Following on from 92.3mm or 3.63 inches of rain in August and 436.5mm or 17.18 inches for the year up to the end of August, September has been relatively dry, sunny and windy, allowing harvest progress to go well. Some potato fields, in fact, have had to be irrigated before lifting as the soil was too dry and doing damage to the potato skins.

Winter crops have been going into good seed beds and straw has been able to get baled without too much rain either, so a good back end to what seems to have been a long ongoing harvest, and further north in Scotland there is still quite a bit of harvest to do yet.

The USDA latest September figures show a small reduction in the global wheat and maize crops but with reduced consumption this left estimated year end stocks only slightly lower than last year.

Wheat production in Australia, Russia, Ukraine and Kazakhstan was down on original estimated figures but this was partly offset by increases for EU-28 and India. Overall, world production is down 2.5m tonnes on previous estimates, however the tonnage is up 35m tonnes on last year to a record 765M tonnes. Consumption is 2m tonnes down on previous figures but is 21m tonnes up on last year. This leaves year-end stocks up 9m tonnes on last year at a record 285m tonnes.

High yielding wheat crops and concerns over Brexit have seen significant volumes of wheat being sold by farmers during the harvest period and last week more than 88,000 tonnes of wheat had been sold and is more than in any week since the 2000 season.

The current GB wheat yield estimates are at 8.9-9.0t/ha, an increase on the five year average of 8.3t/ha.

With record crops for many Northern Hemisphere countries this has led to strong competition in export markets. Ukraine wheat exports were over 3.5m tonnes in August and Russia exported more than 4.8m tonnes more than in any previous August.

EU exports up to September 1, stood at 3.633m tonnes of soft wheat which is 7% ahead of last season’s pace and a third of this tonnage was going to Saudi Arabia, Algeria and Egypt. The EU-28 exportable surplus is estimated at 24.8m tonnes which is 3.7m tonnes up on last year and they will have to be more price competitive to compete with Russia and Ukraine wheat exports.

Based on a three year average, 94% of UK barley and 90% of UK wheat exports move into Europe and the latest figures show a sharp drop in purchases for post October movement.

As at August 29, 26,300 tonnes of feed barley was bought for movement August to October with just 1800 tonnes purchased for November onwards. The uncertainty around Brexit is slowing trade and not just in agriculture as UK manufacturing companies have seen sales drop to their lowest level since July 2012.

With an increasing likeliness of a no deal outcome, sterling could continue to weaken against both the euro and the dollar which would offer support to physical UK prices as seen in physical oilseed prices recently. Recently, however, the pound has been stronger and has risen to a seven and 12 week high against the dollar and euro respectively.

Sterling rose by 1.01% on the dollar to $1.2457 and was up 0.91% against the euro at €1.1249 and this does not support commodity prices.

Based on a UK wheat crop of 15.9-16.2m tonnes, the UK could have as much as 2.6-2.9m tonnes available for free stock or export this season. This is a significant rise on the past two seasons and assumes that human and industrial demand will be up 4000 tonnes due to the Ensus plant coming back on stream and animal feed demand broadly in line with last season.

While it is possible for the UK market to export wheat to non-EU markets, there are a few barriers which could prevent large exports of wheat. These include specification where wheat has to be at a maximum of 14% moisture, admix, where a zero-ergot tolerance operates, trade agreements and being competitive with vessels large enough to keep freight rates at a minimum.

The Liffee feed wheat futures for November 2019 were not affected last week as they finished the week at £134.40 and varied by only £1 all week. At this time last year, the November feed wheat futures stood at £165, just over £30 from where it is now and the May 2020 futures were also £30 higher for the same period and currently stand at £140.80 per tonne.

The USDA figures for maize dropped the US production by 2.5m tonnes from previous estimates but cuts in demand leaves US stocks marginally higher at 55.62m tonnes, but this is 6.5m tonnes lower than last year, overall global stocks are 23m tonnes lower than last year at 306.27m tonnes.

Barley sales have slowed this past week due to the rise in value of sterling and also lack of port availability to load vessels for export. However, a significant number of ships will be still loading barley which shows how price competitive the UK has been over the harvest period but again with the stronger pound this hinders sales as does the large amount of winter forage produced this year on farm which is likely to reduce feed barley demand for animal feed rations.

In order for UK export sales of barley, traders will have to price the barley competitively against the likes of the Black Sea region and France who are key competitors to UK trade into non-EU markets.The demand from non-EU countries is usually in the form of larger ships and there are fewer ports in the UK where 60,000 tonne vessels can trade from which may also limit which traders can access these markets and the strength of the pound will be critical as well in making the barley competitive.

With the Black Sea generally priced in US dollar terms, the dollar-sterling exchange rate will be as important as the euro-sterling exchange rate. The EU commission has raised its 2019-20 barley production forecast to 60.5m tonnes, up 800.000 tonnes from last month’s estimate and this looks like being the largest barley crop since 2015.

Oilseed rape production in the EU is down 13% at 17m tonnes against last year due to a smaller grown area in Western Europe compared to Eastern Europe and this figure represents a 15 year low.

The UK will look to Black Sea and France growing areas for oilseed import requirements as well as Australia and Canada. Australia has suffered from drought, and production there is expected to be 29% below the 10 year average. Canadian production at 19.4m tonnes, will be a 4.8% drop on last year and this season so far, 13% of total EU rapeseed imports have originated from Canada.

The UK and Europe could also import US soybeans to make up the rapeseed deficit and to date US soybeans to the EU have totalled 920,000 tonnes. There is some concern regarding the US soybean yields as reports that 6m acres of beans had failed to form pods by last weekend.

The US-China tension appears to be easing which will support soybean prices and talk of a possible China trade deal and bean sales to China are currently sitting at the high level of 1.17m tonnes.

US soybean prices have dropped by 7% over the past three months due to the US-China trade dispute and China has done a deal to import Argentinean soymeal for the first time.

Currently, UK oilseed rape prices are trading close to import parity levels and oilseed rape delivered Erith was down 50p last week to £345 per tonne.

Crude oil prices have spiked recently on the back of an attack on Saudi Arabia’s largest oil processing facility halting 50% of the country’s output. Saudi Arabia is the world’s biggest oil exporter, so an interruption of this scale could impact global oil supplies, driving prices higher but it is believed that the US is releasing some stocks to prevent increased prices.