While there doesn’t seem to be any hard evidence that the saying, 'may you live in interesting times', was ever actually a genuine Chinese curse, the sentiment which it contains certainly applies to the grain market at the moment.

For it would appear that the years in which the fluctuations in grain prices seemed to limit themselves to somewhere in the region of £2.50 a tonne over the course of an entire season have become a thing of the past – with the current market volatility standing at an almost unprecedented level.

Now, it’s only a couple of weeks since the slide in the wheat futures market saw it bottom out at pretty much exactly half the value which it had climbed to during its peak last year – highlighting just how unpredictable things have become as one of the biggest rollercoaster rides which the market has ever seen continues.

But since that trough, there have been some upwards movement and even a brief look at the situation both around the world and towards our own increasingly stressed crops, would surely indicate that there might be room for prices to regain more of their recent losses before we hit harvest.

It's only a few weeks since it was reported that growers in the US were set to harvest the smallest proportion of their planted crop since 1917 – with the major wheat areas of Oklahoma and Kansas suffering from a drought which reportedly led growers to abandon hopes of harvesting a worthwhile crop. Although rains might have cheered the picture a bit since then, it’s only been a minor improvement.

Meanwhile, in China – which now accounts for a large proportion of the world’s wheat consumption – reports of a wet harvest in the main grain growing regions of Henan Provence, as well as Anhui, Shandong and Jiangsu, have all raised the prospect of substantial crop spoilage and wastage.

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With grains sprouting in the head, it’s likely that even if it gets harvested, there will be a considerable loss of quality and much downgrading, with many crops being rendered suitable only for animal feed rather than the quality bread and noodle markets.

While the authorities in China pointed to the fact that country’s production had remained steady at more than 650m tonnes over the past eight years, in recent months the country has imported more than 12m tonnes – up from earlier predictions of 9.5m tonnes – coming from the US and Australia, marking the highest purchase since 1995.

The confirmation of the world swinging into a fairly major El Nino weather event is also likely to have considerable weather implications around the globe, including in many of the world’s major grain growing areas – and of course the war in Ukraine continues to be another key player in the grain market.

The bursting of the 68 year-old Nova Kakhovka dam a week past, managed to flood some areas of the country’s best agriculture land, while at the same time threatening drought in other areas due to the loss of water for crucial irrigation.

While neither side is admitting they caused the collapse, international efforts indicate that the breach was caused by an explosion inside the dam, which was, at the time, controlled by Russian forces.

On top of this, the Black Sea Initiative – which brokered the deal allowing grain to be exported from Ukrainian ports – has only been extended for 60 days at the last two rounds of negotiations, rather than the original 120 days.

Russia has been taking an increasingly difficult line during the discussions, claiming that while there are no direct sanctions on the export of Russian grain, other restrictions mean international banks, insurers and shippers are reluctant to do business with its exporters – while reports that the overall movement of Ukrainian grain has been slowed and delayed by retaliatory lengthy cargo inspections by Russian authorities.

At the same time, Russia has been demanding that, before any new deal – due by the middle of July – can be agreed, export of its ammonia from a pipeline which runs through Ukraine to Odessa will need to restart.

This, in itself, will be a difficult task as the pipeline was severely damaged in an attack – one which, once again, neither side has claimed responsibility.

So maybe it’s little wonder that the wheat futures have been bouncing about a bit.

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But despite all the climate change effects and geo-political shenanigans, there is also an additional underlying cause which has played a key role in driving volatility.

Many believe that the tightness of world stocks means that there is currently little in the way of anything to cushion against foreseeable – or unforeseen – interruptions to the production or the flow of grain around the globe.

Such stocks are crucial for buffering the impacts on market prices caused by production shocks, such as drought, extreme weather, conflict, or other disruptions. When production shortfalls occur, these stores help to tide markets over until the next harvest, thus moderating price impacts.

On the other hand, when global harvests are large, wheat can be carried forward for sale in the next marketing year, putting an effective floor on current prices. So, taken in the round, stocks can help moderate price peaks and troughs and, as a knock-on consequence, reduce price volatility.

However, when stocks are already at low volumes – as they currently seem to be – the capacity to buffer the impacts of shocks is more limited.

Yet while much expense and effort is put in to assessing the exact level of world stocks – and where they are held – the gathering of this intelligence is often both difficult and politicised, with the huge number of countries and organisations involved in reporting these figures making it a bit of an inexact science.

There is also the fact that many of the big players – including both China and Russia – are never keen to show their hands, as they can often use their buying power and knowledge of what they really need to manipulate the market.

Currently, China lays claim to holding around half of the world’s wheat stocks – a figure which has risen significantly over recent years – and, if correct, is up by around 160% on the levels of a decade ago.

However, with stocks in the rest of the world estimated to be 12% down over the same period, many economists are doubtful of China’s claims and believe that they skew the world picture. So, while reports put total global wheat stocks at an estimated 260m tonnes, if China is excluded, this figure falls to closer to 128m tonnes.

There were some interesting calculations in a recent article published by the International Food Policy Research Institute which tried to put this in context.

It stated that if the Chinese figures were taken as gospel, then the world supply situation looks relatively comfortable, with an estimated 125 days’ supply in store (although this is down from the 147 days pre-pandemic figure).

However, given the degree of scepticism mentioned above – which is held by many in both the trade and government’s over the accuracy of the reported stock levels in China – it accepted that this figure is often excluded from official calculations.

On this basis, things look far less rosy – with a slightly worrying 58 days’ supply left in stock, the lowest level since the last major round of price spikes began back in 2008.

But things are even worse on the third officially accepted measure, which basically only counts the stocks in areas of the world which have the facilities and the infrastructure to actually export significant quantities of grain.

Ending stocks for 2022/23 in these exporting countries are estimated at a meagre 26.3 days of use – again the lowest level since 2008 when the figure stood at 25.4 days.

So, given this knife-edge situation and the major implications which food security has on the stability of governments and other global geo-political factors, pretty soon we might not be the only ones living in interesting times.