Parts of Scotland are now officially in 'drought' and June has mostly had dry weather, especially in the East and North of Scotland.

Just 38mm of rain was recorded at Lochton, near Coldstream, for the entire month of June to give a total for the year to date of 221.4mm or 8.7 inches. However, over the past few days, a similar amount of rain has fallen via some severe thunder showers and this will ease the work of the potato irrigators.

We have not experienced the hot weather that some areas, especially in the West of Scotland and in England have had, but crops look well and winter barley is now being harvested in France earlier than normal due to a recent heatwave. Harvest has just started in the south of England, again following some very hot weather.

One of the main topics causing concern has been a dramatic fall in feed wheat futures caused by various issues and events, such as lack of demand due to failing economies in some countries, unaffordable high commodity prices and the start of harvest both here in the UK and Europe.

Harvest in the US is ahead of normal due to hot dry weather and as of June 26, 41% complete which is ahead of the 35% five-year-average. On June 6, the July, 2022, feed wheat future price stood at £288 per tonne and four weeks later on July 4, the price was £249.50, a worrying £38.50 per tonne drop.

For November, 2022, for the same period the drop was £42 per tonne and moving forward to May, 2023, over the last two weeks the fall was £42.75. Who knows what these figures will look like in the next few weeks?

It is not just wheat prices that have fallen as oilseed rape delivered Erith fell by £90 over the past week down to £566 per tonne. Paris futures for November, 2022, peaked in the middle of May at over €870 but now sit just below €700 per tonne – a fall of more than £150 per tonne.

Ukrainian wheat production estimates have now been revised upwards to 18.2m tonnes and maize production has been increased by 4m tonnes to 52.4m tonnes. It is thought that exports could reach 13.2m tonnes of wheat and 25.7m tonnes of maize.

This will depend, of course, on shipping goods from the Black Sea ports and it is thought that it will be possible in the current situation to export a maximum of 2m tonnes per month.

Looking to the future, there are some hopeful signs that will support prices. India was looking to produce a near-record wheat crop of 106m tonnes, which would have allowed for 6.5m tonnes of exports and help replace lost Ukrainian supplies onto the world market. But, due to the dry hot weather seen in March, India's crop suffered from drought and it is now looking at a 20-year low production figure of around 80m tonnes which could see them having to import wheat.

Recent dry hot dry weather in Spain will see wheat tonnage cut back by around 2.5m tonnes to 5.06m tonnes and all cereal production is forecast 27% lower at 17.61m tonnes.

France, along with other parts of the EU have also suffered from hot dry weather and its average soft wheat yield has been cut from 5.89t/ha to 5.76t/ha and this would see their crop 4.7% lower than last year, which equates to 2.8m tonnes.

This drop in EU tonnage could be as high as 6m tonnes, compared to that achieved in 2021 and Romania is expecting a crop 16% down on last year to 9.31m tonnes. At the start of June, the EU commission forecast soft wheat production for this year at 130.39m tonnes and now the total is put at 125.49m tonnes.

In the latest crop condition report to June 21, 82% of UK winter wheat remained rated as in 'good to excellent' condition. which is unchanged on the previous month but there are concerns about crop yield prospects following persistent hot and dry weather conditions across June in some parts.

The International Grains Council left world wheat production unchanged at 769m tonnes but have increased its world maize production by 6m tonnes up to 1.19bn tonnes which compares to 1.219bn tonnes last season.

Russia is looking to have a record wheat crop this year, amounting to 89m tonnes and that could see exports of 42.6m tonnes, which is up on the 33m tonnes it is thought to have exported this season.

But there are issues for their exports at present with tightening economic sanctions in place and shipping companies have concerns going into areas where there are dangers of mines in a war zone.

Egypt bought its largest single wheat purchase for more than 13 years this past week, buying 815,000 tonnes for movement during August, September and October. It is looking to buy 10m tonnes of wheat over the next six months and this recent purchase came from France, Romania and Bulgaria, with only 175,000 tonnes bought from Russia and none from Ukraine.

Barley prices have followed wheat prices downwards as the Southern hemisphere harvest progressed and with inflation expected to be around 10%, this is pushing stock and commodity markets lower. If there is a larger than anticipated global supply next season, this would add pressure to markets as well.

With soaring inflation and subsequent rises in the cost of living, it has been reported that demand for meat has been down across the board, with consumer demand for poultry down as well.

Animal feed makes up more than 50% of total demand in the UK, and as with all other sectors livestock and poultry producers have been hit with rising input costs and tightened margins. Poultry, pig and cattle feed accounts for nearly 90% of total animal feed production, with poultry feed by far the largest sector at 45% of total feed grain use.

Read more: It's all down to the weather now before harvest

Feed barley futures dropped by £70 per tonne from earlier highs but ex-farm malting barley from harvest to December is worth around £350- £370, which is a huge premium over feed and malting prices remain high because of a low carryover of stock from last harvest. In Scandinavia and France, up to 70% of projected malting barley has already been sold.

The USDA’s latest figures estimate that global rapeseed production for this coming year will increase to 80.8m tonnes which would be up from 71.4m tonnes last year and higher than the five-year average of 72.5m tonnes but this will be matched by higher consumption of 78.4m tonnes which is a 7.2% increase over last year.

Global oilseed year end stocks are expected to climb by more than 12m tonnes with most of this increase in the soyabean sector and will see a comfortable stocks-to-use ratio of 26.3% by the end of 2022-23.

With EU rapeseed production up and Canadian canola production of 7m tonnes, up from last year’s drought harvest, global year end stocks are predicted to grow by 2m tonnes but stock-to-use ratio will remain at a relatively tight 10.7% which would indicate another season of high price volatility.

All is not gloom, however, as a return to hot weather in the next few weeks could see more drought issues and yield penalties. Even with talk of export corridors out of the Ukraine and exports of 2.65 tonnes of rapeseed, currently this option does not look too hopeful via road and rail and China will need to return to the marketplace sometime soon to rebuild stocks.

Pre-harvest feed bean prices eased back in line with other commodities from around £350 ex-farm a month ago and today will be back by about £30 per tonne. Bean crops have developed well this year and it is estimated that an extra acreage of around 11% have been planted this year. This is due to better demand and big cost savings from a legume crop that eliminates the need for expensive nitrogen fertiliser.

Animal feed compounders in the UK and Europe have seen big falls in other mid-range proteins, with rapeseed meal now £100 lower than in recent highs. This fall has pushed feed peas and beans out of many rations with prices needing to fall by a further £10 to be competitive again.

Ammonium nitrate prices remain unchanged this past week with little demand from growers as gas prices in the UK continue to rise. Russia has begun cutting off gas to countries it supplies and this has caused supply cuts in Italy, Austria, the Czech Republic, and Slovakia. Gas has also been shut off to Poland, Bulgaria, and the Netherlands.

The UK is not reliant on Russian gas but is subject to wholesale prices, hence the ongoing price increases and unless the UK see a change in energy costs, fertiliser prices will both remain firm and in short supply.