We have had a more mixed bag of weather this past month following 69mm, or nearly three inches of rain in May at Lochton, near Coldstream – and then followed by 26.5mm, or just over one-inch, in June.

We have also had some nice warm weather and with the rain added, crops are all looking well and moving on fast towards harvest. There have been some very heavy thunder showers in some parts at the start of July, which has seen some flooding but despite that, irrigation on potatoes have been a regular feature in potato fields.

Global weather issues are still causing volatility in the markets, along with forecast estimates of world wheat and maize production which continues to make speculators very nervous and some have been reducing their long futures positions which has helped to lower wheat prices.

Chicago maize futures went 'limit up' with the publication of US stock figures and US acreage statistics by the USDA. Analysts had been increasing their wheat production estimates for major exporters, including Russia, Ukraine and the EU-27, and this left a negative tone which saw world prices fall during June.

London wheat futures fell by £14/tonne over the past month and November, 2021, wheat futures closed below £170/tonne for the first time since mid-April. Grain markets have been pressured by wetter and cooler weather across the primary US maize producing states which is ideal for pollination and improved yield potential.

The US winter wheat harvest is going at a fast pace and is now 17% complete, which again is adding price pressure. On the other side of the coin, the northern US states have remained mostly dry, which is damaging their spring wheat crop where only 27% is rated as 'good to excellent' – that is 10 points down on the previous week.

This is the worst condition index fall recorded for any week since 1988, when there was a drop of 25% and leaves concerns for high-quality bread-making wheat supplies. This meant spring wheat futures rose by over 6%.

In March, USDA had estimated the US maize planted area to be just 350,000 acres larger than last year at 91.1m acres where other analysts had put the figure at more than 96m acres previously. This caused problems with speculators, who had reduced their long positions which added to more price pressure, as this would produce a crop of 385.3m tonnes.

The current yield used is a record 4.57t/acre, whereas the five-year average yield for the US maize crop is 4.41t/ acre and crop conditions will continue to be watched closely over the course of the next month as there are currently some weather concerns.

With regards to wheat traders, they had estimated a wheat area of 93.3m acres but USDA came back with a figure 1.1m acres less, which forced up Chicago Board of Trade maize prices by 14% – the biggest weekly gain since 2011. London futures then regained half of their £14/t June loss.

Brazilian maize crops have also had a difficult season. Adverse wet weather prevented planting earlier and then hot, dry soil conditions damaged the emerging crop – now frost is adding problems to ripening crops.

As a result, analysts cut maize production by 1.7m tonnes down to 87.93m tonnes which is significantly below the USDA predicted tonnage of 98.5m tonnes. This will leave just 20m tonnes available for export, which is significantly below the previous estimate of 33m tonnes.

This loss of export tonnage has come at a time when Chinese maize demand increased by more than 18m tonnes in one year and which helped drive prices to multi-year highs.

Wheat crops in both Russia and Ukraine have benefitted from good growing weather and Ukraine could see their grain tonnage reach a record high of 75m tonnes. That would be a 17% rise in production from the 65m tonnes in 2020. Russia is looking at an increased wheat tonnage up to 83.6m tonnes, but has weather issues which could affect their spring wheat.

Global wheat production is estimated at 789m tonnes which would be 16m tonnes up on last year but due to rising wheat consumption, there will be a minimal change to world year-end stocks.

The International Grains Council increased its forecast for global grain supply in 2021-22 by 9m tonnes, recently, to 2301m tonnes which is a new record. Demand also increased to 2999m tonnes which means there would be a very small surplus – the first such surplus and year-on-year rise in stocks since 2016-17.

EU-27 countries are forecasting a wheat crop of 131.5m tonnes, which would be 12.1m tonnes up on last year, mainly due to a recovery in the French winter wheat crop, although excessive rain has dented prospects. Increased EU domestic demand and exports are expected, and this will leave the carry out stocks 700,000 tonnes lower on the year.

