FOLLOWING THE the recent USDA report which increased global wheat production by 4.5m tonnes to a whopping 726.55m tonnes due to increased expected yields in Russia and Ukraine, more than offsetting a lower crop in Canada, wheat prices have continued to fall almost on a daily basis.

November, 2015, Liffe feed wheat futures dropped £2.10 on the week to £117.85 and again earlier this week fell again to £115.70. Oilseed rape fared little better, dropping by £7 per tonne from last week but recovered by £2 again this week. UK ex-farm bread milling wheat also fell by £4.70 to £119.50 and feed wheat fell by £3.90 to £105.90.

The latest corn returns prices showed the UK milling wheat premium at £13.60 per tonne which is the lowest level seen since 2013. The milling premium has been on a declining trend since the beginning of the year - on the January 8 it was £44.60 - and since then has fallen by more than £30 per tonne.

A weak milling premium indicates the relative abundance of milling wheat or a relative shortage of feed grain. The market is likely to have reacted to early results from the UK harvest indicating promising levels of protein albeit at an early stage of harvest and until it progresses further only then will we know how quality is going to pan out.

With global wheat demand virtually unchanged, world end stocks are forecast higher at 221.47m tonnes which is up 12m tonnes on last year.

The build up to the USDA release has been overshadowed by improving weather conditions for growing crops, indicating more grain coming onto the market. This has also not been helped by the recent decline in Chinese currency which has impacted on all imported produce to China.

Global maize production, though, is estimated lower by 1.5m tonnes but is more than offset by a higher opening stock forecast of 3.47m tonnes. At just over 195m tonnes of global ending maize stocks, the world is still looking at a deficit maize situation of around 2m tonnes but less than the 4m tonnes previously forecast.

French wheat production is forecast to reach 40.4m tonnes in 2015/16 - that's 2.5m tonnes above earlier forecasts. If realised, that will be a record amount - the latest figures are based on a national yield of 7.83t/ha which is 0.57t/ha above the current five-year average of 7.26t/ha.

In the UK, the English wheat area is estimated 6% lower than last year, according to Defra and by August 11, 10% of this wheat had been harvested (see this page for trial results).

For the full 2014/15 season, UK wheat exports totalled 1.9m tonnes, compared to 450,000 tonnes in 2013/14 and at the same time imports were 1.65m tonnes, compared to 2.20m tonnes - making the UK a nett wheat importer by 250,000 tonnes, despite a bumper crop in 2014.

There are currently 14 recommended list winter barley trial results for 2015 from the South-west of England up to Scotland and average yields of the control varieties now stand at 10.72t/ha, which is 1.3 tonnes above the five-year average. The two trials in Scotland yielded 11.64 t/ha in Midlothian and 11.67t/ha in the Borders.

Feed barley prices have fallen in line with feed wheat following the latest USDA report and UK ex-farm feed barley dropped by £1 to £95.20 per tonne. Early season progress with UK barley exports has been good to date but demand has now slowed up.

Barley exports in June were 131,000 tonnes taking the total for the season to 1.49m tonnes which is the largest total since 1999/2000 and it looks likely there will be a similar exportable surplus this season.

The area sown to barley in England this year has risen by 6% with winter barley up by 3.9% and spring barley up 8.3%. England is progressing with its spring barley crop and there are reports of good yields and quality, coupled with a useful range of nitrogen levels. There is little domestic malting demand meantime as buyers take delivery of contract barleys and assess requirements.

The English oat area is 7% below last year's planted area and their oilseed rape area is the lowest since 2010. The area sown to spring oilseed rape is the lowest in the last 20 years and around half the 2014 planted area.

Oilseed rape delivered Erith was unchanged at £268.50 but again due to the USDA report Chicago soyabean futures fell to the lowest contract price seen since June and Paris rapeseed futures fell sharply as well. However, Canada is expecting a 13% year-on-year decline in its canola crop, making it the smallest for five years.

Ukranian rapeseed production could fall for the fourth consecutive year in 2016 due to problems with planting due to dry soil moisture levels being too low to plant the seed. This has delayed drilling and growers could miss the ideal planting window of August 10 to 25. Ukraine is the world's sixth largest rapeseed producer and the third largest exporter.