The month of May, until the beginning of this week saw temperatures well below the seasonal average, but now we have had some warmer than normal weather here in the Borders but still colder on the east coast.

Last week brought some much needed rain and now with the higher temperatures, which we are told will go back to rain at the weekend, crops will benefit greatly and should see some potentially good yield forecasts for this harvest.

Not such good news for prices is that most of the rest of the world is expecting big wheat crops as well, which has seen prices drop dramatically and this is a concern for growers, but as usual, there is still some time to go before harvest, and the weather can affect things as we know from past experience, and, of course, Brexit is still on the go and who knows what and when that will happen, if at all.

The USDA published their latest monthly world supply and demand last weekend with world wheat production for 2018-19 put at 731.5m tonnes and year end stocks at 275m tonnes.

However, the USDA sees significant wheat production increases in 2019-20 for all the major wheat producers, such as Argentina, Australia, Canada, the EU, Russia, US and Ukraine and predicts the world harvesting an additional 46m tonnes for this year, a record 777.4m tonnes. Increases in consumption would leave year-end stocks up 18m tonnes to a record 293m tonnes.

This has resulted in global grain markets being driven down with Chicago, Paris and UK new crop wheat futures falling to contract lows.

EU wheat production is projected to be 153.8m tonnes which would be a four-year high, Ukrainian wheat production at 29m tonnes would be the largest in nearly 30 years.

Russian production is projected to be the second highest on record at 77m tonnes although other forecasters are predicting an even bigger Russian wheat crop. The greatest year-on-year change in wheat production for 2019-20 is the United States, up 15.5m tonnes at a three-year high of 381.8m tonnes, hence the December 2019 Chicago new contract low down $5.51 to $164.69/tonne.

The current condition of US winter wheat is the best since 2010, with 64% of crop rated good to excellent compared to 34% at the same time last year. Additionally, old crop US exports are behind last year’s pace despite a forecast year-on-year increase.

Because of all these increases in forecast wheat production, UK November 2019 wheat new crop price on May 2, stood at £146.25 and as at May 14, had dropped to £141 per tonne, the lowest point since February 2018, November 2020 futures were down last week by £1.45 to £146.80.

UK ex-farm bread milling wheat was down £3.00 on the week to £175.00, feed wheat was down £6.60 to £155.10 and feed barley was down £3.90 to £126.80 per tonne.

Despite all the doom and gloom of expected high wheat production around the world there are some down points as well. Spring wheat plantings in the US are currently 27% behind the 2014-2018 average at 22% complete.

In Europe, drought could become an issue with soil moistures below normal in many parts of western and eastern Europe and further dry weather is forecast for western Europe. The same can be said for parts of Russia in the key spring wheat regions in Volga and the Urals region which are very dry and look set to remain dry.

The AHDB published their cereal usage data and the UK milling industry used 524,000 tonnes of wheat in March which is a drop of 10% year-on-year. This includes flour used for bioethanol and, therefore, the closure of a UK bioethanol plant since March last year could be a major factor in this drop.

In contrast UK brewers, maltsters and distillers used 8.8% more barley at 173,600 tonnes in March 2019 compared to March 2018.

Animal feed production was down 19.9% for sheep, poultry down 5.5%, cattle down 3.9% and pigs down 1.2% from March last year. The “Beast from the East” in March last year which resulted in a lot more feed being used was a major factor in the difference in the amount of feed required as March this year was much more benign.

Global barley production in 2019-20 is projected by the USDA to rise to an 11-year high, mainly driven by increases in EU production, up 6m tonnes year-on-year to 62m tonnes.

Ukrainian barley production is forecast to be the largest in three years at 8.5m tonnes which is 1.4m tonnes up on last year and Turkey, Russia and Canada are all forecast year-on-year increases in production.

With larger Black sea crops forecast, this may increase export competition into the Middle-Eastern and North American markets, as 2019-20 is likely to see an increased domestic exportable surplus, this could further pressure UK barley markets.

Last week, the UK feed barley markets continued to follow the downward trend seen throughout this year. Large availability, positive new crop prospects and lack of demand have caused the drop in prices.

Maize has been some of the reason for this price drop as usage of whole and flaked maize in animal feed production is up 80.4% on last year and the increased maize usage has left barley struggling to find demand in domestic animal feed rations.

As feed demand is down, the next market for feed barley is exports and UK exports have been relatively quiet this season. A strengthened sterling has pressured prices to remain competitive, particularly with Black Sea supplies.

Brexit uncertainty has added further challenges to the barley export market and the Brexit delay until October 31, should have given confidence to old-crop export markets but with no clarity on export tariffs the picture for new-crop barley remains uncertain.

A 14% rise in the UK area of 2019-20 winter barley to be grown has been highlighted and 95% of this crop was considered to be in good to excellent condition as at the end of March and again this puts pressure on prices.

New crop oilseed rape markets have continued to fall due to projected increased supplies and issues with the USA and China trade disputes. UK delivered oilseed rape prices saw oilseed rape delivered Erith down £1.50 on the week to £315 and between April 26 and May 10 prices have dropped by £4.50 per tonne delivered.

Ongoing trade disputes between US and China kicked off again as China wanted to renegotiate some key elements in their proposed deal and President Trump reacted by raising tariffs on $200bn of Chinese goods from 10% to 25% and this giving concerns for further trade and thereby pressurising prices as well.

The Ukraine is forecast to produce a record oilseed crop in 2019-20 and the latest USDA report forecasts world soybean production for 2019-20 to increase by 2m tonnes. Chinese soybean imports are expected to be reduced by 2m tonnes and year-end global stocks are predicted to reach 113.09m tonnes and if realised, the year-end global and US stock levels would both be at record levels.

There's some indication of better news for prices of oilseed rape as the EU production is expected by many to fall to its lowest level for some time, at 19.2m tonnes which would be the lowest since 2008 and Germany is looking to have a rapeseed crop down 17.1% year-on-year.

Concerns for new crop maize planting in the US continues to drive suggestions that more acreage could be planted to soybeans, however, there is still time to plant maize which has been held up due to excessive rain.

The current year USDA maize report indicates year end stocks increasing by 12m tonnes on the previous report. The world total maize output is now set at 1119m tonnes and year-end stocks at 326m tonnes. The USDA sees 2019-20 world production up further at 1133 m tonnes bringing total global supply to a record 1460m tonnes, although consumption increases will see year-end stocks lower on the year at 314.7m tonnes.

Recently just 23% of the US maize crop had been planted compared to 36% last year in early May, but the weather forecasters now see a clear window of opportunity to get more planting done.

Potato planting is now more or less complete in most areas and potato emergence is now taking place. Favourable conditions in March meant many growers started earlier than normal and most crops have gone into good seed beds, but soil temperatures have been on the low side. The recent rain will again have helped to get the seed chitting and the warmer weather will speed things along even faster.

Export trade since the turn of the year has been good with strong demand for both processing and fresh supplies from the continent. Belgian and Dutch factories have been taking any available seed tops meeting frying specification and demand for packing supplies has been good across the continent.

With Brexit deadlines delayed again, a brisk export trade may be maintained for the near future. The packing markets have mostly been driven by a large quantity of good quality supply available in Scotland. At the beginning of May, the GB weekly average price was slightly down to £204.13 and the weekly average free-buy price was down £17.70 to £211.30 per tonne.