AT LAST we had a settled period of good harvest weather – though there might have been a few blips for some around the country.

Harvest is getting well through now in the Borders and winter oilseed rape drilling has gone well and into good seedbeds. Potato harvesting is gathering pace now and yields on irrigated crops appear to be satisfactory so far, but a long way to go yet.

However, price volatility continues in the market place and November, 2018, feed wheat futures continue to react to outside global issues. This past week, futures varied from a starting point of £180.50, then fell by £2.45 and then the following day rose by £4.95, before falling again by £1.90 to finish the week more less where it started. This was because UK markets followed the US market, as situations arose to cause these ups and downs.

There has been much discussion in recent weeks about the concerns surrounding global crop supply and demand that has been driving the November, 2018, feed wheat futures higher, although at time some declined as well. Given that it is still not clear what type of Brexit deal we will have in March, 2019, the November, 2019 and 2020 futures may offer an opportunity to insure against uncertainty.

This situation is not being helped by trade tensions between the US and China which escalated again last week with both sides imposing an additional tariff of 25% on $16bn worth of goods, despite talks between officials earlier in the week.

Russia continued to give problems to traders as it exported large tonnages of wheat and combined with its unknown harvest wheat production, this makes everyone continue to try and second guess just how much wheat Russia can sell and have enough left for its own requirements. So far this season, Egypt has bought 1.6m tonnes of wheat which is a similar amount to last season, however to date 78% has come from Russia, compared to 74% last year.

At the last tender amounting to 350,000 tonnes, 290,000 tonnes were from Russia and this continued to set the floor for world market prices. So, it looks like any change to Russian export prices are likely to filter through to the wider global market and so influence UK prices.

The Russian rouble has declined in strength again recently against many other countries, including the US dollar and the rouble is currently close to its lowest level against the dollar since April, 2016 – partly as a result of sanctions by the US and other governments. This makes Russian wheat cheaper in US dollar terms and therefore export markets, this could keep the incentive for Russian farmers to sell, despite global prices declining.

There is much uncertainty as to what the Russian 2018 wheat harvest actually is, as traders believe the 35m tonnes of wheat exports projected by Russia are greatly optimistic and that it would have to curtail exports to fulfill domestic demand.

Elsewhere around the world, in Australia drought conditions are forecast to persist through its spring and expectations for crop production in 2018-19 are already down following abnormally dry conditions in east of Australia. Forecasters have predicted output in the country to be down 3% from 2017 for wheat, 4% for barley and 24% for rapeseed.

That said, Australia is still currently forecast to account for 9% of global wheat trade, 20% of global barley and 3%of global rapeseed.

Depending on results elsewhere, including Argentina where wheat crop conditions are reportedly very good, this could add support to global and potentially UK grain prices.

The German Farmers Association has revised its estimates of 2018 grain production there and places grain production 26% below the five-year average at the lowest level since 1993. Winter wheat production is expected to fall by 23% from 2017 and 6.7m tonnes below the five-year average. Winter oilseed rape is expected to be around 3.3m tonnes and 36% below the five-year average, while winter barley production is estimated at 7.4, tonnes, down 18% on the year.

The Swedish board of Agriculture has estimated its 2018 total cereal production at 29% lower year-on-year adding further confirmation of decreased cereals production in European regions affected by the dry summer.

Yield forecasts for total wheat at an EU-28 wide level are estimated at 5.49t/ha – down 4.2% on the five-year average – and total EU barley yield is put at 4.71t/ha, or 4% below the five-year average. EU-28 maize yield is forecast to be above the five-year average but nearly 4% below last year.

Following the good conditions and forecast yields in Romania and Bulgaria, 28% of EU grain maize could be produced by these two countries in 2018. Maize crops have been forecast down in France and Germany, whilst the UK crop has also been affected by the drought.

There has been a much smaller crop of available human consumption beans in the UK this year and pressures of supply and demand have come into play. Premiums for the few consumption beans are now over £30 per tonne in most areas and feed beans in some parts of the country are trading at a £3-£5 premium as feed compound buyers are keen to take some cover.