Feed wheat prices will range between £85 and £100/t over the next five years, according to Arthur Hill, NFU combinable crops board chairman.
Speaking to Farmers Weekly at Cereals 2007, Mr Hill said that although prices would remain volatile, the range of fluctuation would be much smaller than that experienced three or four years ago.
“Instead of seeing feed wheat prices stabilise at about £67.50/t for a period of three or four years, they are likely to fluctuate between £85-£100/t he said.
Key factors supporting prices will be the weather’s impact on production, low world stocks and food and energy security, particularly in the United States.
“The weather will remain the biggest driver (of higher wheat prices) but it’s only having such a big influence because of tight global supply and demand for grain,” said Mr Hill.
Global stocks now stand at only 115m tonnes compared with 200m tonnes in 1988. Also, EU intervention stocks are virtually empty and releasing up to 14m tonnes of grain had no effect on prices, he said. “With stocks at such low levels we can’t afford a weather disaster.”
Food and energy security in the USA is also playing an increasing role in preventing a return to wheat prices of about £67/t as more maize production is diverted into bioethanol the tonnage available for export has dropped sharply.
Little US maize will be exported this year compared with a 38m tonne surplus only three years ago. In contrast the US is expected to use 76m tonnes of maize for bioethanol production this year.
Although improved wheat prices were good new s for the arable sector, Mr Hill said livestock producers’ feed costs had obviously risen. “Livestock producers also need sustainable prices for their stock and milk,” he said.