For the first time in many years we are experiencing some real winter weather with temperatures down in some areas as low as -13°C and snow in many parts.

In my part of the eastern Borders, we have had only a covering of snow but prolonged frost which will do a lot of good in the long term. Not so good in the short term for livestock outside that require extra feeding to combat the cold conditions.

The recent AHDB ‘Early Bird’ survey of GB cropping intentions for the 2018 harvest indicated that the national area of wheat grown will fall by 2% year-on-year and if confirmed would result in 1.752m ha for harvest 2018, which would be the fourth consecutive year of decline in area of planted wheat.

This area equates to a 3% drop below the five-year average and is resulting in the balance between availability of wheat and domestic consumption being forecast at 2.648m tonnes, which is 18% lower year-on-year and 26% below the rolling average, the second lowest in 15 years.

After taking into account the operating stocks requirement of 1.6m tonnes, the estimated surplus of wheat available for export, or free stock in 2017-18 is 1.048m tonnes, down 35% year-on-year and the current forecast is the lowest since 2013-14.

UK wheat prices have been on a steady downward spiral since harvest, initially on higher than anticipated crop figures and latterly on expectations of a drop in domestic demand. Our wheat harvest production is put at somewhere between 14.5 and 15.2m tonnes, but the lower figure appears to be nearer the mark as spot wheat is difficult to source and the UK is not sufficiently competitive to sustain an export programme able to move a potential 1m tonnes before next harvest.

The closure of the Vivergo bio-energy plant for an extended period of maintenance has severely cut domestic demand and the Liffe feed wheat futures for May, 2018, were down 40p to £142.10. For November, 2018, new crop wheat futures were down £1 to £141.10.

Globally, the world is well supplied with wheat, due in part to the latest wheat production estimates for Canada being higher than previous expectations, but other countries are having their wheat production issues.

Australian wheat production is likely to be down by 42% from last year at 20.3m tonnes but this was expected given their exceptional yields achieved last year, even so this year’s projected production figure would be their lowest level in the past 10 years and is due in part to rains linked to a La Nina-related weather system.

The latest USDA long range projections forecast the US wheat area to hit another historical low in 2018 and only see minimal recovery through to 2027. The current declining trend will see planted area fall to an all-time low of 18.2m ha since records began in 1919. If confirmed, a further drop in the US winter wheat area could mean that the country’s grip on the global wheat market will weaken further.

Currently, Russia has been increasing its dominance and is set to be the largest wheat exporter this year with a record month in November for grain shipments, compared to the EU wheat exports which are 23% behind last year’s export level stocks are building up as a result.

With the US wheat planted area projected to continue at historically low levels, the US wheat ending stocks could also fall. Unless stocks held by other major exporting nations rise to compensate, a decline in US wheat stocks could lead to increased market sensitivity to weather crop issues, such as La Nina for example.

The latest production estimates indicate a 2m uplift in global wheat production mainly due to higher than previously projected output in the EU, more than offsetting a lowering in production estimate for Argentina and global wheat production is now put at 754.8m tonnes.

Global wheat end stocks are forecast to hit an all-time high of 257m tonnes, which will be 5% higher year-on-year. This rise in closing global wheat stocks represents a fifth consecutive year of increase, driven by a build up in China and Russia.

The Early Bird survey forecasts that the GB winter barley area will decline by 9% and the area of spring barley is expected to continue to increase, with the 2018 area forecast up 3% year-on-year at 773,000 ha.

UK barley availability is currently estimated to be 11% below the five-year rolling average, but there is a contrasting situation for domestic barley supplies, compared to wheat. Defra forecast the 2017-18 surplus of barley available for free stock or export at 1.713m tonnes, 21% higher year-on-year.

Old crop spring barley continues to have good demand by domestic maltsters at this time and going into next year malting barley is attracting a decent premium over feed barley. UK feed barley prices are not competitive with other countries for export at present, but there is strong domestic demand.

The Early Bird survey for oilseed rape in 2018 indicate an uplift in area of 9% year-on-year, taking it above 600,000 ha for the first time in three years. Despite the increase, the forecast 2018 UK area is still 19% lower than the record area of 756,000 ha set in 2012.

Canada has increased its projection of 2017 rapeseed production to 21.3m ha, which is 8.7% higher year-on-year and a new record.

Australian canola production is estimated to fall to 2.85m ha which would be 31% down on last year. World rapeseed production is now estimated to recover by 1.8m tonnes to a three-year high of 65.3m tonnes this season, but Argentina and Brazil are having dry weather at present and likely to see their soyabean crops suffer as a result.

News that will not help UK oilseed prices was the breakthrough in Brexit negotiations which firmed sterling and will put additional pressure on UK OSR markets. As a result, last week oilseed rape for delivery to Erith in February, 2018, was down £8 to £314 per tonne.