WE’VE had the direst spell these past few weeks, than we have had for many months – following the wettest autumn on record in the UK.

Spring work is now progressing well, but there remains wet areas in some fields that are not able to be sown. This week was cold, with wintery showers and winds from the north and east, but looking ahead the forecast is for warmer weather, which will get new sown crops moving.

The planned cropping areas for the UK are now very much different from the first AHDB ‘early bird’ survey, due to the very wet autumn and winter weather. This has now updated and the UK winter and spring wheat area is forecast to be down by 17%, with Scotland down by 9% – which is 7% lower than the forecast in November’s survey.

Scotland did not have as much wet weather through the autumn and spring as did England, hence the bigger variation in areas than down south.

UK-wide though, growers intend to double the area intended for spring wheat, although only 2% had been planted as at February 14, but good progress has been made since.

The UK winter barley area is down 23%, again with Scotland only down 7% and this has seen a large swing to towards spring barley – up 47% from 2019 and 10% more than intended back in November. In Scotland the spring barley area is marginally up by 3%.

The UK oat area is up 26% from last year – or 12% more than planned in November – and this consists of a greater area of spring oats, which this year will account for 66% of the total, compared to 58% last year. In contrast, Scotland expects its oat area to be down by 3%.

The overall oilseed rape area is down by 32% from 2019 – due to crop losses because of poor establishment and cabbage stem flea beetle damage. In Scotland, OSR is only down by 6% which again reflects the better weather conditions compared to the rest of the UK. The other major change is that pulses in the UK are forecast to be up by 27%.

However, a notable variation in the figures in the survey is a 50% increase of arable fallow land in the UK, which may be the best option for some. This might have an impact on cash flows but might be the only route available given the recent weather and soil conditions.

Due to the ongoing and worsening situation with Covid-19, there has been much volatility in commodity markets. Governments have made some big decisions recently and interest rates in the UK were cut to a new historical low of 0.1% (previously 0.25%) as part of measures to try and boost the economy.

The US government and senate also agreed a new package to try and reduce the impact of the outbreak on the US with a $2tn package to support its economy. This has been helped by signs of global export business resuming with China, which bought 756,000 tonnes of US maize for delivery in the 2019-20 marketing year and also intends to buy 340,000 tonnes of hard red wheat over the next two years. This is the first major purchase since the Phase 1 trade deal signed in January.

The International Grains Council forecasts that the world will produce a record wheat crop during the 2020-21 season reaching 768m tonnes, which would be 5m tonnes up on last year. It predicts gains for Russia of 6.4m tonnes, Australia of 8.8m tonnes and India of 4.4m tonnes, but a significant decline for the EU is also anticipated – a reduction of 9.6m tonnes from last season.

If this all happens, then world wheat stocks will rise by 8.5m tonnes to a record 283.2m tonnes, but stocks for the major wheat exporters will be 4m tonnes lower, bringing the total to 62.8m tonnes. Total world grains in 2019-20 is now put at 2175m tonnes, up 3m tonnes from the last estimate and accounting for a larger maize production in the EU. Grains production for the 2020-21 season is forecast at a record 2223m tonnes, or up on last year by 2%.

Russia’s domestic flour prices reached record levels last week, which could lead to flour shortages and limit food exports. US wheat futures rallied to an eight-week high on concerns that Russia might restrict its wheat exports.

This is because Russia is the largest wheat exporter and so far this season has already exported 26m tonnes of a 35m tonne target, following the strong devaluation of the Russian rouble, which made its wheat far more attractive than US grain for export.

UK wheat prices have been particularly volatile due to the wide swings in the value of the pound to the euro. With sterling at its weakest, trading within a 5% range against the euro, 2020 London wheat futures rallied to new contract highs before losing value last week as sterling strengthened.

May, 2020, old crop Liffee feed wheat futures currently stand at £157.55 having been as high recently as £166 and November, 2020, new crop wheat futures stand at £170 per tonne, down from a recent high of £175.50.

While this is the highest at this time of the season since March, 2013, these figures are changing rapidly all the time as gains in the short term have been supported by increased demand from panic buying in supermarkets and global wheat market gains.

There are no reports of food shortages –retailers claim that there are ample supplies – but there has been a concern that Covid-19 has put an enormous strain on their food supply and demand process.

Currently, delivered UK bread wheat is worth £197 per tonne, feed wheat is worth £171 and feed barley £137, so still a big discount to feed wheat for ration inclusion. The big price difference between wheat and barley is due to the presence of imported maize and a relatively large supply of barley pressuring domestic markets.

The restrictions imposed by Covid-19 is also affecting beer sales due to the closure of restaurants and pubs, and hence barley sales.

Due to the fall in the value of sterling, particularly against the euro, there has seen some export demand to give a late season boost to UK traders, but there is also competition from Russia.

New crop oilseed rape is worth around £300 ex farm which is due largely to the value of sterling which has devalued by 10% against the euro since the middle of last month and has resulted in the cost of imports into the UK rising by over £30 per tonne, however oilseed rape dropped £3 per tonne down to £323 for rape delivered Erith with the recent strengthening of sterling.

A further reduction in EU oilseed rape production is forecast down to 17.59m tonnes for 2020-21 and this will see the EU still requiring to import oilseed rape. That should maintain the value of rapeseed at a premium to other vegetable oils in the coming season.

Potato planting has resumed with the recent dry settled weather but retail demand for potatoes has dropped following the nationwide lockdown imposed last week. With the closure of non-essential shops, such as restaurants, this has seen demand drop following the initial panic buying in the supermarkets. Many families overstocked initially and currently are not buying more at present while the closure of schools has seen many orders for potatoes cancelled, including for chip shops except those operating a delivery service.