THE WORLD remains on track for a fourth consecutive global grain surplus and this will keep prices subdued and a long way off the high prices recorded a few years ago.

Grain markets are still on course to have a record crop, forecast to reach 2069m tonnes – an increase of 69m tonnes year-on-year.

Output is forecast 18m tonnes higher than demand and, if confirmed, such a level of production would result in a build-up of stocks to the highest levels recorded in recent times.

Most of the increase in global grain output is expected to come from US maize but global wheat production is forecast to hit a new record of 745m tonnes, compared to 735m tonnes last year as production issues in some areas have been offset by larger crops elsewhere.

Given the extent of the fall in EU production, it’s not just output that has been affected by the adverse weather earlier in the year, quality has been badly impacted.

There is now a bigger gap between medium and high protein wheat prices and this year there could be lower availability of particular quality grades of wheat.

In France, in particular, just 24% of wheat samples tested have a specific weight of 76 kg/hl, compared to an average of 80% over the past five years.

Germany, the EU’s second largest wheat exporter, is also suffering from quality issues and there are concerns for Romania’s regarding depleted protein content.

EU exports as a result of the poor quality are forecast to drop sharply by nearly 9m tonnes to 26m tonnes and could hit its lowest since 2012/13.

Russia and Ukraine are expected to capitalise on much of this trade and there is an opportunity for the US to recapture some market share as well. Russian wheat production and exports have expanded considerably from the 34.5m tonnes of wheat produced and 690,000 tonnes exported in 2000/01.

In 2016/17, both production and exports are now forecast to be at 72m tonnes and 30m tonnes, respectively.

With the UK having better quality wheat this harvest, this will influence the amount of wheat imported to here. Good quality will make it likely that the UK will have lower imports than in recent times.

In 2008/09 the quality of wheat was so poor, only 6% of group 1 samples made bread specification and imports rose to 1.2m tonnes, the third highest level behind 2012/13 and 2013/14.

In 2010/11, 30% of the samples made bread spec' and the use of imported wheat went down and total imported wheat milling levels dropped 27% year-on-year to 767,000 tonnes.

Our milling wheat is mainly sourced from three countries, Canada, France and Germany. Total imports from these countries averaged around 1m tonnes in the past 10 years.

Last season, 2015/16, of the 1.5m total wheat imported from those three countries accounted for more than half of the tonnage, with around 344,000 tonnes or 23% from Canada, a very high protein milling wheat producer.

This year we will have fewer imports from France and Germany due to the poor harvest this season. France’s production of 28.5m tonnes is the lowest since 1993/94 and Germany’s wheat production this year is down 8% at 24.4m tonnes from last year.

French wheat prices have risen on the back of the quality concerns and its wheat is now more expensive in sterling terms than both German A wheat and ex-farm eastern bread milling wheat at around £170 from the start of September.

Currency is a major factor in determining the UK’s competitiveness in the global market. With sterling weakening recently, this could leade to lower of imports as it will make them more expensive than domestic supplies. However, a weaker currency gives the opportunity for UK milling wheat to be exported.

Potato maincrop lifting continues and with the fast growing conditions experienced this year, this points to an average quality crop and yield. While the planted area has risen by an estimated 4.3% from 2015/16, UK potato output dropped by 5.4% to 5.43m tonnes.

Farmers are still recovering from a poor 2015 when total income from commodities fell by 29% to £3.77bn, according to Defra, but the potato supply and demand situation is currently well balanced.

Potato prices have actually risen ahead of last year. AHDB estimates an average of £166.73 a tonne last week, a rise of 10.7% year-on-year.

Free buy potatoes, those that are not grown on contract are achieving £183.48 per tonne, a rise of 18.4 % year-on-year. It is expected, however, that prices for non-contracted potatoes to be in line with those that have been contracted.