IT SEEMS we have endured a never-ending stream of winter storms since the turn of the year and earlier this week we suffered the consequences of storm Dennis.

This wreaked havoc over many areas of the UK, but England would appear to have generally come off worse than Scotland. Flooding and high winds have done a lot of damage and with rivers bursting their banks once again, this means that spring work is being pushed even further back.

Winter sown crops where flooding has occurred will also have a questionable survival rate and any further thoughts of late drilled wheat is pretty much out of the question.

Adding to the gloom, in line with world prices UK wheat prices lost value again this past week, not helped by sterling strengthening against the euro to its highest close since June, 2016, with £1 equalling €1.204. The euro also continued to fall against the dollar to close at the weekend to €1 to $1.08, the lowest value since April, 2017.

While sterling’s strength enables imported wheat to be bought more cheaply, that in turn has a negative impact on UK domestic prices. It also affects our ability to export.

The weather is another factor affecting domestic prices and this has countered the rise in the value of sterling. Since September, the wet weather has actually lifted old crop May, 2020, feed wheat futures have risen by £15.25 per tonne and the new November, 2020, futures by £20.

Despite this long-term gain since September, from late January losses have been evident. The effects of coronavirus in China has hit demand for a range of agricultural products since the disease had its first registered death on July 11. Along with the Chinese outbreak of African swine fever, this has all resulted in pushing world market prices lower for grain crops.

May 20 old crop feed wheat futures currently stand at £152.55, down £1.75 on the week and November, 2020, new crop is down to £161 per tonne. Delivered UK milling wheat is currently worth £186.50, feed wheat £158.88 and barley £131.50 per tonne

The extent of a possible UK wheat shortfall next season may become more evident when the next USDA report comes out. Farmer’s initial intentions to drill a wheat crop 9% lower than the previous year will now be even lower following on from the ongoing difficult conditions.

Within the EU28, the UK is the third biggest wheat producer, following France and Germany, and so far this season the UK has exported 841,400 tonnes between July and December. If we maintained this pace, we are still looking at 3.18m tonnes of wheat left available at the end of this season for carryover into next year.

However, this could be necessary to make up the reduced tonnage from this year’s lower planted wheat area, making the incentive to carry old-crop into the new season is likely to be attractive for some farmers. This means that the UK is likely to switch to a net importer next season.

The USDA’s latest world supply and demand figures this week did not have any major ‘alarms’. World production dropped 440,000 tonnes to 763.95m tonnes, consumption dropped 180,000 tonnes to 754.19m tonnes and year-end stocks were down 50,000 tonnes to 288m tonnes, which was still a record high.

The change in sterling has also hit oilseed prices. Oilseed rape delivered to Erith is down £2 this week to £334 as sterling strengthened by 2.32% last week. That meant that old crop values were largely unchanged despite a €10 increase last week in the Paris futures prices.

The Brazilian soyabean harvest is nearly 20% complete, with above average yields and a forecast production of 125m tonnes, which would be up from 117, tonnes in 2018/19. That will put the brakes on new season prices.

Traders will be watching to see how US exports go when the phase one deal between the US and China, which became active on February 15, kicks in. There are still tight supplies of rapeseed in Europe and the market will continue to trade of the short term strong export demand for US soya but this could come under pressure from the increased Brazilian production from the harvest now under way.

October’s UK export figures for barley were the highest in over 20 years, but the recent increase in sterling has done little to help the UK’s competitiveness with fresh barley exports. There has been little change in the malting barley prices as premiums come under pressure, with little demand at this time.

Barley will be under pressure from an increased threat of a large barley crop estimated to be around a 23% increase in planted area and an 8m tonne crop forecast, but another factor is a continued high level of maize imports coming into the UK.

The UK imported 238,000 tonnes of maize in December taking the total tonnage for the season-to-date to 1.24m tonnes, which is just 49,000 tonnes below the same point last year. This will increase pressure on UK barley prices for the remainder of this season and a second consecutive 8m tonne barley crop would result in barley availability of around 9m tonnes, which would be similar to the 2019-20 season.

Demand for wheat from the EU, though, has remained fairly strong so far this season with the EU commission reporting increased weekly exports averaging 544,000 tonnes per week. Up to February 2, EU exports stood at 16.4m tonnes compared to just 9.9m tonnes at the same time last year. France exported its biggest tonnage of wheat for six years during January and the Ukraine exported 15.9m tonnes, which was 4.3m tonnes ahead of last year at this time.