Cereals market outlook

February 2025

Key points

• Following an overall smaller cereal harvest in 2024, the UK has a greater reliance on imported grain in the 2024/25 marketing year
• As the UK is a net importer, domestic grain prices continue to track movement on global grain markets. Currently a global grain deficit is predicted, though demand is uncertain
• Total UK cereals demand for animal feed in 2024/25 is expected to decline, with a fall in the amount of grain fed on farm outweighing an increase in usage by compounders
• Total UK cereals demand for human and industrial consumption is expected to decline this season, with particularly sluggish usage by brewers, maltsters and distillers
• Looking ahead to harvest 2025, UK wheat production is due to recover somewhat − though it is not expected to rebound back to average levels

Global grain production for the 2024/25 season is expected to drop by 11.4 million tonnes (Mt) year-on-year, reaching 2,286 Mt (USDA). This reduction is largely due to a 17.6 Mt drop in maize production on the back of an anticipated smaller crop in the USA, following a bumper season in 2023/24. The forecast is still dependent on Brazil's maize crop, which could be affected by delays to the country’s soya bean harvest. This will be a key factor for markets in early 2025.

The drop in global maize production and stocks, combined with concerns over drought in Argentina, is a supportive factor for grain prices in the short term. Meanwhile, Black Sea exports have continued to decline, mainly due to export quotas and lower stocks.

While global wheat production is expected to climb slightly on the year in 2024/25 due to increases in Argentina and the USA, forecasts predict a smaller EU, Russian and Ukrainian crop. Tighter supplies in Europe could mean markets are more reactive in the longer term also.

Currently (February 2025), European wheat prices are still being underpinned by the weather challenges in top-producing countries and limited global maize stocks, even though global demand is sluggish due to the slowing economies of key importers.

UK

The extremely wet conditions throughout the winter drilling period, and into the spring, greatly impacted the size of the UK domestic harvest in 2024. The final Defra estimate for the 2024 UK wheat crop is 11.1 Mt, down by 20% both on the year and the five-year average. It is also the lowest since 2020, and the second lowest since at least the turn of the century.

Total barley production this season is up by 2% on the year at 7.1 Mt. Difficult conditions in the winter meant there was a considerable rise in spring cropping, with the spring barley area up by 19% on year earlier levels. UK oat production in 2024 is estimated by Defra at 986 Kt, up by 19% on the year, but still back slightly on the five-year average.

For wheat, there was a decline in area and yield, and the quality of the crop suffered from the extreme conditions. In AHDB’s Cereal Quality Survey published in November, data showed that 20% of UK Flour Millers Group 1 wheat samples met a typical bread-making specification in 2024. This is up from 2023 when just 13% met specification (largely due to increased fertiliser costs leading to lower protein), but well below 2022 when 33% of samples met specification. 

Moving ahead to harvest 2025, central and southern parts of England again experienced a particularly wet autumn this season; overall, though, the UK had better planting conditions than a year prior.

AHDB’s Early Bird Survey (EBS) of planting intentions, carried out in November, suggests that the total wheat area could see a yearly rise of 5% to 1.61 M ha. Meanwhile, the winter and spring barley areas were expected to fall by 1% and 13%, respectively, on the year. The UK oat area is expected to increase by 3% for harvest 2025.

AHDB’s November crop development report showed that despite the heavy rain in certain regions, winter crop conditions were better than expected. At the end of November, 44% of the GB wheat crop was in good or excellent condition, with 9% rated as poor or very poor.

At this point in the season, the big question is what to expect from the 2025 wheat crop. Combining the EBS-projected UK wheat area with an average yield over the last five years (2020–2024), the UK crop would reach 12.5 Mt. While this would be up by 12% on year earlier levels, it is still well below the five-year average of 13.9 Mt.

However, anecdotal reports suggest that a slightly higher area of wheat has been planted than reported in the EBS, which is a survey of planting intentions. This is likely due to concerns over the wet start to the autumn and doubts over whether winter plantings would be completed (after the survey had taken place). Because of this, we have looked at an alternative scenario too, adding an additional 5% onto the EBS area estimate.

The next few months, as spring drilling progresses and the winter crops develop, will be key for indicating what we can expect from yield. An average to maximum yield would depend on particularly favourable conditions.

Wheat imports have been high in 2024/25, largely due to a smaller domestic crop and competitive import prices. A large proportion of imports is high protein milling wheat. Full season imports for 2024/25 are currently forecast at 2.75 Mt (AHDB), up by 313 Kt from 2023/24.

Imports from July to December reached historically high levels at 1.70 Mt (HMRC). However, the pace of imports is likely to slow due to heavy front-loading of high-quality milling wheat.

Looking ahead to 2025/26, while we are expecting to start the next season with heavier-than-average carry-in stocks, imports will very much depend on the development of our domestic crop over the coming months, as well as our price relationship to the continent.

