Prolonged dryness has been adversely affecting wheat crops in the UK, northern Europe and the Black Sea region. This has helped support world wheat prices in recent weeks. This week, however, saw a change to weather patterns as low pressure systems sweeping in from the west brought much needed rain and relief to stressed winter and spring wheat fields. Confidence that notable yield losses may have been avoided triggered a wave of selling on futures markets. Buyers stood aside and prices dropped to eight-week lows. It remains to be seen how beneficial this rain has been.

​World consumption of oils is forecast to decrease by up to 500,000 tonnes compared to that seen in 2019, due to less biodiesel and food demand.

Wheat markets rallied sharply earlier this week, recovering much of the previous week's losses. Attention turned away from loss of demand due to the impact of Covid-19 to problems with supply, especially in the ethanol sector.

The Ministry of Agriculture of the Russian Federation stated that grain exports would cease once the seven-million-tonne quota they set for the last quarter of the season was reached. It is thought that 3.5 million tonnes of that has already been shipped. Over one million tonnes is being loaded at Russian ports each week, meaning the quota will be surpassed early May.

The Ukraine is also close to meeting its wheat export quota of 20.2 million tonnes, having now shipped 18.5 million tonnes. It is also reported to be considering limiting corn exports to 29.3 million tonnes while the United States Department of Agriculture (USDA) has targeted 32 million tonnes.

Prolonged dry weather in parts of Europe, Russia and Ukraine has resulted in dry soils that are well below average. This has been a strong supporting factor for wheat markets in recent weeks. However, rain arriving in the western side of Europe, as well as Russia and eastern Ukraine, has eased concerns for crop development in those regions. Meanwhile, analysts have been assessing the impact of coronavirus on wheat demand in the milling, animal feed and ethanol sectors and have adjusted their balance sheets accordingly. Last Thursday afternoon, the United States Department of Agriculture (USDA) cut both world wheat and corn use by approximately five million tonnes each. This raised year-end stocks for each commodity by the same value. European analyst Stratégie Grains published its EU balance sheet this week, cutting two million tonnes from last month's estimate of EU wheat use this season and almost three million tonnes for the 2020/21 season.

With the Covid-19 pandemic still impacting trade around the world, grain prices remain volatile. The Frontier pools are the ideal vehicle to help growers manage their risk and, with spring drilling completed by many in good time following the dry weather, now is a sensible time to consider available end markets for your growing crop. This is especially true for spring barley; with a record crop looking likely this season.

The pools are set to close Friday 17th April. Read on for the latest market developments and for help with committing a proportion of your 2020 crop.

The UK wheat market has been less volatile than it was last month, making small gains and recovering some of last week's losses. French wheat futures rallied €6 to highs not seen since August 2018. This has been encouraged by the fast EU export pace, which reached almost 25 million tonnes – 67% up on last year and closing in on the season's target of 31 million tonnes. France had its biggest March soft wheat export programme to countries outside of the EU for ten years, despite the logistical challenges brought by the coronavirus. UK wheat prices were capped by firmer sterling and the weight of the old crop surplus that is unlikely to be shipped and will need to carry into next season. New crop prices are supported by the continuing dry spell and increasing temperatures, not just in the UK but across western Europe and extending into eastern Germany and Poland. Crops will become increasingly stressed without rain.

European markets have steadied this week following a period of considerable price volatility seen last month.

Futures rallied €20 to 18-month highs in March as, amidst the pandemic, panic-buying gripped consumer markets and shoppers cleared supermarket shelves of bread, pasta and fresh meat. However, supply chains responded to the challenge and with supermarkets now restocked, demand has eased and markets are looking at their basic fundamentals for new direction.

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Since last week's global rally, UK futures and physical prices have shed around £8/t due to a downturn in domestic demand and strengthening sterling. Consumers in all sectors continue to weigh up the impact of Covid-19 on their businesses but, with sterling firming and old crop becoming too expensive to export, it feels as though time is on their side.

Supermarket demand for bread, meat and eggs is supporting wheat inclusion for feed compounders around the UK, but industrial flour usage demand has crashed as the public no longer require pre-packed flour based products. 

The impact of coronavirus continues to be the primary driver for financial and commodity markets. World wheat prices saw significant volatility this week, driven by exaggerated moves in foreign exchange rates and high nearby consumer demand. The Bank of England cut UK interests rates to a record low of just 0.1% and, with the British government introducing other financially supportive measures for the UK economy, sterling fell by 6.5% versus the euro. As a result, London wheat futures rallied to new contract highs for November 2020 and, from the lowest to the highest, achieved a spread in prices of £12/t. The euro also fell versus the US dollar, adding value to European wheat prices. Demand for bread products increased as panic buying cleared supermarket shelves, brought millers back to the market, and added weight to the increase in old crop wheat prices.

