Mid-way through August and the UK wheat harvest is under way.

So far it has been a rollercoaster of a year: initial hopes of a large crop were dashed by the driest spring for 100 years, especially for farms in the East of England. But cool damp weather in June and July enabled some recovery, meaning that the overall crop is likely to be slightly greater than was once feared.

Quality, however, remains an unknown factor and much will depend on the weather over the next fortnight. 2010/11 has made evident that what happens at home is not the only determining factor for wheat markets. France seems to have followed a similar pattern to the UK, while heavy rains in Germany and Poland are once again a cause for concern in relation to the supply and therefore cost of quality wheat.

In global price setting, however, there are two very important matters to consider: the development of wheat crops in Russia and Ukraine and the progress of the US maize (corn) crop.

The former seems to be going quite well, and Russia has been active in export markets. The latter is possibly more significant, because there is a very low stock to begin with. Any shortfall is likely to lead to still higher maize prices, increased demand for feed wheat and hence strong support for the world’s wheat markets.

There are still several weeks to go until the maize harvest gets under way, however, so a further period of volatility seems inevitable, enhanced by the continuing gyrations of currency, oil and other investment markets.