a rebound in the winter wheat area is expected, subject to the October weather with wet conditions already delaying progress in some areas, advised Ms Plant. There is a large fallowed area to drill, plus the end of the EU three crop rule restriction. Anecdotally, the oilseed rape area has fallen yet again, and the spring barley area is likely to fall from the previous year’s high.