Due to Covid-19 issues, I missed my last slot for The Gleaner article earlier this month so have a bigger time gap to cover and catch up on the world of commodity markets.

Actually, not much has changed, with many supply problems caused by the ongoing war in the Ukraine – which was supposed to have been, according to Russia, a three-day war and which is now into the third month with no sign of an ending in sight.

Price volatility has continued, but this is also due to crop conditions in the US which are suffering badly from drought and will result in a reduced tonnage of various commodities over the next year.

This caused Liffee feed wheat futures prices to hit record levels over the past month and if we look at the futures prices since the end of March until now May, 2022, old crop wheat has risen from £310 to £322 per tonne; November, 2022, new crop has risen from £262.50 up to £287.55 and was as high as £293 per tonne earlier in the month,.

Most other future contract months, even as far ahead as March, 2024, are up by around £25 per tonne on average.

The Chicago Board of Trade futures were also higher triggered by the latest US crop condition report. This has seen the overall situation worse than trade expectations.

US winter wheat has fallen by two points to just 30% 'good to excellent', which compares with 53% at this time last year and their crop condition index has only been worse in one of the past 35 years at this stage of development.

There are prospects of some rain arriving in some of the drier areas soon, but this will be essential to help lift yield prospects. There is still plenty of growing time left until harvest and the total US wheat area is up 1% on last year at 19.16m ha, but still represents the fifth lowest US wheat area since 1919.

However, fulfilling US crop potential will be key to meeting global demand, especially with concerns around the potential availability next season from the Black Sea region.

In the EU, 2022 wheat production has been revised downwards to 126.7m tonnes, which is 3.3m tonnes down on the 2021 crop and the available exportable surplus is reckoned to be 30.3m tonnes, which will be 1.1m tonnes down on 2021-22.

Russia is forecasting a 2022 wheat crop of 87.4m tonnes which would be a record, but that appears to be an optimistic total. It is looking to export 41m tonnes, which again seems high – it will all depend on how exports proceed given the economic sanctions in place and other high insurance costs for ships using Russian waterways.

There has, however, been some limited Russian wheat exports – despite sanctions – to Egypt last week, which was the first tender since the start of the war in Ukraine.

Wheat exports are currently very limited for Russia, but Ukrainian exporters are willing to take more risk in an attempt to move old crop prior to harvest 2022 and if this route becomes more established and successful, we may see some easing in old crop prices if global availability increases.

The Ukrainian storage capacity will be insufficient for this year’s harvest, even with a reduced tonnage and exports are currently limited to rail movement to clear the backlog.

The Ukrainian agricultural ministry announced this week that spring sowing is now 20%, complete with 2.5m ha sown to date. However, they said that the total spring area may reduce by 20% due to the war and this reduction may be as much as 70% in areas experiencing intense conflict.

Data experts have been looking at the 2022-23 world supply and demand for wheat and have cut production down to 780m tonnes due to the expected lower Ukrainian wheat output, which is estimated at 19.4m tonnes for 2022, compared to 33m tonnes in 2021.

This loss may be offset by the higher projected Russian tonnage and Canada is looking to increase its wheat total production from 21.7m tonnes in 2021 up to 31.6m tonnes in 2022, but even with these figures, world ending wheat stocks will still fall by 5m tonnes to 277m tonnes.

World maize production is forecast to fall by 13m tonnes in 2022-23 to a total of 1.197bn tonnes due mainly to Ukraine producing 18.6m tonnes down from its record 41.8m tonnes in 2021 and the US maize crop is forecast down by 7.3m tonnes on the year to 376.6m tonnes. This would see world maize stocks falling on the year by 21m tonnes.

These maize forecasts prompted China to turn to the US to buy another 1m tonnes of maize following the similar tonnage bought recently as there are also concerns for China’s domestic crop potential, with Covid-19 lockdowns preventing farmers from planting in key production regions.

Strong Chinese demand, combined with added crushing demand, is supporting the soyabean market – the US reported 132,000 tonnes of soya sales to China and later last week a further 838,000 tonnes of old and new crop sales to China and other destinations were reported as well.

UK ex-farm oilseed rape prices have been as high as £900 per tonne last week due to continued shortness in vegetable oil markets across the world and oilseed rape delivered Erith, for August, was quoted last week at £707.50 per tonne.

There are also concerns for the planting and development of the Canadian canola (OSR) crop due to dry conditions in some parts of the country and also snow, coupled with freezing conditions in other parts.

Canada was originally looking to crop 20m tonnes, but this is now unlikely and with the Ukrainian sunflower planting progress well behind schedule at 0.6m ha, compared 1.2m ha at this time last year, vegetable oil supplies will be extremely tight.

There have also been problems in Argentina affecting soya production. There the harvest is put at 19% complete, compared to the 25% average and there are diesel shortages as well as truck drivers going on strike, which reduced deliveries to crushers and delivery to export outlets.

Feed barley prices are now at parity to feed wheat in the south and east of England and animal feed compounders will use wheat rather than barley for their rations as wheat has a better nutritional value.

The old crop feed barley market has been relatively quiet recently and most of the market activity has been around new crop, with surging wheat prices pulling feed barley prices higher.

Barley prices in Europe reached a high due to ongoing weather concerns for the growing crops in North and South America and the prospect that India may not have as good a harvest as expected.

Fertiliser prices remain high but have steadied, as demand has remained low. Prices are still supported by an anticipated Indian tender for urea because its stocks are very low.

It would appear that many UK arable farmers are largely covered for fertiliser requirements for the current season, but the big decision to be made is should yields be maximised with the full application rate of fertiliser at current wheat prices? This is a decision that has to be made now as the warmer growing season approaches.

Farmers in England are experiencing probably the most rapid period of change since the accession to the EU back in 1973 with the removal of direct payments and the phasing in of the Environmental Land Management Scheme.

They will need to ensure they can benefit financially from the environmentally positive actions that they take. The Sustainable Farming Incentive – part of the ELMS – is currently being rolled out in England and it will be interesting to look over the Border to see how farmers are financially rewarded for carrying out actions that benefit the environment.