WITH recent warmer than usual autumn weather, we now appear to be heading back to more normal seasonal temperatures as we head quickly towards the end of the month and the clock time changes once again.

The past week has seen more price volatility than normal and is due to various factors. One is the uplift in prices which has triggered short covering by speculative traders.

Another reason is sterling falling to a five-year low against the euro which lends further support to the price of feed grains and last week UK feed wheat futures for November, 2016, closed at £134.30 which is up more than £5 on the week and the highest price since July, 2015.

Sterling hit its lowest point since July, 2011, at £1 equating to €1.10 and this latest decline is also due to further developments in the ongoing discussions surrounding Brexit. Since the vote in favour of leaving the EU, the pound has fallen by 15% against the euro.

On September 13, the euro was worth 85p and by October 13, it was worth 90p.

Earlier this week, feed wheat futures for November, 2016, rose even further and then later week November futures dropped as the pound firmed and Chicago Board of Trade futures weakened. This volatility is expected to continue for various reasons.

November, 2017, feed wheat futures currently stand at £139.40 and November, 2017, futures are at £141.30.

UK ex-farm bread milling wheat was down 30p on the week to £131.50 and feed wheat was up £4.20 to £126.30. Feed barley was up £2.40 to £107.40 and oilseed rape delivered Erith was up £10.50 to £350.

Strong export demand is also helping prices as countries who use the euro can buy more of a commodity priced in sterling than they previously could for the same amount of euros. Also, reduced wheat production in the EU coupled with cheaper UK wheat (in euro terms) helped boost demand for UK wheat in Europe.

The first estimates of UK wheat supply and demand in 2016/17 showed a tighter balance than in the last two seasons. Our exports got off to their strongest start since 2010/11 and for July and August totalled 457,000 tonnes, compared to 180,000 tonnes for the same period last year.

UK barley exports for July and August, 2016/17, were at their highest level since 2003/04 at 281,000 tonnes and this the UK’s strongest barley export campaign since 1996/97 and the strongest wheat campaign since 2008/09.

It is likely that a large amount of UK exports in July and August were of remaining old crop stocks and, with Defra’s first estimates indicating a drop in UK wheat and barley production this season, the level of stocks carried over from last season will play a key part in determining how UK wheat and barley markets pan out.

Defra estimated a 2016 UK wheat crop of 14.5m tonnes, compared to 16.4m tonnes in 2015. The UK barley crop for this year is put at 6.6m tonnes, down from 7.4m tonnes in 2015.

Based on these figures, barley exports for this season are expected to be around 1.6m tonnes. Scotland has had two good years of barley exports, but with Scottish barley production dropping by 16% or 320,000 tonnes from last year, this should see the volume of our barley exports greatly reduced.

Good premiums for domestic and export malting markets continue to be available. Domestic maltsters have more or less completed their harvest intake and will review their requirements for the rest of the season.

The huge reduction in spring barley production in Scotland would have resulted in a short malting supply and demand position had there not been a large carryover stock available.

For wheat, the lower availability is compounded by increased demand, including millers. Also, UK bioethanol demand is forecast significantly higher this season, due to the reopening of one of the major plants in July, 2016.

As a result, the balance of wheat availability and domestic consumption is 2.75m tonnes, 51% lower year-on-year and only above 2013/14 within the past 10 years.

Barley supply and demand is also forecast to be tighter than the last two seasons as a result of the smaller crop but less so than in 2013/14. Animal feed demand remains a key area of uncertainty due to the grain’s wider price differential from wheat, which may see higher barley usage in feed rations this winter.

Oilseed rape prices in the UK are at their highest in more than two years. At £350 they are at their highest since April, 2014.

The extent of the increase in UK prices reflects in part the weakness in sterling but prices are also being helped by the UK harvest this year which produced only 1.77m tonnes of oilseed rape, down more than 30% year-on-year.

This decrease in production reflected an 11% decrease in planted area, to 579,000 ha and a 22% decrease in yield, to 3.1 t/ha. Plantings in the UK could decline for a fifth consecutive year on increased risk of insect damage, with crops in the country seen as suffering particularly from the impact of an EU ban on neonicotinoid insecticides.

Typically, the UK has a surplus of rapeseed which is exported to the rapeseed deficit regions of mainline Europe, such as Belgium, Netherlands and Germany, where they have crushing plants looking for rapeseed supplies.