UP TO June 1 this year, in the Borders we have had 388mm or 15.25 inches of rain, compared to last year at this time, when we had 171 mm or 6.75 inches.

However, April this year produced 30 mm or just over one inch, and May was 29 mm or again just over one inch. So, even though we have had 8.5 inches more this year to date, due to the last two months of dry weather, spring crops, including potatoes, are in real need of rain.

As a result, wheat prices rose both here in the UK and in Europe as traders became aware of the potential underdeveloped crops and reduced yield potential, especially as we had a few days of relatively hot sunny weather as well.

Futures prices in both London and Paris saw price increases earlier in the week but when some rain fell, then prices settled back down again. The HGCA have forecast that EU wheat production would need to fall by 10m tonnes to produce a balanced European supply and demand situation for 2010/11, but at the moment the dry weather is not going to cause crops to suffer that much to reduce yields dramatically, and we should not forget that world stocks will be at a nine year high in 2010/11.

Cold weather in Spain is also set to reduce yield potential in wheat crops so the markets are watching the weather patterns very closely at present to see how the potential wheat production will work out.

US futures markets have found new contract lows this past week due to the strong dollar and good reports on spring wheat planting into good seed beds. Weather is going to be the main factor between now and harvest but with large world wide stocks then there should not be the volatility in the market place that we have seen in past years due to the weather.

The November 2010 LIFFE wheat futures rose £3.40 on the week to £108.50 and for November 2011 rose 95p to £116.50. Old crop barley prices have eased this past week due to lack of demand, stronger currency and more sellers coming into the market place possibly to clear space for this coming harvest, which is only two months away or less and there will be a carryover similar to last year into the new harvest year.

Maltsters are not buying any tonnage at present, so there is little premium for quality at present. For new crop barley, there is little interest even with dry spring crop conditions and the 2010 spring barley certification area is down 38% on last year, spring wheat is up 37% and spring oats plus 7%.

Barley has continued to be priced at a £10 per tonne discount to wheat due to the large carryover and only time and weather will determine if there is going to be any change to increase or reduce that discount.

Oilseed rape price appears to be stagnant at present as traders try to access the potential yield penalty from the long cold winter both here in the UK and Europe. Oilseed rape planting in Australia is expected to be up 16%, which would be the second highest on record and see production up from 1.97m tonnes to 2.27m tonnes.