As has happened in previous years, March has turned out to be the month where we got most snow.

In my part of the Eastern Borders, we came off lightly with snowfall, compared to other areas both in Scotland and further south. Following on from 27.9mm of rain in January, we had 24.2mm in February and if the rest of March follows the first half, we could have a similar amount as in the first two months of 2023.

There had been some spring sowing done in the south of England, but so far land work has not started up here, with rain falling as this article was penned.

Wheat futures continue to fall and have now lost 14% of their value since the end of 2022 and are at their lowest level for 18 months. May, 2022, Liffee feed wheat futures currently stand at £212 per tonne, compared to £235 four weeks ago and £300 back in mid-October which is a reduction of £88 per tonne and still falling.

The story is similar for May, 2023, with futures currently at £216, down from £241 four weeks ago and £302 per tonne since mid-October. July new crop currently stands at £217.25, down from £238.25 four weeks ago and £291.50 last October.

The main reason for this is the ongoing supply of cheap Russian wheat exports following their record 2022 wheat crop, which was estimated at around 104m tonnes and there is also the likelihood that the Ukraine Black Sea export deal with Russia and the UN will be renewed later this week.

If this happens, then Ukraine will continue to export cheap wheat, maize and other commodities onto the world market, which will leave the EU, US and other wheat exporting nations with large year-end stocks.

The recent US World Agricultural Supply and Demand Estimate report indicated that Australia’s wheat crop was slightly higher than previously forecast at 39m tonnes; Kazakhstan production was up to 16.4m tonnes, which was a near 40% increase on last year’s total of 11.81m tonnes; and India's total production increased to 104m tonnes, taking world production 5m tonnes higher to a total of 788.4m tonnes.

World consumption is expected to be 2m tonnes higher up to 793.19m tonnes and if you exclude China, world stocks are now 2.9m tonnes up on the month to 127.62m tonnes.

Wheat prices have also not been helped by recent rainfall in the drought-hit areas of France and the US.

Looking forward to the 2023-24 wheat crop, Russia is looking at a reduction from this past year’s total of 100m tonnes down to around 85m tonnes and the Ukraine is expected to be down from 22m tonnes this season to 15m tonnes.

Australia’s wheat production could fall from last season’s record crop of 39m tonnes down to 25m tonnes due to the El Nino weather pattern, which could leave Australia drier than usual later this year. The La Nina event experienced over the past three years meant that Australia produced record crops of wheat, barley and canola – but now there is an increased likelihood of EL Nino warming ocean temperatures, this would result in reduced rainfall which would impact on Aussie cereal production, but would support global grain prices.

Until recently, persistent drought across the US plains affected crops in Kansas, the US’s top wheat producing state. As of March, 17% of the winter wheat crop planted there was rated 'good/excellent', this is down from 19% on February 26 and at the end of February, 87% of the winter wheat area in Kansas was in drought with 45% in exceptional drought, compared to this time last year when 73% of the national area was affected.

Recent rain will be beneficial, but even with the potential yield being affected, the fact that the planted area this year will be up 11% year-on-year and at the highest level in eight years, this extra area will make up in part for any reduction in yield due to drought. Recent estimates for US' 2023 wheat production are put at 51.5m tonnes, 6.6m tonnes up on the year.

The EU is expecting to produce around 130m tonnes of wheat this coming season, which would be 4.1m tonnes up on last year and up 4.0% on the five-year average, while India is looking at a 112m tonne wheat harvest, but recent record temperatures and more excessive heat until May could reduce this total to nearer 100m tonnes.

If the Black Sea export corridor agreement continues, this will see a continuation of the recent cheap exports and sales which recently took place when Turkey bought 790,000 tonnes of milling wheat from the Black Sea region and mainly from Russia.

EU exports have now risen to 20.472m tonnes, which is 7% up on last year and leaves approximately one-third of the surplus to export with a further third of the season left to go. Combined with a forecast larger wheat crop for next year the EU will have more grain to export, and with anticipated reduction in Russian and Ukrainian tonnage, due to the ongoing dispute, the demand could be there for more EU wheat.

From last July to December, 2022, EU wheat imports totalled 4.6m tonnes which is more than double the five-year average and up 198% on the previous year. Forecasters are predicting that the EU will import a total of 7.1m tonnes during the 2022-23 season which, if realised, would be 4.3m tonnes up on the year.

The latest figures show that up to February 6, 16.1% or 832,200 tonnes of imported wheat into the EU was from the UK which so far for this marketing year was only behind the Ukraine in actual tonnage.

Earlier in the first half of the season, up to December, 2022, the EU imported 613,300 tonnes of UK wheat, up 73% on the year and up 48% on the five-year average. For the UK to finish the season having exported over 90% of its wheat to the EU, it would need to export an average tonnage of just over 73,000 tonnes per month for the rest of the season.

Both domestic and export feed barley demand remains slow, with UK exports standing between 750,000-800,000 tonnes as at the end of February leaving the UK with a surplus still to market. With little domestic demand and a big tonnage still looking for export, old crop barley prices are dropping and are now below £200 per tonne ex-farm.

Animal feed production is down 6% on the year, with barley use in rations down 20% on last year which indicates that barley is not competitively priced for feed rations compared to wheat and maize.

Maltsters are covered for the season, so there's little demand for malting barley as UK barley is not competitively priced against Scandinavian stocks.

Oilseed rape prices have been dropping by as much as £30 per tonne per week recently due to a large global rapeseed crop and only limited demand. Oilseed crushers across Europe appear to have enough cover for the remainder of the season due to increased imports estimated now to be at 5.1m tonnes, combined with a large domestic production, this is depressing prices.

Soyabean prices have not been strong as progress is made with the Brazilian harvest and allowed exports to China, its main export market and as soya prices drop this brings down rapeseed prices as well, with excess tonnage being carried over into the next season.

Brazil is looking at a record 153m soya crop, but Argentina has been hit by the worst drought in 60 years, reducing its soya potential from 34.5m tonnes down to 27m tonnes which should help support prices. The La Nina weather effect is causing drought and high temperatures there and increased demand for biofuels, coupled with lower yields, helped bolster prices.

Fertiliser prices have eased as UK natural gas prices continued to fall over the last two months. Even with the recent cold spell, gas futures closed at 109.59p/therm last week, down 21.94p/therm from February and down 263.99/therm on the year.

UK-produced 34.5%AN for February delivery averaged £630 per tonne, which is 10% or £70 down from January and down 3%, or £19 per tonne from the same time last year. The average price for imported AN in February was £538 per tonne, down 21% from January and 16% on the year.

Another factor that could bring prices down is that European gas storage facilities are expected to end the winter season at more than 50% full. At the end of March last year, just 26% of European storage facilities were filled.

With natural gas futures currently on the decline, fertiliser prices may do too, but with ongoing volatility in gas markets, it is unlikely that fertiliser prices will come back down to prices seen before the Russia-Ukraine dispute in the foreseeable future.