With Covid-19 ongoing and lockdown issues making January seem even longer than normal, we also had a wet month – with 103.4mm, or four inches of rain recorded at the Aitchison family’s Lochton farm rainfall gauge, near Coldstream.

This figure is three times the amount that fell in January last year and up to the middle of this week, we've had very little snow in the Eastern Borders, but did have some good hard frosts.

According to the Met office, it's been the coldest UK January for 10 years, which will help spring cultivations on heavy ploughed land still to be sown. There will not be as much land to sow this spring as a lot more winter wheat was planted this past autumn into good seed beds, but with the rain last month there's a lot of surface water still evident.

In recent weeks, we have seen wheat futures ending their 30% price increases which started last August. The Liffee feed wheat futures peaked and set a contract high price that had not been seen since January, 2013.

One of the main reasons for the high price was concerns for the availability of wheat supplies, and not helped by Russia increasing its wheat export tax from €25 up to €50 per tonne from March 1 until June 30, restricting tonnage. This will support prices in the short-term but going forward, Russia is also looking to introduce a 'floating' tax which may reduce prices.

High prices don’t last forever. They either drive increased supply or destroy demand and since the start of January, London wheat futures have been down by nearly £15 per tonne.

In previous years, we have seen prices fall in a big way. In 2012-'13 wheat prices were above £200/tonne and the following harvest the wheat price fell to £150-£160/ tonne.

The November, 2021, old crop wheat futures contract currently stands at £166.50/tonne, which is £23 ahead of the average of the previous five November contracts at this point in the season. March, 2022, futures are at £170.65, November, 2022, futures currently stand at £157.25 and May, 2021, old crop was down £3 last week to £206.35/tonne.

The EU wheat balance sheet is tight this season, which all helps to support prices. Its export surplus is 10m tonnes lower than last year and to date 13.991m tonnes of wheat had been exported, compared to 16.733m tonnes last year at this time.

About 25m tonnes had been forecast to be exported by the end of January, leaving just over 11m tonnes available for export up to the end of June when, last year for this period, 18m tonnes were exported.

UK wheat imports mainly come from the EU, but the share of non-EU imported wheat has been increasing in recent years. Imports of milling grade wheat now come from North America, as well as Germany and France.

Average UK wheat imports from 2017-18 to 2019-20 have been 384,000 tonnes from Canada, 262,000 tonnes from France and 222,000 tonnes from Germany, plus smaller amounts from Bulgaria and Romania.

Last year, UK wheat production was just over 9m tonnes and is expected to be back up to over 15m tonnes this season. If we are in an export situation this year, most wheat exports will be feed wheat and destined for the EU and some to North Africa.

UK feed wheat faces competition from maize imports which can be partially substituted into animal feed rations. Two major UK bioethanol plants are major users of feed wheat and one of them can also use maize as feedstock, but only one of the plants is operating at present and at a reduced capacity.

Recently, US maize futures recorded their first week-on-week decline for six weeks which pulled down global wheat futures, but more recently global grain markets have made some gains and again this is due to China’s expansive buying programme when it bought 22m tonnes of maize, or 4.5m tonnes higher than the USDA had forecast.

Maize futures, though, eased as much needed rain had fallen on the South American maize crop where previously soil moisture reserves were very low and yields were forecast to be poor. With the rain, yield prospects for the 2020-21 maize crop is improving.

China’s increased demand for maize is driven by pig feed demand as their pig numbers recover from African swine fever and it is not only maize as soyabean imports reached an all time high of 100.3m tonnes, which is 13% higher than in 2019.

Of this total, China imported 52.8% more US soya in 2020 than in 2019 at 25.89m tonnes. China also bought around 200m gallons of US ethanol for the first six months of 2021, up slightly on the 198m gallons bought in 2016.

The feed barley discount to feed wheat has gradually been increasing throughout the season as wheat prices rallied. The AHDB corn returns reported that spot feed barley started the season at a £36.20/tonne discount to wheat and this had widened to a maximum of £54.30 as at December 31, but since then has started to decrease and for this month is estimated to be around £47.10/ tonne.

The barley harvest in 2020 was the second consecutive year of more than 8m tonne production, whilst wheat production at 9.7m tonnes was down 6.6m tonnes on the previous year. As a result, wheat imports have needed to grow significantly to satisfy demand, whilst barley has had to fight for export trade and barley exports, so far this season from July-November they are 38.9% lower than the same period last year, at 684,600 tonnes.

Over the past three years, Spain, Netherlands, Ireland, Portugal and Belgium have been the main destinations for UK feed barley exports, where previously North Africa was one of the main customers.

Malt barley exports to Japan, US, Ireland, Vietnam and Thailand are the main destinations, and UK malt exports averaged 190,700 tonnes over the last three years, with most going to Japan.

There have been sales of domestic feed barley for livestock feed compound use at the current discount price to wheat and looking forward to next year when barley production, according to AHDB early estimates, will be down to around 7m tonnes, this will see smaller discounts to wheat as more land will have been sown with winter wheat.

Oilseed rape prices have dipped recently to around £380 delivered Erith following a previous £10/tonne increase over the past week due to rain in South America lifting supply concerns for soya. Brazil’s 2021 soya crop is estimated at a record level, but prices are not being supported due to current high crude oil stocks.

Prices have been volatile with reports of low world stocks and a tight EU market for rapeseed. Traders are now revising the annual crush volume up to a new total of just over 23m tonnes, which will require imports of rapeseed of around 6.5m tonnes.

The only potential obstacle might be the value of sterling which currently against the euro, sits at almost 1% stronger than it was a week ago which makes imports cheaper by around £3/tonne.

The UK is usually a net exporter of rapeseed oil, with the EU as the main destination. However, latest figures for the current year show UK rapeseed oil imports higher than exports for the period from July to November due to tighter rapeseed supplies because production has been falling.

This had been due mainly to problems in growing the crop and in 2020 was the lowest production in the last 10 years, so domestic supplies will be tight.

In the past three years, the main UK rapeseed export destinations have been Germany, Sweden, Denmark, Czech Republic and Netherlands. The main rapeseed importing countries to the UK over the same period have been France, Netherlands, Ukraine, Lithuania and Latvia.

Feed bean prices have remained firm at around £220/tonne ex farm and are being used in feed rations and new crop bean prices are around £200/tonne.

Micronising peas are worth around £300/tonne with feed peas making the same money as feed beans but not a lot of demand for feed peas valued at the same price as feed beans.

January is normally a quiet month for the potato trade, but this past month has been one of the quietest ever due to lockdown and movement issues.

GB grower held potato stocks as at the end of November, 2020, are estimated to total 3.37m tonnes, which is up 12.5%, amounting to 363,000 tonnes from 2019 and 4.7%, or 147,000 tonnes up on the previous five-year average. Last year an estimated 5.4m tonnes of potatoes were grown.

By the end of November 39%, or 2.1m tonnes, had been sold off farm and sales have been slower than in 2019.

A free trade deal was finally signed with the EU in late December which took away concerns over potential tariffs for the GB-EU potato trade, but this is not the case for seed potatoes which have not been granted third country equivalence by the EU which effectively shuts the door for GB seed potato exports onto the continent.

Scotland had exported 95% of its seed potatoes bound for the EU before the end of December but for the future there is much discussion to be had to resolve this issue for the future of the Scottish seed industry.