COMPARISONS are being made to the last big drought year, 1976 – but we have now had some late welcome rain at the end of July which gave a total of 44.9mm for the month and 365mm or 14.35 inches for the year to date.

This rain did not fall in all regions and some have had less than others and still require more rain, although it is too late to help most of the cereal crops yet to be harvested.

By the end of the third week of July, an estimated 22% of the GB cereal and oilseed rape crop had been harvested in the south of England. Now harvest is in full swing in most regions and at the end of July 25% of the GB wheat crop had been harvested in the south and east of England.

With the GB five-year average yield for wheat at 8.2t/ha, the early yield figures for 2018 indicate that yields are between 5-8% below the five-year average at 7.6-7.8 t/ha.

Should these early yields be representative of the UK, then UK wheat production in 2018 could well be 13.5m tonnes, over 1m tonnes less than in 2017.

However, the early yield estimates are based on harvested varieties in the south and east of England and are not representative of what may happen in the north later on as harvest progresses.

Weather issues around the world continue to add price support in the UK market. September wheat is now £24 per tonne higher than the lows of July and a hefty £52 higher than January lows.

Given the UK’s tight balance sheet – with a sub-14m tonne wheat crop predicted – there will also be a heavier reliance on imports from the EU and further afield. With current internal prices at season highs and up by £30 in a month, UK feed wheat is the most expensive feed in the world and consumers are increasingly looking for cheaper alternatives.

However, weather woes around the globe are not giving much succour that there will be enough crop to put a lid on prices. Another volatile week in the UK grain trade has seen November futures hit new contract highs of £195, last week, caused by yield issues around the world.

The outlook for wheat across Europe and the Black Sea has contributed to UK feed wheat futures gaining £16.25 per tonne during the last two weeks of July.

For instance, Germany revised its last crop estimate down 2.5m tonnes to just 18m tonnes due to hot dry weather impacting on yield.

Sweden is also expected to have a 40% drop in wheat production due to hot, dry weather and Russia is forecasting its wheat crop will be 15-20% down on last year.

Across the pond, it’s not much better. Canada and the US are also suffering dry, hot weather which is affecting yields. Even in India, the monsoon rainfall is below average.

The Ukraine have announced that it will limit the amount of wheat available for export. That move alone saw Matif futures rise by €10, before slipping back.

There is a lot of nervousness surrounding the EU crop size and only when the grain is harvested and in store will the market react accordingly.

The International Grains Council published its most recent report at the end of July. This dropped world wheat production by 16m tonnes on the previous estimate to 721m tonnes – this is 37m tonnes down on last year. Carryover stocks are now predicted to fall by 18m tonnes on the year to 247m tonnes. Also, a report from Strategie Grains dropped the EU soft wheat below 125m tonnes, or 5m tonnes below the last estimate.

The market for feed barley remains firm on the back of all this, with prices following feed wheat higher in a volatile market place. Strong domestic demand is continuing as winter fodder stocks are being utilised on farms at present.

The spring barley harvest has started in several areas of the UK and early results are showing good quality, with samples meeting malting specification. Yields are reportedly down on the year and it will be interesting to see how later drilled spring barley yields compare with earlier drilled crops.

Bean harvest has also started and prices for human consumption quality have been around £200 per tonne. However, more than 80% of all bean samples have failed the grade for human consumption, with some samples reading over 60% internal bruchid damage and bruchid infestation has been far higher than first thought in the south and east of England.

The oilseed rape harvest is underway in northern regions now as well and yields continue to be mixed. The earliest crops appear to be coming in 10-15% below the five-year average.

Currently, the EU commission is estimating a 2018-19 EU rapeseed crop of 19.67m tonnes which would be a 2.29m tonne fall from last season and the lowest since 2012.

Rises in rapeseed prices in Europe have seen UK prices follow with Erith delivered prices for September rising £6.50 in the last week of July.

The full crop year animal feed usage data released at the beginning of this month highlights the increased demand for cereals from the animal feed sector.

With challenging conditions in 2018 for the livestock sector, beginning with the ‘Beast from the East’ snowfall, followed by one of the driest Junes on record, GB compound animal feed production has increased. Sheep feed is up 15.4%, cattle and calves up 6.7% and pig feed up 3.4%.

With dry conditions persisting, forage production has been adversely affected and with forage availability down, cereal demand for the livestock sector could well remain high in 2018-19.