So far this month we have had dull, damp, windy weather which has carried on from January when we had 63.2mm or 2.5 inches of rain here in the Borders.

We have had a mild winter compared to some years and for the first time, the world has experienced a full year of warming above the 1.5C target limit set out in the Paris climate change agreement. The global mean temperature for the period from February 2023 to the end of last month is the highest on record at 1.52C above the 1850-1900 pre-industrial average and 0.64C above the 1991-2020 average.

The EL Nino weather phenomenon is thought to be partly to blame for the recent high temperatures and it is expected that global temperatures should sink below 1.5C when the El Nino weather stops, but predictions are for a transition back to La Nina around July to September.

This weather occurred between 2020 to 2023 when Australia’s grain production grew to record levels but saw poor yields in South America.

El Nino and La Nina weather patterns affect other parts of the globe as well as causing high sea temperatures causing Asia, India, and Australia to be wetter while the US will be drier.

All these factors have the potential to drive global grain and oilseeds markets.

Wheat

Due to the poor weather here in the UK, the final estimate from Defra for the 2023 wheat harvest is 14mt which is 10% down from 2022 and the lowest since 2020 – and for 2024, the UK wheat area could fall 3% year on year to around 1.66m ha with the winter barley down by 7%.

Slow demand and continued wheat exports from the Black Sea have seen wheat futures prices drop by £25 since the end of 2023.

Old crop liffe feed wheat futures for May 2024 are at a contract low of £169.40 which is down £10/t from two weeks ago. November 2024 new crop wheat futures stand at £188.60/t which is £7 down on two weeks ago.

This means that there is a carry of £19/t between the old and new crop futures prices so again, if space and finance allows, it would be a consideration to sell wheat later in the year. The falling prices could continue as Russia is forecasting an increased grain area for 2024, up by 300,000 ha to 84.5m ha.

Recently the USDA published the US wheat planting figures which are 2.3m acres down on last year at 34.43m acres but they expect that higher yields will make up the yield deficit from last year.

US wheat export figures currently stand at 11.274mt, which is just over 57% of the estimated total for the year but is 18% down compared to last year.

Ukraine wheat exports continue to increase and in January were over 5m tonnes which puts them ahead of Russia. They are now nearly back to levels seen before the Russia-Ukraine war started. Russian grain exports are estimated at 4.6m tonnes of which 3.6m tonnes is wheat.

Despite the drop in wheat prices, the UK remains uncompetitive to export any of its wheat and is likely to see a record low export total this season. Even in 2020, when the UK wheat crop reached only 9m tonnes, UK wheat exports reached 200,000t. To date this season, the UK has exported less than 130,000t.

With the current market situation, ex-farm feed wheat would need to fall to £150/t to generate export sales. At the end of last year, £180/t was achievable and for those farmers producing bread-making wheat, they can achieve a premium somewhere over £70/t.

The EU revised their 2023 wheat production estimate recently up to 125.9m tonnes and exports remain unchanged at 31m tonnes. This puts year-end stocks at 19.1m tonnes and the UK is looking at over 3m tonnes end stocks following poor exports while the US end stocks are forecast up by 2m tonnes to 17.62mt.

Barley

Total UK barley output is down 6% year on year to 7mt due to a fall in spring barley yields. Markets have been quiet following stronger ex-farm sales in recent months and feed prices have now eased back to £140-£150 depending on location.

Barley exports are forecast for this season at around 700,000t, which would be 38% down from last season, and currently exports total 329,000t which is down 31% from the same period last year.

There has been some export demand to Ireland and Spain but little domestic demand even though barley is trading at a £25/t discount to feed wheat on old and new crop compared to £16/t a year ago – so still price competitive for animal feed rations.

There has been some spring barley planting in areas with less rain and due to the wet autumn, more spring barley is expected to be grown this year which could bring pressure on prices with larger supplies of both feed and malting barley available.

Oats

The UK average ex-farm milling oat price reached a 19-month high last month at £252/t which is up 14.4% for the same month last year while the premium of milling oats over feed oats for January reached £76.70, the highest recorded in at least 10 years.

The feed oat discount to feed wheat is also reducing and there is now a firm premium over feed barley. The total availability of oats for this season was estimated at 995,000t which is 16% down on last year. Consumption of oats was forecast up 3% to 507,000t and oat exports have been stronger than expected, given the tight supply situation, and are currently forecast at 100,000t, down 42% on last year but in line with the five-year average.

Oat supplies are expected to increase due to a larger intended planted area for 2024 compared to this year where oat production was estimated at 830,000t, which is down 18% year-on-year.

Oat exports currently total 57,800t with a season forecast of 100,000t and this would leave the 2023-24 oat ending stocks at the lowest level since 2012-13.

Oilseeds

Soybean futures have been trading at a seven-month low this past week as production for 2023-24 is forecast to account for 60% of global oilseed production, although with a reduced supply of rapeseed on the continent for harvest 2024 this could provide some support for rapeseed in relation to other oilseeds.

Last year, UK oilseed rape planted area grew by 7.4% year on year as high oilseed prices encouraged farmers to increase their production. Problems after planting such as disease and poor weather saw UK yields average 3.1t/ha for 2023, down 17% on the year. Oilseed rape prices have fallen sharply and recently delivered prices were over £200 lower than the peak in 2022.

The UK OSR area for harvest 2024 is put at 317,000ha which is down 19% from last year, the lowest since 2021. From November 2023, the UK imported 361,500t of rapeseed, which is down 11% from the same period in 2022.

It is forecast that the UK requirement for imports will continue to be strong in the second half of the year due to strong crushing demand with expected total imports around last year’s level at 725,000t.

In the past 12 months, 2024 rapeseed prices have come down by over 20% which is partly due to cheaper Ukrainian oilseed coming into the European market.