​Currently, the underlying issue for the market is nervousness around global trade execution due to Covid-19. Buyers are still out there (Tunisia and Algeria for example), but usual offers are down in volume by circa 50%.

The kill rate in the broiler (chicken meat) market has increased drastically on the back of shoppers panic buying. The same is also now true of bread; supermarket shelves are empty and the demand for wheat is significantly higher than first forecast. However, this could be the short-term picture. Due to so many individuals stockpiling products, and with the hospitality and leisure industry likely to be heavily impacted by the recent government advice around social distancing, medium-term demand for meat and cereals could be much lower.

The impact of coronavirus on global economies has been the overwhelming factor driving wheat prices this week. The widespread panic-selling seen in stocks and shares and crude oil spilled into all commodities, pushing world wheat prices down. 

US wheat futures fell to lows not seen since last September and their losses since mid-January rose to 15%. However, the impact of this on UK wheat futures was reduced as sterling lost ground to the euro following the Bank of England base rate cut of 0.5%.

Despite the increasing spread of coronavirus and concerns surrounding its potential impact on demand, world wheat markets have managed to tread water this week with overall minimal change. International trade does not appear to have been affected yet, with importing countries such as Tunisia, Korea and Thailand continuing to make wheat purchases.

​Although Friday morning saw price volatility, US wheat futures were trading within one cent of last week's closing prices. Concerns may be greater for supply rather than demand. Furthermore, a Chinese government working group stated that farmers must not let grain output decline this year despite coronavirus ensuring food security.

Wheat markets have rallied this week, bouncing back from the sell-off that we saw last week as a result of the coronavirus.

London wheat futures recovered £4 per tonne from Friday's low point, also encouraged higher by sterling weakness versus the euro. A settled UK weather outlook is encouraging for potential spring plantings but winter drilling is now done. Unfortunately, the prospect of a 2020 wheat crop that is little more than half the size of the 2019 crop is a concerning likelihood. 

The spread of the coronavirus has triggered record-breaking falls in stock market values this week, with crude oil losing a quarter of its value since the beginning of 2020. This negativity has inevitably spilled into grain markets and world wheat prices have dropped 6% since last Friday's close. 

There are concerns over the impact the virus could have on supply chains and demand, although international trade appears to be continuing as normal at present. Futures markets are oversold but, should the virus continue to spread, it seems likely that global wheat prices will continue to come under pressure.

Farmers in Russia have enjoyed the opposite of the dire weather conditions endured by UK farmers. Prolonged settled weather during the autumn and a mild winter allowed Russian farmers to exceed their winter wheat planting expectations and there are limited signs of any damaging winter kill. 

Various analysts are now suggesting that the Russian 2020 wheat harvest will be the second highest on record. Estimates range from 75-85 million tonnes with the record being harvested in 2017 at 85 million tonnes. 

US wheat futures markets eased again this week, dropping to price levels not seen since December.This drew Black Sea and European markets lower too. There is still no evidence of any US wheat export business to China following the signing in mid-January of 'phase one' of the China/US trade deal, and US wheat is not competing for business in other markets such as North Africa.

This week, Egypt held a tender for wheat to be supplied during April. They bought 180,000 tonnes from both Russia and Romania at prices that, on average, were $6/t below their previous tender from France two weeks ago.

​World wheat markets have managed to achieve modest gains this week, supported by ongoing strong international export trade but lacking any fresh price drivers. Futures remain a good 4% below their January highs. China remains a primary focus, with the combination of their wheat buying activity, the coronavirus outbreak and their trade deal with the US creating a recipe of uncertainty.

Following the signing of 'phase one' of the US/China trade deal, US traders expected to see a wave of wheat buying activity as China began their obligation to purchase US agricultural products. 

Following losses of 4% during the last third of January, around £2 per tonne has been added to world wheat prices since the market closed on Friday.

There is little fresh news to influence prices but wheat exports from the EU and Ukraine continue to move at a strong pace. EU exports climbed to 16.4 million tonnes by the 2^nd February, compared to just 9.9 million tonnes at the same time last year. Despite strike action hindering logistics, French ports shipped their biggest volume of wheat for six years during January.