The UK wheat supply and demand balance is 16% tighter than in 2023/24. Exports are forecast at 175 Kt, down by 32% from last season, with a slight pick-up expected towards the end of the marketing year. So far, 70.2 Kt (HMRC) of wheat has been exported from July to December 2024, leaving 104.8 Kt to be shipped from January to June. Meeting the forecast will depend on how competitively priced UK wheat is on the global market, but minimal exports are expected to continue into next season.

For barley, exports are forecast at 500 Kt, down by 36% from last season. Exports from July to December totalled 257.2 Kt, a 37% drop from last year (HMRC). While the export pace should remain steady, a slight increase is expected towards the end of the season. Much like wheat, the size of the 2025 barley crop remains key to new season exports, with end-of-season stocks 330 Kt higher on the year at 1.55 Mt (AHDB).

Oat exports have been slow this season despite a heavier supply and demand balance, following higher production. UK oat exports are forecast at 50 Kt, down by 57% year-on-year, and the lowest since 2020/21. Exports are expected to accelerate in the second half of the season. A larger planted area for 2025 could boost supply and lead to stronger exports in 2025/26, provided the UK remains competitive and that there is demand for UK oats on the continent.

Maize imports are forecast at 2.68 Mt, up by 1% from last season. The strong import pace is driven by its relative price and availability, and concerns over domestic grain supplies' RED II status. However, with maize now less price-competitive, the pace is expected to slow during the latter part of the marketing year.

Demand

Animal feed

Compound animal feed production is expected to rise for a second consecutive season, following a considerable decline in 2022/23. This increase is driven largely by a rise in cattle feed production and, to a lesser extent, strong demand for ewe feed at the start of the season.

Firm cereal inclusions (due to the relative price of proteins) are another factor driving the increase in cereals demand by compounders. An increase in cattle feed demand is largely due to supported beef and milk prices, with forage also variable across the UK. However, pig and poultry feed production is forecast to decline. The amount of grain fed on farm this season is also expected to decline, and this outweighs the increase in usage by compounders.

As such, total cereals demand for animal feed in 2024/25 is estimated to fall. It is worth noting that other input costs appear to have stabilised somewhat, though current increases in energy prices could impact the livestock sector later this season.  

Imported maize is currently (February 2025) featuring more heavily in rations due to its relative price earlier in the season. However, with maize prices now less competitive, the proportion of maize used in rations is expected to ease during the latter part of the marketing year. 

A slightly higher proportion of barley is also estimated to be included in rations due to its relative availability and price to wheat. The discount of the UK average ex-farm feed barley spot price to feed wheat sat at £25.10/t in January 2025, compared to £24.30/t in January 2024 and £15.90/t in 2023. Because of this discount, barley is expected to remain at current levels throughout the rest of the season. Wheat usage is expected to remain at historically low levels in rations, though they could pick up slightly towards the end of the season when maize drops out.

Milling

On top of a much smaller domestic crop this season (11.15 Mt), protein levels were significantly lower than average and were at the lowest level since 2014. On the other hand, specific weights and Hagberg Falling Number requirements were generally met or exceeded in milling wheat samples, and overall reports suggest that the 2024 milling crop is functional. However, due to the smaller crop and competitive price of imports, millers are expected to use a greater proportion of imported wheat this marketing year.

While flour production by UK millers is expected to marginally decline this season, slightly lower extraction rates mean wheat usage in the sector is forecast to rise.

Human and industrial usage for oats is forecast down marginally (1%) on the year. Despite extra capacity coming online, the impact on demand has been negligible. Anecdotal reports suggest global demand for oat products is poor, and demand for oats is expected to stay sluggish for the remainder of the season. 

Biofuels

Wheat usage by the bioethanol industry is expected to decline from 2023/24 levels. Neither UK bioethanol plant is expected to be running at full capacity, partly due to competitively priced ethanol imports. Another factor driving the decline is a question mark over the resolution of the status of domestic feed wheat under the renewable energy directive (RED II).

Concerns over the UK’s RED II status, as well as its competitive price earlier in the season, has led to higher inclusions of maize in bioethanol production this season compared to last. Even with maize pricing less competitively now than earlier in the season − with a lot of the grain bought forward and concern over the use of domestic wheat − usage is expected to remain firm throughout the full season.

Brewers, maltsters and distillers (BMD)

Total cereals usage by the BMD sector is forecast to decline this season on year earlier levels. This is due to a downturn in demand, particularly on the brewing side. This is partly driven by the increase in the cost of living, as well as the longer-term trend of fewer younger people choosing to consume alcohol. Maintenance is also being carried out across a few key sites within the industry, contributing to steady production.

