September had some dry autumn weather to allow harvest throughout Scotland to progress well and most grain and oilseed harvest are all but done.

Potato lifting has also gone well, but I am told that in the Borders some potato fields had to be irrigated before lifting as the dry soil is doing damage to the skins during lifting.

This was certainly not the case in some areas in late August, which saw some wheat and barley crops weathered to the point of being only suitable for animal feed rather than milling, or malting due to the rain that came at that time.

This produced the price gap between ex-farm feed barley against malting open to more than £16 per tonne – it was around £13/tonne at this time last year. Due to that poor spell during harvesting, some crops lodged and wind ear loss occurred as well, resulting in yield estimates dropping from previous forecasts. Hagberg levels also dropped and a degree of sprouting took place.

Because of those weather issues, as at September 22, the AHDB estimated the yields for GB wheat at 7.1-7.3 t/ha, which is 13-15% below the 2015-19 average and winter barley at 6.5-6.7t/ha, or 6-9% below the same period.

Spring barley at 5.8-6.1t/ha is somewhere between 1-6% above the 2012-19 years and oilseed rape at 2.7-3.0t/ha is down by 18-26%, but this also due to disease problems as well, especially in England. Oats are estimated at between 5.1-5.3t/ha, which would be 6-10% down on the previous five years.

Due in part to the reduced yields and the collapse of sterling, November, 2020, feed wheat futures rose to £182.75 per tonne last weekend, before dropping back earlier this week to £180 and May, 2021, dropped as well from a new contract high of £183, down to £179. November, 2021, was down £1.50 to £153.50.

It is interesting to note that in mid-September last year the November wheat futures stood at £140.30, which is just over £40 per tonne down from last year at this time.

Sterling devalued by 4.4% against the dollar between September 1 and 11, and this pushed up nearby UK feed wheat futures by £7.65 per tonne. On September 1, sterling was at its highest point against the dollar since June, 2018, at $1.33 equivalent and we will still see sterling volatility as Brexit negotiations get to their finale.

With UK wheat trading at, or close to import parity, currency will be a key driver for prices. Any continued weakness in sterling would support prices, but also make imported inputs such as machinery, fertiliser and fuel more expensive.

Recently, the USDA revised world wheat production estimates added 4.5m tonnes to world output, up to 770.49m tonnes and increasing season end stocks to 319.37m tonnes. This up almost 20m tonnes on the year due to increased wheat production estimates for Australia, Canada and the EU.

The global wheat surplus had already been forecast at 23.6m tonnes in 2020-21 and further increased wheat production in Russia could push this surplus figure towards a record 29.9m tonnes set in 2014-15.

The AHDB Basic Payment Scheme figures now estimate that the 2019-20 UK wheat production could even be around 3% smaller than the Defra June census figures stated.

The estimated yield of 8.9t/ha for the UK wheat crop would put production at only 15.631m tonnes, which would mean there’s around 600,000 tonnes less wheat than previously thought. If this is the case, it leaves an even greater import need to meet domestic demand.

Meanwhile, there are wide-ranging trade estimates for the 2020 UK wheat crop. If the reality is as little as 9m tonnes, the import need could be a staggering 4.5m tonnes, a challenging target for the supply industry to meet.

French wheat exports outside the EU are now only expected to total 6.6m tonnes in 2020-21 instead of the 7.75m tonnes forecast in July and 13.5m tonnes in 2019-20. This sharp drop reflects the export pace to date and is due to a 25.5% year-on-year drop in production.

Drilling conditions in the Ukraine are reported to be the worst for 10 years, with much of the country in extreme drought and soil moisture reserves are the worst seen for the past 50 years, with little rain forecast. This season’s wheat crop from the Ukraine is expected to be 27m tonnes, 2m tonnes lower than last year as a result of the dry conditions and will see their exportable surplus reduce by 3m tonnes.

EU wheat production this year is put at 129.22m tonnes, which is 18m tonnes down on last year, also Russia has had strong wheat exports to date and may well introduce grain export quotas in the second half of the season from January to June, 2021, to ensure domestic supplies are catered for. Growers there are also having difficulty getting their winter crop sown due to drought.

There are concerns for crops elsewhere around the world and the condition of some crops in Argentina are described as ‘critical’ following months of dry weather. Its wheat production estimates dropped from 21m tonnes to 17.5m tonnes.

UK feed barley exports are continuing, mainly to the EU as barley holds its discount price to wheat at approximately £40 per tonne. Prices remain volatile as currency fluctuates due for various reasons and a devalued sterling makes the UK more competitive to export to other third country destinations, such as the major North African markets.

UK feed barley for export has been quoted at £143.50/tonne for October and a greater focus on barley exports is expected this season.

Scotland has produced barley yields ranging between 6-8t/ha and has seen some good quality crops produced, resulting in an exportable surplus. With spring barley representing around 75% of the total UK barley area of crop 2020, spring yields are a crucial factor in determining the final crop size.

Some Scottish malting barley will be moving south into England, despite its own large barley crops as these suffered from poor weather at harvest time and had high nitrogen samples not suitable for malting, as well as germination and pre-germination issues. This will result in Scottish low nitrogen barley going south to blend with English malting barley, or used on its own to support the low-nitrogen English malting barley demand.

UK delivered oilseed rape delivered Liverpool is currently worth £357/tonne delivered, or £9 down on the week due to the strengthening of sterling. A lack of confidence in energy markets, due to mounting pressure from increasing coronavirus and a stronger US dollar, saw Brent crude oil futures closed down 2.85% last week to $41.92/tonne.

For the UK market, there is also concern that if the government does not get a Brexit trade deal in place with the EU before the end of the year, there could be another jump in the value of sterling again and some forecasters put this at as much as 4%, which could see a fall in price of rapeseed by as much as £15.99 per tonne.

China is expected to import around 100m tonnes of soyabeans in 2020-21 which will help to support rapeseed prices and at the start of September, US sales to China stood at 16.3m tonnes and a further 2.6m tonnes have been confirmed as well.

Alternative oilseeds are important for EU and UK as the tight availability of rapeseed means that soyabeans, sunflower seeds and palm oil will be required and currently due to large and increasing Chinese imports these other commodities are becoming more expensive imports to buy.