We are at the end of November and yet the UK has not reached a Brexit deal with Europe – but a recent trade agreement with Canada is a more positive move.

We are hearing more about quotas from different countries that could soon kick in and the Russian agricultural ministry had announced a limit, known as a tariff rate quota, TRQ, on the volume of grains that can be exported from there from February 15 until June 30 of 15m tonnes, which might help steady the market.

China has continued to purchase various commodities and is forecast to exceed its annual TRQ of 7.2m tonnes of wheat, which includes an expected 2m tonnes from France – one of China’s few approved suppliers. China’s imports of barley, maize, sorghum and wheat almost doubled to 5.16m tonnes from July to September, 2020, compared to the same period last year and their maize import forecast was put at 13m tonnes.

The UK is forecasting a wheat import requirement of 2.15m tonnes of wheat this season and Ukraine is likely to be a source of that and over the last five years had provided 2% of all UK wheat imports and the TRQ of 136,000 tonnes of low and medium wheat is greater than wheat imports of recent marketing years and should help further future trade when we leave the EU at the end of the year.

Above this TRQ tonnage, low and medium quality wheat would incur a tariff of £79 per tonne. Tariffs for high quality wheat are currently set at £0 per tonne under the UK General Tariff Schedule, however there is currently little information around what tolerances there would be on the specification of imported wheat.

The EU had stated a 0.7% protein tolerance at a 12% moisture level, though so far there are no further details with regards to the UK position, but there is the potential tariff on imported wheat below 14.6% protein.

Last week, the final AHDB cereal quality survey results from the 2020 harvest showed that only 32% of Nabim Group 1 wheat samples hit full specification milling quality, which is 10% lower than last year and 5% lower than the five-year average. That was not unexpected given the effect of the weather at harvest time.

There is a UK-Ukraine continuity agreement which must first be laid before Parliament and ratified. If accepted, this will facilitate trade after December 31 and is positive in terms of assisting 'normal' trade when the UK leaves the EU, providing some reassurance that imports of both low and medium quality maize will continue.

That's important as the Ukraine maize imports of 906,000 tonnes accounted for 65% of non-EU imports in 2019-20. The new TRQ outlines a limit of 108,000 tonnes and while this falls short of the previous year’s imports, above the quota, the UK General Tariff is set at £0.00 per tonne for maize.

Russia limit to grain exports is due to securing enough wheat supplies for their domestic millers and feed producers. There, domestic wheat and flour products are continuing to rise and have set new record high prices.

There are also concerns for the Russian 2021 wheat crop as temperatures fall to well below freezing with the potential to damage exposed crops with little snow cover and some analysts are already forecasting a wheat crop some 10m tonnes lower than this year, despite a 1m ha increase in area drilled with winter wheat.

World wheat markets have been quiet, with no fresh news to drive them any higher. US wheat exports last week were lower than expected at 192,000 tonnes, instead of the predicted 250,000-500,000 tonnes, but in the UK, which has a tight supply situation, there was an increase in wheat prices which set new contract highs

That was also helped by animal feed compounders being active in the market topping up supplies before the end of the year, while prices were also helped by rising maize prices, which have gone from £168.53 per tonne delivered in July, to £220 per tonne for December delivery.

With maize prices set to remain high, that will continue to support wheat prices. The November, 2020, Liffee old crop feed wheat futures currently stand at £193.25, which was up £2.25 on the week and May, 2021, is currently at £193, and new crop wheat futures for November, 2021, is at £160 per tonne, or up £1.15 from last week.

US weekly maize exports of 1.09m tonnes are ahead of trade expectations and the US season export total is put at 35m tonnes, which is 2.5 times higher than this time last year.

Overall world wheat production has dropped to 772.38m tonnes and stocks are revised down to 320.45m tonnes, similarly maize production has been forecast down to a new total of 1.1446bn tonnes and this is mainly due to lower US and Ukraine maize yields, but EU and Russian yields are down as well.

Prices have been helped by the strong buying pace from China which has increased its maize tonnage this season by 6m tonnes up to 13m tonnes. As a result, world year-ending stocks will be 12m tonnes down on the previous USDA report at 291.43m tonnes with 191.51m tonnes of that total stored in China.

A trade war induced Chinese tariff of 80.5% on Australian barley is causing concern for Australian farmers. From there, on average over the past five years, some 4m tonnes have been exported to China and this tariff is proposed to continue for five years which will mean they will source supplies from France, Ukraine, Argentina and Canada.

A second 8m tonne-plus UK barley crop in succession as meant that exports are going to be crucial to the UK barley market. As many samples did not make malting standard, this leave a bigger tonnage of feed quality to export.

The AHDB survey showed that malting barley samples from Scotland had an average grain nitrogen level of 1.47% and English samples were averaging 1.89% and with the maximum nitrogen level for export brewing at 1.85%, this means more barley for the feed heap.

Ex-farm barley was recently quoted at £138.50 as at November 12 which was a hefty £46.80 discount to feed wheat. This gap has grown since the start of the season and any gains in the price of barley has been on the back of wheat price increases.

Prices have been helped by barley inclusion in animal feed rations, which are up 28.5% year-on-year, but brewing, malting and distilling usage is down by 14.7%.

With Brexit looming and the risk of trade tariffs the UK could have to compete with Australia, Black Sea, and France for non-EU export business. A no-deal scenario would result in tariffs for UK barley going into the EU, where the EU TRQ for barley stands at 307,000 tonnes of imports at €16 per tonne, after which a €93 per tonne tariff will be imposed on tonnages above the quota.

Last season, 23% of UK barley exports went to non-EU homes, the largest share since 2015-16 and if the UK exported a further 24% of its available barley before the end of December, this would theoretically leave 1.4m tonnes of the surplus barley post-December for either stock, or export.

Oilseed rape markets have stayed firm recently and UK delivered rapeseed for December was up £4 per tonne to £375.50, which is the highest since early 2017 where the Erith crushing plant is now again up and running.

Demand for soyabeans from China had also helped support oilseed prices as well as the tight supply and demand in the UK and EU. European rapeseed prices are finding new contract highs and Canadian canola prices are at a seven-year high, with US soya markets also trading at the highest level since 2016.

UK prices have gone up £30 per tonne since early August and £60 since the middle of March, despite a 3% increase in the value of sterling since the middle of September.

These price increases are, in part due, to the very dry conditions in Brazil and Argentina, where September to November rainfall had been at a 40-year low during a period crucial to the planting season for South American producers. With the current demand situation and weather concerns, it is difficult to foresee a change in optimism for oilseed prices any time soon.