Harvest is now well underway in England and in Scotland combines are venturing out as a decent dry spell of weather – interspersed with thundery downpours it has to be said – ripened winter barley.

The Northern Hemisphere wheat harvest is now well underway, with France over 40% complete and with hot weather forecast for many areas across Europe, this will accelerate ripening and ultimately speed up harvest, which could add further price pressure to this crop.

Egypt tendered this week for 60,000 tonnes of new crop wheat and the order was entirely filled with Russian wheat which out-priced all other suppliers, even though Russia is looking to produce a lower tonnage than originally forecast. It had estimated a wheat crop of around 85m tonnes, but this has been reduced to around 76m tonnes and exports reduced to 33m tonnes, which would be 2m tonnes below that exported in 2018/19 season.

Early Russian wheat harvest results indicate a 1% lower yield than last year, which would be a four-year low, but protein quality is high, with samples up to 16%, but the prolonged dry weather and heat during the spring and early summer has reduced yield potential [see also our View from the East column on the opposite page].

This is not only affecting Russia, as hot weather in the EU28 could reduce the tonnage by 2.2m tonnes from last month’s estimate, down to 140.6m tonnes. However, this figure is still much higher than last year’s drought affected crop, which totalled just 127.1m tonnes, but this year’s French crop in the western part has also seen some yields 1-2 t/ha higher than normal, but has resulted in proteins down below 11% which means that it is not suitable for milling wheat export markets.

The USDA report has cut Russian wheat production by 3.8m tonnes, Ukraine down by 1m tonnes, EU28 by 2.5m tonnes, and Australia by 1m tonnes. The US estimate is increased by 500,000 tonnes but overall world production was lowered by 9.4m tonnes to 771.46m tonnes and year-end stocks by 8m tonnes to 286.46m tonnes.

The US wheat harvest is around 70% complete, compared to 80% at this time last year and in the Ukraine, wheat harvest is 65% complete, with yields up 0.39t/ha on last year.

The winter barley harvest is well underway and in the South of England yields as high as 10t/ha have been reported in many regions, which is up to a third higher than last year. With the AHDB planting figures showing the 2019 winter barley area up 11% from last year, farmers will be keen to sell their crop sooner rather than later given the increasing likelihood of a hard Brexit at the end of October.

Currently, UK ex-farm bread milling wheat is worth £169.60, which is down £2.30 on the week, feed wheat was down £3.20 at £138 and feed barley was down £1.40 to ££119.60, which is still around £20 per tonne discount to feed wheat.

The November Liffee feed wheat futures were down 75p to £147.95 and for new crop November 2020 down to £150.55 per tonne.

In the EU, winter barley yields are above the five-year average and French autumn sown spring barley is also being harvested, again with good yields and low protein levels and this is putting pressure on prices, partly due to less demand from North Africa. Then, it has also been an excellent growing season and lower demand is coming from China because of its African swine fever epidemic, which has reduced the number of porcine mouths to feed wheat to dramatically.

UK oilseed rape production is still too early to predict as some crops in the south have been written off, while others appear to have good yielding crops. However, it looks like the total oilseed rape tonnage will be less and as a result, oilseed rape delivered Erith in November has gained £26 per tonne from March 15 to July 12. It is currently worth £340 delivered November, which is up £1.50 on the week.

The physical prices also have support from a continually weakening sterling and last week the pound dropped to its lowest value against the euro this year. That said, there won't be much around to export as the English oilseed rape area is down 11% and the Scottish area down 6% year-on-year, which will see production around 1.7m tonnes against a consumption level of around 2m tonnes.

The European rapeseed outlook remains tight too, but Ukrainian production forecasts remains relatively high with a record area of 1.3m ha but yields and oil content are lower year-on-year. The USDA forecast oilseed production at 3.9m tonnes, but with 60% of the crop harvested, yields look like being down 10% from last year.

The French oilseed rape crop is forecast 200,000 tonnes down from the June prediction and will result in a 27% drop on the 2018-19 production figure. Because of lower production, EU oilseed imports for 2019-20 are put at 5.8m tonnes which would be an increase of 38% on last season and with weather improving in Canada and Australia, the market is expecting a heavy programme of imports from these countries in the coming months.

The UK oat area looks set to be up 8% on last year and the highest on record going back to 1980, due in part to oats being included in the rotation to control grass weeds. This includes 36,000 ha grown in Scotland and if the UK produces around 1m tonnes of oats this year, then UK oats will need to find an export market as demand is around 850,000 tonnes.

Then, there's another problem. Some 93% of UK oat exports are destined for the EU and so beyond October 31 oats could face a tariff of €89 per tonne in the event of a no deal – a tariff which is entirely prohibitive. Our remaining trade has been with China, North Africa, North America and Norway, and these markets will become increasingly important to the UK oat market in the event of a no deal.

But, in order to sell into these markets, oats have to be of good quality and the challenge for oats last year was quality when drought resulted in high screenings but firm milling oat prices as a result. So, quality will be the key for oats this season