No one knows what 2017 holds in store for growers, but the die is cast once the acres go into the ground. From what we can judge, it looks like growers are putting their faith in the old reliables, with little change in crop makeup to reflect the challenging market circumstances.

Everyone knows that price is under pressure and that it has been for the past four years at this point. We would do well to remember that this is a consequence of oversupply and, for the moment at least, acres feed the expectation of high output again this year.

We now appear to have a mix of crop potential in the ground. Winter crops are generally in good condition but I saw a lot of winter wheat with poor headlands and poor areas across fields in the past week or two. These were probably later-sown but yields will be affected.

The bigger concern is spring crops. Many later-sown crops were planted into seedbeds that were a bit cloddy and germination and establishment are now a problem. This will mean uneven crops and unevenly established and delayed germination areas are also much more subject to BYDV infection, thus hitting yield and quality. And the quality implication could be very serious in these fields for malting barley. All spring crops could do with some rain at this point.

So, given a number of variables, the outcome from the Irish grain harvest is uncertain. There have been problems in recent times in other parts of the world that added some excitement into flagging grain markets but there is still no news that would add optimism to harvest price outlook. Basically, we have significant surplus and it will take a big production deficit to generate a level of supply fear to drive price increases.

Price sentiment

Could one suggest that there is little chance of any improved price prospect for 2017? Of course one could, but there is still as much chance of being wrong as right. Four record harvests in a row is already unique so perhaps a fifth could be tagged on. I would have lost money on this bet for the past two years, but the four big harvests in a row are quite real.

This record output has been helped to some degree by the increasing global planted area, which has risen by an estimated 180m acres in the past decade. But this was accompanied by higher than normal yield levels which have contributed significantly to the record output.

The global grain sector rightly asks if plant breeders have actually succeeded in weatherproofing modern varieties. This would appear to have been a factor in recent years. There may be something in this as there were many early reports of potential problems in the global crop in recent years but output was not affected.

Price jitters

So will 2017 be any different? As of now there is little to indicate any improvement. The current rise in futures prices, especially for wheat, is driven by futures rather than physical prices. Funds are being invested actively in grain following the problems with snow on US wheat crops and ongoing concerns about potential drought in parts of mainland and central Europe. But as of now few believe that there will actually be a shortage or even a substantial reduction in wheat production globally and stock levels are high. Futures prices have already slipped back.

Maize production could be blamed for the current difficulties as output has expanded substantially in recent years.

Maize is the major feed grain and it and other feed grains have increased from about 800m tonnes in 1995 to over 1,300m tonnes last year. Maize supply and price is challenging markets for feed wheat and barley and this is further adding to market difficulties. But stock levels are not massive and this is the product that buyers appear to want.

Stocks

As for 2017, my gut feeling is that we are less likely to see another record but it could still be a good output year globally.

Large stocks mean that small output reductions can go unnoticed. With global production now over 2.1bn tonnes and stocks at over 500m tonnes, the market can be relatively relaxed about supply.

A 10% reduction output would reduce production by 210m tonnes and the market would likely try to ride that with only a modest rise in prices. A 15% output reduction would take 315m tonnes out of the equation. That would change things dramatically because close to 200m tonnes of the global stock is likely to be in countries from which it will not be exported. Demand remains an important element in the supply-price relationship but high prices would also act to decrease demand.