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UK crop area losses to wetness 'even worse than thought'

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The problems posed by historic wetness to UK farmers is even worse than had been thought, Origin Enterprises said, raising to 10% its forecast for area that will not get seeded, in a caution which sent its shares to a 10-year low.

 

The agronomy-to-farm retail group raised to 40%, from 25%, its estimate for the year-on-year decline in UK winter crop sowings, “following further heavy and sustained rainfall from December to February to-date”.

 

While Origin had in November expected nearly all of this lost land to be planted in the spring, forecasting then a 2% year-on-year decline in total UK seedings, it said “with the extent of the shortfall in winter cropping in addition to the poor establishment of already sown crops” the drop would now hit 10%.

 

UK arable area as of 2019 totalled 4.67m hectares, excluding 224,000 hectares of fallow land, according to official data.

 

Shares tumble

For Origin itself, the lost area, and the even greater proportion in sowings programmes of spring crops which require fewer inputs, meant its operating profit and adjusted earnings per share for the year to the end of July “will now be significantly below the current range of analysts’ estimates”.

 

Shares in the Irish-based company plunged 8.1% to E2.955 in early deals in Dublin, their lowest since October 2010, before recovering some ground to stand at E3.00 in late morning trading, down 6.7% on the day.

 

Analysts at Dublin-based Davy Stockbrokers lowered by about 20% their forecasts for Origin’s full-year operating profit and earnings per share.

 

Survey findings

The scenario unveiled by Origin, which owns the Agrii agronomic chain, appears even worse than that suggested by a much-watched annual survey by researchers at the UK’s Andersons Centre, which last week estimated at 1.50m hectares the country’s sowings of winter wheat for the 2020 harvest.

 

That figure, while down 130,000 hectares from the centre’s November estimate, represents a decline of 17% year on year.

 

Indeed, taken together, sowings of the three key winter crops – barley, rapeseed and wheat – totalled 2.21m hectares on Andersons Centre estimates, a drop of 21% year on year.

 

The survey also showed that spring sowings would make up for nearly lost winter area, thanks largely to a hike of 47% to 1.04m hectares in spring barley plantings, seeing total crop seedings down by 2.4% at 4.54m hectares.

 

Industry group Coceral last week forecast total UK grains area for the 2020 harvest (excluding the likes of rapeseed and beans) at 3.19m hectares – up 14,000 hectares year on year.

 

‘Long way from 2012’

However, the extent of the challenge posed by continuing rains is prompting many UK farmers already to curb spring sowings intentions, with James Bolesworth at CRM AgriCommodities saying that the conditions were prompting growers to be “more imaginative” over their options.

 

“Their attitude is to thinking more outside the box and do something a little different,” he said, noting aims such as boosting soil health, with some farmers also said to be planning herbicide programmes against persistent weeds such as black grass.

 

One deterrent to taking wheat appeared “something of a gamble at this stage” on spring sowings was the relatively strong prospects for crops in many other countries.

 

“We are a long way in the scenario compared with that after 2012,” when the US suffered a drought-devastated harvest, boosting prices for the last sowing seasons when UK plantings were significantly hampered by persistent rains.

 

Official data earlier this week showed improvement in winter wheat condition month on month and year on year in most reporting US states, while in the former Soviet Union, a mild winter is spurring ideas of strong harvests.

 

Agritel said on Wednesday that “climatic conditions are still very favourable in the Black Sea basin, which should perhaps lead to a new record wheat harvest in Russia”.

 

North-south French divide

This time “we have much more of a UK-centred problem”, Mr Bolesworth said.

 

According to Origin Enterprises, UK “autumn/winter rainfall has been at its highest level in 30 years, with more than double the number of continuous days rainfall compared to the prior year and the fifth wettest on record”.

 

Similar conditions have been seen in some northern parts of France and Germany, the European Union’s first- and second-ranked grain growing countries respectively.

 

Data from FranceAgriMer show the French winter wheat crop, which is centred on more northerly parts of the country, at just 65% rated “good” or “excellent”, the lowest for the time of year on data going back to 2012.

 

By contrast, sowings of spring barley, which is grown largely in southern areas, have got off to a decent start, with 20% seeded so far, an unusually fast pace, if slightly behind that recorded in 2019.

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