Over the last four weeks, the weather has changed dramatically and following months of drier weather than normal where we were looking at water shortages and hosepipe bans, suddenly we find the fields flooded and roads closed because of excessive rain and now we are being warned of very cold weather and snow forecast.

According to my local weather guru, John Aitchison, from Lochton, near Coldstream, we have had 80.2mm of rain in November, which I suspect is a lot less than others where I heard of 100mm falling in one weekend in several areas last month, but Lochton is quoted as having 501mm, or 19.7 inches of rain for the 11 months of the year to date.

The crops do not appear to have suffered from the recent wet spell and a cold seasonal spell will do no harm in the run up to Christmas and help to kill off some of the bugs and pests that have survived so far during this past year where we have experienced some record temperatures.

With harvest this year being earlier than normal this allowed autumn planting to start earlier as well and due to the dry and mild weather crops have established well and for 2023 wheat availability is forecast to rise by 8% from this year to 18.735m tonnes due to a rise in production and carry-in stocks.

On the back of higher-than-average yields, UK wheat production for 2022 is provisionally forecast at 15.664m tonnes which would be 12% higher than in 2021. As a result, due to a larger domestic crop this year this will result in full season imports likely to be 39% lower on the year at 1.225m tonnes.

Total domestic consumption of wheat this season is forecast to increase by 2% from last year to 14.982m tonnes with a rise in usage by the bioethanol and starch sectors expected to outweigh a drop in animal feed demand. Bioethanol demand is expected to be up on last year’s levels but demand by flour millers is forecast to come back slightly due to the increase in the cost of living expected to see less premium product being produced.

With the UK’s wheat surplus 158% larger than the five-year average of 872,000 tonnes and the bioethanol demand taken care of in the north of England bioethanol plants this means that we are going to have to export wheat.

Russian and Ukrainian wheat is very cheap on the export market in comparison to other EU countries and currently EU prices are supporting UK domestic wheat prices but the volatility between Ukraine and Russia will ultimately dictate the direction of the global market and things will change if the export corridor ceases to operate after March, 2023, or we see some extreme weather in the future.

With UK wheat supply expected to outweigh demand for wheat, the tonnage has increased by 40% from last year to 3.752m tonnes. Considering an operating stock requirement of 1.500m tonnes, this leaves a surplus available for export of 2.252m tonnes which is over 1.5 times the volume in 2021-22.

There are a few factors which may affect the UK supply and demand as the season progresses such as demand by the bioethanol sector, the full impact of avian flu on the poultry sector and weather conditions in the spring which could delay livestock being turned out to grass.

The recent agreement last month to extend the Black Sea grain corridor for another 120 days until the end of March has seen prices ease and UK wheat prices have followed the global wheat markets in a downward direction. Sterling strengthening against both the US dollar and euro has also meant that domestic prices have been under pressure as well.

Over the past four weeks the May, 2023, Liffee feed wheat futures have dropped £40 per tonne from £282 down to £242.50 and for November, 2023, down £30 from £263 to £233 per tonne.

Other factors pressurising grain prices has been the rise in Covid-19 cases in China where lockdown restrictions have been tightened which is expected to reduce demand for agricultural commodities, China is one of the world’s largest wheat importers and the USDA estimates its import need this season to be at 9.5m tonnes.

Wheat sales have been taking place on the international scene with Egypt, Algeria and Pakistan all making sizeable purchases amounting to 1.5m tonnes. To date the EU have exported 13.9m tonnes but other sources estimate a further 1.9m tonnes have been moved as well to give an unofficial total of 15.8m tonnes.

With seven months of the season remaining, EU exports are halfway to the 31.6m tonne export total estimated for the season. With a purchase volume of 1.97m tonnes, Algeria is the leading buyer of EU wheat followed by Morocco at 1.86m tonnes and Egypt with 1.5m tonnes.

US weekly export sales are slow with just 155,000 tonnes exported of the 300,000-635,000 tonnes that traders had expected to be sold at this stage. Their export pace is 2% of what is required and is slower than any season over the past five years.

The condition of the US wheat crop remains a concern where their crop is rated at 34% good/excellent, compared to 44% at this time last year and their five-year average of 49%. Heading into winter 75% of the US winter crop area is in drought and Kansas, their primary winter wheat producing state is rated as 43% poor to very poor.

Eastern Ukraine and central southern Russia have no snow cover and temperatures are forecast to drop as low as -20°C which could see damage if the temperatures drop this low before the snow arrives. Ukraine wheat exports for the season reached 6.3m tonnes and their grain traders say that they will be able to export 13m tonnes over the season if the grain corridor remains open, but this figure would be 20m tonnes less than last season and compares to Russia whose wheat exports at the end of November were standing at nearly 19m tonnes.

World wheat production is now estimated higher at 782.7m tonnes due increased production in the UK, up by 800,000 tonnes to 15.4m tonnes and Australia, up 1.5m tonnes to 34.5m tonnes, despite widespread flooding in some key wheat growing areas. Canada has produced 34.7m tonnes of wheat, which is 55% up on last year when yields were devastated by extensive drought.

The UK feed barley markets have been quiet recently as merchants have enough cover until the new year and there has also been a lack of export demand as well. Compounders are also well covered due to the mild spell of weather and any export business has been to Spain, but the Ukraine has also been exporting to Spain which has given the UK some competition to supply barley there.

Malting barley prices have come under pressure as well, again with little domestic or export demand. Prices are not helped by the increased barley production this past harvest where a rise in production had led to a 1% increase in available supplies at 8.226m tonnes.

Production is provisionally estimated at 7.190m tonnes, up 3% on the year. Domestic usage is expected to fall by 3% on the year to 6.138m tonnes due to a drop in animal feed demand outweighing a rise in usage by the brewing, malting and distilling sectors. With the rise in supply, outweighing a fall in demand, the barley balance has grown this season to 2.088m tonnes, 16% up year on year, however, this remains lower than the previous five-year average and is the third lowest in a decade.

Maize imports are forecast to fall by 9% to 2.01m tonnes as bioethanol demand for maize is expected to be down on the year and for animal feed maize usage is forecast to drop to 1.150m tonnes, a level not seen since 2016-17.

Total availability of oats is forecast to fall by 3% to 1.253m tonnes but remains above the five-year average. Oat production is provisionally forecast at 1.081m tonnes, down 4% on the year. With animal feed demand expected to drop back slightly from last year, outweighing a rise in milling demand, domestic usage could fall back by 1% to 995,000 tonnes which leaves a balance of 257,000 tonnes which is 8% down from last season and exports are forecast at 115,000 tonnes, 8,000 tonnes lower than last year’s record level.

Recently, feed bean values had fallen by over £15 per tonne and prices look to be falling further in order to be competitive in feed rations and currently there is no demand for beans before next year. Australia is looking to have a big bean crop again, despite their wet weather which will have compromised quality and Egypt is not looking for supplies due to a weak Egyptian pound.

There has been a halt in the decline of oilseed prices as the weather in Argentina has remained dry which is giving cause for concern on the establishment of soyabeans. Oil and oilseeds markets saw some strength on the back of the anti-Covid protests in China, which had given the market confidence that China might reduce some of their covid restrictions and see an increase in demand from China.

Oilseed prices had dropped by around £15-£25 per tonne from early November due to a stronger sterling and a combination of a global record crop is helping to keep prices suppressed. Canada is looking at a crop of 19.1m tonnes compared to 13m tonnes last year and with the Ukraine grain corridor open again more oilseeds will come from that direction as well.

Pressure in the crude oil markets, caused by limited Chinese demand and large supplies of US gas oil, was also all putting on added pressure to global markets.