However, with slightly less sluggish distilling demand, and further growth in the starch industry, wheat usage by this sector is expected to climb year-on-year.

What could this outlook mean for UK prices?

Overall steadier demand for cereals in the UK this year contributes to a historically heavy exportable surplus of domestic grain. This, alongside a heavier dependence on imports, suggests UK prices will continue to track global price movement. In the short term, the slowing of Black Sea exports and weather concerns in both South America and Russia are keeping prices supported for now.

In the longer term, however, the current expectation is still for abundant maize supplies from both South America and the USA, which could limit price rises in the wider grains complex moving forward.

New season plantings are also a key watchpoint at the moment both in the UK and globally. In the UK, winter drilling conditions were greatly varied, alternating between very wet and relatively long dry periods, before turning wet at the end of autumn again. As a result, cereal crop conditions are also variable. Because of this, and due to the large exportable surplus of wheat forecast for the end of this season, new crop domestic feed wheat futures (Nov-25) have consistently been trading at a premium to old crop prices since the end of November 2024.

Consumption trends

The level of meals eaten in the home during 2024 was 3% higher compared to 2019 but 2% behind when compared to the previous year. There were slightly higher levels of eating out during 2024. However, these levels remain behind that compared to pre-Covid years (Kantar Usage, 52 w/e 4 August 2024).

For 2025 we expect a level of economic uncertainty, as detailed in our economic outlook. We expect business confidence will remain low, and this will likely feed down to shoppers. After multiple years of overcoming challenges and reconsidering how to spend their money, we expect any changes in shopping behaviour to be gradual.

In-home breakfast occasions are likely to face increased challenges from the on-the-go format which is attracting interest from supermarkets and foodservice. While half of all breakfast occasions still feature cereals, it still faces volumes challenges: currently down 1.7% vs the previous year (Kantar Usage 52 w/e 29 December 2024).

The slight rise during 2023 for in-home baking did not continue into 2024, and the category has experienced a long-term decline. The current levels are 10% lower than the previous year. These dips have occurred in both savoury and sweet baking occasions (Kantar Usage 52 w/e 1 September 2024).

Baking is still very much on consumers’ radar, with 58% of consumers claiming to have baked in the last six months. Of those, 20% say they plan to bake more often in the next six months. Further encouragement for the longer term is that interest in baking more often peaks at 36% for the 18−24 age group (YouGov/AHDB Pulse, January 2025). Tapping into the needs of this younger Gen Z group and considering how they source their information on food could benefit the category.

Volume sales of flour rose by 0.6% during 2024 compared to the previous year (Kantar 52 w/e 29 December 2024). There are signs that consumers are using these purchases across fewer meal occasions, as flour occasions are down by 11%. Evening meals and lunch remain the heartland of flour consumption, but breakfast has gained share in the last five years (Kantar Usage, 52 w/e 1 September 2024).

Biscuit volumes were slightly behind for 2024 year-on-year (Kantar, 52 w/e 29 December 2024), with Kantar reporting that consumer desire to treat themselves has benefited branded biscuits where volume growth has outstripped that of own-label, helped in part by some consumers switching into the category from chocolate confectionery. (The Grocer Focus on Biscuits September 2024 − Kantar 52 w/e 7 July 2024). 

Bread volumes in 2024 were -2% down year-on-year, with the traditional ambient loaf coming under increased pressure from sandwich alternatives like pittas/wraps. There has been strong volume growth in meal accompaniments like naans and flatbreads, where consumers are exploring a range of cuisines. (The Grocer Focus on Bread & Baked Goods May 2024  − Kantar 52 w/e 17 March 2024). 

Retail volume sales of beer and lager remained flat during 2024 following challenging declines during 2023. (Kantar 52 w/e 29 December 2024). Higher prices have meant volume growth has been hard in the backdrop of consumers watching their finances.

There has been 4.6% volume growth for non-alcoholic beer during 2024 on the back of rises in 2023. Mintel reported that moderation of alcohol consumption has grown since 2022 and is set to further increase in the near future. Low-/no-alcohol beers have enjoyed strong sales growth in recent years, but their share of overall beer sales remains small. The category will need to address various barriers to uptake, such as views of low-/no-alcohol beers as overpriced, held by 74% of beer drinkers. (Mintel Beer Report January 2025).

Fewer sporting events during 2025 are likely to impact both on- and off-trade alcohol sales.

Spirits volumes sales continue to dip, with affordability a key consideration for consumers for which finances may remain tight. The spirits category has seen continued price rises, with the average price for consumers of £20.07 per litre (Kantar 52 w/e 29 December 2024). Premium ready-to-drink launches over the last few years have also impacted the spirits category. Canned cocktails may well sell at a higher price per litre, but their lower unit price could be a cost-effective way for consumers to try out and enjoy a range of tastes/flavours.

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