The weather this past month has seen some areas with heavy spells of rain and others with very little moisture – but harvest has, in the main, progressed well.

There have not been too many stops for rain and crops in general have been gathered in with low moistures resulting in welcome reduced drying costs. Temperatures have remained relatively high throughout the month which helped ripen crops and allowed straw to be baled quickly behind the combine in terrific condition.

Some areas of Scotland experienced their driest summer for 152 years, so have been facing a challenge to maintain water supplies and there is little rain predicted going into September, October and November.

The West is experiencing its driest summer since 1869, with just 53% of the rainfall it would normally expect in June, July and August and moving further North, Caithness has only had 37% of its average summer rainfall and Orkney has had only 38%.

For those who like history, in 1869 the Caledonian Brewery was established, work on the Wallace Monument was completed in Stirling and the clipper ship, Cutty Sark, was launched out of Dumbarton.

Looking at the UK, Greater London has had 48% more rain than normal this summer and the top five regions in the UK which have been driest this summer are all in Scotland. For some, a more serious issue is that some whisky distillers have put a temporary stop to production because of low water levels caused by prolonged dry weather!

The latest AHDB harvest report up to the August 26, indicated that winter barley is now all but finished and average yields are ranging between 6.9-7.1t/ha, which is a slight improvement on the five-year average of 6.8t/ha.

Preliminary yields for spring barley are good, with early harvested crops yielding ahead of the five-year average of 5.7t/ha, with malting varieties typically about a tonne/ha lower than feed varieties and harvest progress is 5% behind this time last year.

Winter wheat yields remain close to average, ranging between 8-8.4t/ha against a five-year average of 8t/ha with harvest progress some 11% behind the five-year average but ahead of the 2017 and 2019 harvests.

Winter oilseed rape yields are close, or slightly better than the five-year average of 3.3t/ha and oil content is around 44%, but some low oil percentages have been reported where desiccation took place a little too early this dropped oil content to around 40-42%.

Harvest for this crop has been 6% behind the five-year average and has seen the slowest completion time over the proceeding five-year period.

Some winter oats have been cut, but are 19% behind the five-year average and currently yields are ranging between 4.8-8.5t/ha.

Overall, the barley markets for both malting and feed remains good, with UK compounders looking to source supplies for autumn delivery but supplies are not plentiful as much of the spring barley being harvested is making malting quality.

With good feed barley export demand to mainland Europe, this has helped to keep prices firm and has resulted in barley’s discount to wheat to fall to around £15-£17 per tonne, which could see compounders revert to using more wheat in rations.

At the end of July, ex-farm barley was at a £61/tonne discount to feed wheat, compared to £40 at the same point last year but as the barley price has crept up, the discount has been eroded and purchased feed barley tonnage for July to August 12 is up by 7% from last year.

With most malting barley samples having low nitrogens and good grain size this would, in some years, see prices drop because of an oversupply of potential malting tonnage, but continued export interest from mainland Europe is supporting premiums for malting barley in the UK, also helped by the value of sterling weakening against the US dollar.

Based on the harvest results so far, the UK winter barley tonnage is estimated at 2.82m tonnes, spring barley at 4.22m tonnes giving a total barley tonnage of 7.04m tonnes, which would be 13% down from the 2020 harvest, but only 5% behind the five-year average.

As of August 24, AHDB estimated that 46% of the UK wheat harvest had been completed, which is later than normal and that milling quality has not been as good as earlier harvest reports. This has been the case in Europe as well, due to poor weather conditions.

Germany’s wheat crop yield suffered with poor weather and France completed 91% of its wheat harvest, with as much as 60% of the crop no better than feed quality, with specific weights down at 70kg/hl, and to make export standard would have to be 76kg/hl.

Traders who have sold French wheat futures with the intention of supplying physical wheat are unable to source the appropriate quality and have been forced to buy back their contracts. This sent the nearest September contract to a €30/tonne premium over the December contract when a week ago it was at a €3/tonne discount.

Currently, UK Liffee feed wheat futures are similar to two weeks ago for new crop November, 2021, at £195.75 per tonne and for May, 2022, stand at £201.60 – which is up £1.30 from two weeks ago.

Due to the current good planting weather and a likely increased wheat area for next year, November, 2022, futures currently stand at £178 which is nearly £18/tonne less than the current November, 2021, offer.

