Big global crops are pushing wheat prices down, with ex-farm values losing about £2.50/t in the week to Wednesday (31 August).
This, combined with a slightly stronger sterling value, put spot ex-farm feed wheat values anywhere between £113/t and £122/t, a drop of £5-£10/t off the top of the market seen in mid-August.
However ex-farm sales were slow, with growers resisting the lower prices and the trade not desperate for supply, said Openfield wheat and barley trader Alec Tindal.
Many who needed to sell had taken advantage of the better prices a couple of weeks ago, he said.
The main factors behind the price fall are rising production forecasts for wheat crops in important producer countries:
- Russia – latest harvest estimate is for a 73m-tonne crop compared with 61.8m tonnes last year
- Australia may harvest its second-largest wheat crop ever in 2016 – most recent estimate is 27.8m tonnes (24.2m tonnes in 2015)
- Canada’s crop, at 30.5m tonnes, looks like being about 10% larger than last year’s
- US wheat prices have dipped to a 10-year low on expectation of a big wheat crop and there is added pressure from what looks to be a huge US maize crop.
The International Grains Council recently raised its world cereals production forecast to a record high of 743m tonnes, while corn production is estimated at 1,030m tonnes.
Last week also saw publication by Defra of a record end-of-season UK cereal stock figure. At 2.7m tonnes, the UK’s wheat stocks at 23 June were up by 34% year on year to the highest on record since 2007.
At 770,000t, UK barley stocks were 2.2% lower at the end of 2015-16 than the previous year, in line with what was expected, after a rise in the use of barley for feed and strong exports of almost 2m tonnes.
Wheat quality concerns in Germany have risen and Russian yields and quality have also been affected by rain.
While Russia continues to win export business, EU exports have also started well, topping 4m tonnes by the end of last week.
Full-spec breadmaking milling premiums averaged £13.20/t across the UK this week, reflecting a good supply of quality wheat.
Quality problems in continental European countries such as Germany and France could mean better milling wheat export prospects for UK grain. Export demand is likely to be for lower-grade milling wheats, mainly for biscuit use.
So far, such export demand had been limited, said traders. Typical premiums for Group 3 wheats with 10.5% protein, 74kg/hl and 225 Hagberg were £4-£5/t over feed values.