The UK milling wheat market is historically dependent on imports of high protein wheat and over the past five years we have imported an average of 371,000 tonnes from Canada to supply the gluten required in bread production. But, it may be difficult to source enough high protein wheat this year due to hot, dry weather across the US plains and Canadian prairies which has seen spring wheat deteriorate.

In the most recent US crop progress report, released last week, the proportion of spring wheat rated 'good or excellent' was just 20% – the lowest since 1988. Even with the proportion of the crop rated as 'fair' at 41%, conditions remain at their worst for more than three decades.

If availability of high protein wheat is short from North America, the UK could become more dependent on German wheat. Last week, imported wheat from there at 14% protein was quoted at £229.50/tonne for August delivery. Currently, UK Group 1 milling wheat delivered into the North-west of England was quoted at £198 for harvest delivery.

Winter barley harvest is underway in England, France and Russia, so now there will be no weather issues to affect yields there. Prices may settle down as a result when no weather risk is involved, but if yields are not as expected we can expect more volatility.

Old crop barley prices had some support, recently, as there is little left available on farm, though demand is limited as merchants are more or less covered for requirements.

Export interest at this time has been limited to Spain but with both sterling and the euro weakening over the second half of June, there is still some potential.

The amount of barley used in GB compound feed remained high in May, when 145,200 tonnes were used, including tonnage by the poultry sector that was 45% more than in May, 2020, and a record for the month.

Barley use in animal feed was high throughout 2020-21 due to the small wheat crop and as supplies tightened ex-farm barley prices closed the gap to feed wheat and from over £50/tonne in January, to £15.30 last week.

In May, brewers, maltsters and distillers used the largest tonnage of barley since March, 2020, and the biggest volume since the pandemic began in March, 2019, even though at the end of May nearly a quarter of licensed venues across the UK remained closed.

From last July until May, barley use was up 36% and it could be that UK barley stocks may be lower than forecasted.

The UK hybrid seed barley market looks to be in deficit for this autumn, with poor yields of seed crops in 2020. This means there was no carry over of seed which could become difficult to find as time moves on, especially given that different varieties on the continent means that supplies are not available from there.

With fertiliser, urea markets remained firm as India is expected to confirm purchase of 779,000 tonnes and another tender is expected soon which will only increase prices – currently in the UK granular urea stands at around £400/tonne.

The UK market has followed the global urea and the European ammonium nitrate market this week by moving up another £16/tonne for delivery between now and September. Gas and ammonia are at five-year highs which adds pressure to prices and phosphate and potash prices have also increased due to demand.

The price of gas at this time last year was 9p per therm and now stands at 77p per therm, so like all raw materials prices remain firm and continue to rise.

With wheat prices easing, beans have done likewise dropping by as much as £5 per tonne. The weather has been perfect for bean development and with the potential looking good for the crop, forward sales at £200 per tonne are available for feed beans and more if they make human consumption quality. However, if wheat prices continue to fall, then beans will follow suit.

Back in March, 41% of the GB winter oilseed rape crop was in 'good to excellent' condition but frosts in April/May may have done some damage and this will only become evident once the combine goes into the field at harvest.

However, there are reports that crops are better than last year, with less cabbage stem flea beetle damage ... which is encouraging.

An OSR crop somewhere between 1.015-1.045m tonnes in the UK is being forecast, based on a 2%-5% rise on the estimated five-year average of 3.25t/ha. This is based on a harvested area of 307,300ha, which with a UK demand of 1.7m tonnes and due to stocks at the beginning of the season being 31% down at 79,000 tonnes this will leave around 640,000 tonnes to be imported.

The EU is expected to produce 16.7m tonnes but will still have to import around 6.8m, leaving 2021-22 ending stocks at 600,00 tonnes.

That said, UK delivered prices jumped last week. Rapeseed delivered Erith was quoted at £462.50/tonne on July 2, up £29/tonne. At this time last year, it was at £335.50/tonne.

Canada is a main supplier of Canola to Europe and there are some concerns as to how much they will produce this year due to weather issues, even though plantings are higher.