The International Grains Council had cut its Russian wheat estimate by 6m tonnes from its previous report to a new estimate of 75m tonnes and also cut 4m tonnes from the Canadian harvest to a new total of 24.5m tonnes due to a prolonged period of heat and drought in Canada

World wheat production estimate is now 6m tonnes lower, at 782m tonnes, however with consumption lower by 4m tonnes this leaves year-end stocks down by only 2m tonnes on previous estimates and only 1m tonnes down on the year.

The main factor to note is the 7m tonnes decrease in stocks for major wheat exporters. EU wheat yield estimates have been cut from 6.05t/ha down to 5.98t/ha, resulting in a 500,000 tonne decrease in production to 127.2m tonnes, including a 3.6% yield reduction for Germany alone.

The UK is normally a net importer of milling wheat, with imports from Canada and the EU, so with both areas suffering from yield and quality, we may have to turn to Romania, which is having a bumper wheat harvest, expecting to produce 11.3m tonnes compared to last year – this year it could become Europe’s third largest producer, behind Germany and France.

As Romania only use 3m tonnes themselves they will have a large tonnage of wheat to export and due to having rain at the right time should have quality product as well.

US wheat markets eased this week due to the strength of the dollar which reached its highest point against the euro since November, 2020, and US commodity prices need to adjust to remain competitive in export markets where currently wheat exports are 2% behind average. However, US maize exports are currently double the pace of last season.

With UK barley domestic and export demand expected to remain strong this season, maize may yet be an alternative for inclusion in feed rations, especially given a tight global wheat supply.

However, a cut of 1.8m tonnes in the EU maize production, estimate down to 71m tonnes, was announced recently and other weather factors are being mentioned which will not help the maize production either.

Argentina could be affected by the La Nina weather system, which has a 70% chance to return from this November until January, 2022, and will cause dry conditions throughout South America.

This could cut rainfall by 20-30% during the 2021-22 season and a dry outlook for this autumn could again delay soyabean planting in Brazil and increase the risks for the 2021-22 maize crop as well.

Any issue with the South American crops is likely to spark more volatility in the market, with grain and other commodity stocks already very low, which will also have a knock-on to UK prices.

Maize production in Bulgaria and Romania makes up 28% of the EU maize production and the weather forecast going forward will continue to be hotter and relatively dry.

Should drought conditions have an impact on Bulgarian and Romanian maize, this could affect maize availability from the EU, which made up an average of 43% of UK maize imports over the last five years. Therefore, monitoring availability of maize could be important for feed ration use going forward.

Domestic rapeseed prices reached new contract highs this past week after gaining over £50/tonne since the beginning of August. A 1.5% weakening of sterling against the euro helped contribute to this, but it has been serious drought in Canada and recent increase of Chinese buying of soya that has mainly caused this increase.

Recently, USDA cut the Canadian Canola crop estimate back from 20.2m tonnes to 16m tonnes due to severe drought and some forecasters think output could be as low as 12m tonnes.

Canada usually accounts for 65% of global oilseed exports and with yields at their lowest since 2012, we could see export availability drop to levels not seen since 2007-08.

China is reported to have increased their pig herd by 31% year-on-year and has started to increase their purchases of soya, which will put more pressure on stocks.

News that will help oilseeds availability is that global output of all oilseeds is forecast at 706.7m tonnes for the 2021-22 season which implies an increase in production of 23.5m tonnes. If realised, stocks would rise by 4.3%.

Strong current prices for oilseed rape could incentivise growers to increase their area for next year, but there is also the challenge of managing the cabbage stem flea beetle issue and that has been major problem recently in many areas of the UK.

With the current high prices and the Paris November, 2021, rapeseed futures currently sitting at around £490 per tonne, growers may be tempted to grow the crop. But it is important to look forward as November, 2022, futures closed recently at £405.28 – significantly lower but still around £40/tonne ahead of the highest price at this point in the season across the last 10 years.

With the higher commodity prices comes the higher fertiliser prices, as well as higher freight prices.

Gas prices drive ammonia fertiliser costs, which has seen UK-delivered N increase by a further £15-£20 this past week alone. As India has still approximately 5m tonnes of urea to buy for this season and September, 2020, gas prices have risen from £0.25/therm to £1.10/therm it looks set for an sustained increase in fertilizer prices and fuel prices in future.