There has been little spring work in Scotland so far, as the cold weather has continued with some heavy rain and dry periods as well.

However, down south spring barley sowing is reported as nearly finished, with crops starting to come though the ground. The forecast for the coming week is for more rain, so it looks like it will be into April before drills appear this year.

In my last article, it was reported that wheat futures had lost 22% of their value since the end of 2022 and were at their lowest level for 18 months.

At that time, May, 2023, Liffee feed wheat futures were at £217 per tonne but since then May futures dropped down to £192, before picking up slightly to stand at £200 per tonne. But as it has been very volatile, moving by as much as £11 per day, these figures could be way out in no time.

Considering May futures stood at £302 last October, who knows where the figures will be at harvest.

To sum up futures' movements in recent times, from the start of 2022, May, 2023, futures had risen from just over £190 to over £350 in May, 2022, and have now fallen back by more than £150 per tonne to just over £190 this month.

Higher input costs, coupled with another increase in interest rates to try and reduce domestic inflation – now standing at 4.25% and 10.4% respectively – both of which were unexpected. That all causes nervousness in the marketplace.

The reason for the futures price volatility is due to the uncertainty as to whether the Black Sea export corridor deal would be renewed between Ukraine and Russia which, in fact, did happen – but only for 60 days and not the requested 120 days as previously.

Russia said an extension of the deal beyond mid-May will depend on sanctions imposed by the West on the of import machinery and spares into Russia being lifted and, if not, then they would refuse to agree to another deal renewal which would halt Ukraine’s grain trade into Africa.

Further price pressure on wheat has come from better prospects for this coming wheat harvest in the EU and the US. Recent rain helped the US crops, where crop ratings in Kansas and Texas are up by 2 and 6 points, respectively, and the US is estimating an increase from 44.9m tonnes to 51.4m tonnes this season which is also partly due to an increase of 11% in planted area.

Argentina is forecasting an increase in wheat production from 12m to 19m tonnes, despite drought conditions, but weather will still be a big factor in what the final total will be.

EU wheat crop average yield forecasts, following recent rain, have now risen to 5.99t/ha which compares to last year’s figure of 5.8t/ha and the five-year average of 5.81t/ha, which adds an extra 4m tonnes or up 3% on the five-year average and would see a potential EU crop of 131m tonnes.

There are, however, still some parts of the EU suffering from drought which applies mainly to Spain and Portugal, and reservoirs there and in Italy are currently very low, which means irrigation will be difficult to carry out satisfactorily.

Russia is looking to have a wheat harvest in 2023 of around 85m tonnes compared to their record 2022 production of 104m, tonnes and the Ukraine wheat harvest is forecast to be around 16.5m tonnes, compared to 20.5m tonnes in 2022.

The Ukraine is also looking at more than a 15% reduction in its maize harvest in 2023, with the drilled area falling from 3.6m ha due to a large area of unharvested fields from last harvest and maize production could be around 21.5m tonnes – down from 25.5m tonnes. It warned that these figures might even be lower by harvest time.

READ MORE: The Gleaner: Cheap Russian wheat brings UK prices crashing down

Due to the vagaries of the weather around the globe and the Russia-Ukraine war, the International Grains Council is forecasting that global wheat production will be down in 2023 by 14m tonnes to 787m tonnes.

Looking at the UK domestic position so far this season from July to the end of January, the UK had a substantial exportable surplus of domestic grain, especially wheat, and has exported 735,800 tonnes of it, which is 2.5 times the tonnage exported at this time in 2021-22 and the largest tonnage exported for this period since 2019-20.

The pace of exports has been rising in recent months, with 159,500 tonnes of wheat exported in January alone, the largest monthly volume exported since October, 2019.

In January's AHDB UK cereal supply and demand estimates, the 2022-23 full season wheat exports were estimated at 1.15m tonnes and including January exports, this would leave around 414,000 tonnes of wheat to be moved from February to June, or an average of 83,000 tonnes per month for the rest of the season. Going by past export figures, this should be easily achievable.

According to the figures produced by the EU Commission, the EU has imported 1.047m tonnes of wheat from the UK up to March 13.

Looking at barley exports, estimates are that 850,000 tonnes of barley have moved so far, which would leave us with 400,000-600,000 tonnes still to market in the final three months of the season.

With around 1.3m tonnes of UK surplus barley, this will require 150,000 tonnes per month to be moved before the end of the season to avoid a significant carryover into next year.

With tonnage for animal compound feed still way behind normal use, the UK will have to remain export competitive to find demand for the old crop barley surplus.

Old crop feed barley prices dropped by around £20 per tonne last week as barley followed global weakness in wheat markets, which again was affected by decisions being made in the recent Ukraine grain corridor deal with Russia.

New crop barley prices have not fallen as much as old crop at around £13-£15 per tonne.

Currently, full season oat exports are estimated at 115,000 tonnes and with the July to January tonnage already exceeding the full season estimate, that will need to be revised in the next tonnage figure update.

Oilseed rape prices have been highly volatile this past month, with prices ranging from £17 per tonne down in one day to up £11 another day, but in most cases, until very recently, it has been a downward spiral in prices.

For the first time on record, the Paris MATIF rapeseed futures posted 13 consecutive down days in the period ending March 22. Prices were affected by several factors, including the financial market concerns following the recent Silicon Valley Bank and Credit Suisse Bank failures, coupled with general economic unrest.

Oilseed rape is globally over-supplied and demand appears to be reducing due to the large available supply which contributes to price pressure.

With oil prices struggling as well due to Brent Crude oil down 10% last week, this saw UK oilseed rape prices fall again due also in part due to the current strength of Sterling against the euro.

The EU rape crop also appears to be in good shape at present with the yield estimate for this coming harvest at 3.29t/ha which would be 6% up on the five-year average but down 1% on last year.

The EU is expected to have a rapeseed surplus by the end of the marketing season, with a build up of stocks in Romania and Poland, due to exports coming in there from Ukraine.

Australia produced a record canola crop of 8.3m tonnes for the 2022-23 marketing year, of which more than 2.1m tonnes had been exported globally between November and January, 2023.

EU rapeseed imports are expected to be at 6.8m tonnes for the 2022-23 marketing year and currently, up to March 12, the EU imported 5.8m tonnes of rapeseed across 37 weeks, up 56.9% from over the same period last year.

Of this, Australia’s market share into the EU was 41.2%, or 2.37m tonnes behind Ukraine, which accounted for 49.8%, or 2.866m tonnes of these exports, which at this time last year was 34.0% and 44.1%, respectively.

Australia’s record rapeseed crop is continuing to be offered on the world market at a discount compared to other suppliers, and with another 1m tonnes expected to come to the EU before June, this is likely to come from Australia as the Ukraine supply is becoming scarce. Again, that's the reason for continued price pressure.

As a result, EU rapeseed stocks are expected to rise this season and looking ahead to next harvest 2023, the EU are expecting a large tonnage, so rapeseed prices are forecast to come under pressure both in the short and long term.