Brexit has happened and we are trading again – without all the tariff concerns that have been threatened in the months before the deal was done.

It might not all be to everyone’s satisfaction, but at least we now have some sort of game plan – but as always, the devil is in the detail. Exports, as predicted, are having logistical problems at the ports and we will be in this awkward situation for some time until some common sense prevails and we learn to work together better post-Brexit.

The Covid-19 vaccination programme is gradually being rolled out, though all areas are experiencing different rates of success and January is slipping away with the weather, again in different areas giving some winter snow conditions but looking at the forecast for the next few days rain is going to be widespread in most areas.

The world agricultural supply and demand estimate report issued earlier this month has seen some commodity futures volatility following a period of prolonged market price gains not seen since 2012-13.

It is not long since the Liffee feed wheat futures breached the £200 per tonne mark and this week we have seen May, 2021, old crop wheat futures rise by over £4 to £214.40. November, 2021, new crop wheat futures are up by a similar amount to £171.40 and November, 2022, currently stand at £161.40.

The Chicago Board of Trade wheat futures rallied by almost 5% and both Paris and London wheat futures hit new contract highs for both old and new crop markets.

The current strength of sterling, which last week rose against the euro by 1.33% to trade at £1= €1.1246 did soften the UK price rally, but May, 2021, Liffee wheat futures still rose to their highest point since January, 2013.

Markets were, in any case, expecting to see some price increases with global weather issues causing concern for many crops. Argentina and Brazil wheat crops were forecast lower due to dry conditions and along with increased demand for US wheat – and that all made for predicted higher prices.

The US maize crop was forecast down 4m tonnes from previous estimates and at 39.42m tonnes, US maize stocks were 9m tonnes down on last year – their lowest since 2013-14.

Last May, the USDA estimated world maize stocks would increase to 373m tonnes by the end of the season, which would have suppressed prices, however subsequent crop losses in the US, Ukraine, Russia, as well as the EU and South America, meant this estimate is now down to below 284m tonnes. That is almost 90m tonnes below the original estimated figure.

Global maize production in 2020-21 is now estimated at 1143.6m tonnes due to falling production and demand is predicted to rise. As a result, world end maize stocks are now down to their lowest figure since 2014-15 and this is also helping to lift both global maize and wheat prices.

Global maize consumption has risen by 30% from 2011 to 2019-20 and growth of 3% is expected in the next few years as higher feed demand from China is one of the main reasons. It is forecast to use 286m tonnes of maize in 2020-21, which equates to 25% of world demand and in the 10 years leading up to 2019-20, Chinese domestic demand increased by an estimated 38%.

This increase could well affect the UK, as our domestic consumption has risen by 7.5% year-on-year to 2.32m tonnes in 2020-21, due to a 21% higher human and industrial use. Imports are forecast to rise year-on-year by 3.2% to 2.45m tonnes to satisfy this.

Another reason for wheat price support is the increase in the Russian wheat export tax that was originally going to be set at €25 per tonne which would apply to its 17.5m tonne wheat export quota to run from February 15 until June 30.

This will now run until March 1 and then will increase to €50 per tonne until the end of June. There will also be a €10 export tax on barley and a €25 tax on maize to act as a brake on exports.

An example of how wheat prices have increased this past month is shown by Egypt receiving significantly inflated offers for its latest tender to purchase wheat last week. That was £45 per tonne above the price the country paid in its previous tender in mid-December.

Grain prices are also being supported by countries throughout Asia and North Africa who have increased their purchases of grains in recent months and this demand on a global scale such as a weaker dollar and inflation has led to a positive increase in agricultural futures contracts.

So far, all the news has been about increases in cereal prices for reasons as mentioned earlier but on the flip side looking forward, EU 27 wheat production is expected to rebound next season to nearly 130m tonnes, up from around 120m tonnes last year and this could put some pressure on prices.

The US winter wheat crop, where harvest is due to start in May, is estimated at 12.95m tonnes, up 5% from 2020 and currently 46% of Kansas' winter wheat is in 'good condition' as against 40% a year ago. All eyes will be watching what the weather there does in the next few months as soil moisture levels for the Midwest and plains now are at their lowest since 2018.

Snow cover is increasing across much of Ukraine which will help winter crops survive against freezing temperatures and this will reduce the risk of winter kill. Also, parts of Europe that experienced very cold weather are expecting milder weather soon.

On the whole, conditions look to be set fair for wheat crops next year and having said that, currently, UK November, 2021, wheat futures are £21.17 per tonne ahead of the five-year average for November contracts at this point in the season.

This season’s wheat exports from the EU to end December reached 12.86m tonnes, compared to 15.11m tonnes for the same period last season. During 2019-20, EU wheat exports amounted to 34.7m tonnes, with shipments reaching almost 20m tonnes for January to June, 2020.

The total available to export this season is less than 25m tonnes and half of this has already been done, which leaves EU stocks at a bare minimum and this shows why the EU needs to ration export demand as Russia is doing by introducing export tariffs.

World feed barley prices have risen again this week, supported by increases in global wheat and maize prices and UK feed barley prices are starting to narrow the discount to feed wheat values.

In the UK, the price of feed barley has risen by around £15 per tonne since the beginning of this month as demand for domestic winter livestock feed increases and barley for export to mainland Europe where tariff-free trade continues with the EU.

Barley usage by maltsters and distillers from July to November was down 12% on the same period last year due to Covid-19 restrictions but feed barley use in the UK was up 34% over the same period and highlights how demand increases when barley gets to a £50 per tonne discount to wheat.

Oilseed rape price delivered Erith as at December 18 was quoted at £380 per tonne and on January 8 had risen by £16 per tonne to £396 – in part due to Brent Crude oil futures reaching their highest level since February 24 last year.

There was also a combination of sustained buying by China as well as the effect of drought conditions in South America where 17% of the soya crop is in 'poor' or 'very poor' condition, compared to 7% the previous week. Rainfall is expected to improve conditions in the short term, but forecasts are for drier weather to follow.

Chinese buying has also supported prices with their US soya purchases for 2020-21 now standing at 32.8m tonnes, compared to 11.1m tonnes in 2019-20 up to the end of December.

The delivered OSR price to Erith, though, is now down £4 to £392 as crude oil markets and Paris rapeseed futures fell this past week.

The recent WASDE report indicated that the US soya stock-to-use ratio was at 3% but others think it is nearer to 1% and suggestions are that the US will run out of soya before next harvest, unless prices rise sufficiently to ration demand.

There is reducing confidence that the world can find enough spring acres to plant in order to rebuild oilseeds stocks in 2021-22 and Northern Hemisphere farmers will need to find an additional 8m acres to sow with beans this spring so oilseed markets are expected to remain firm over the coming months.

In the UK, a 20% drop of oilseed rape planting is expected but in Europe a 4% increase is forecast and when combined with a slight yield improvement, this could result in an additional 1m tonnes of EU production.