European grain markets continue to firm cautiously as harvest reports come in from Germany and other key grain-producing EU member states.
Rain has badly affected progress in Germany and Poland. Yields are reported down by 10-20% in Germany and milling quality is at risk.
The French soft wheat crop size was downgraded by analysts again this week, to 28.2m tonnes compared with the record output of 41m tonnes in 2015.
Most London feed wheat futures contracts had risen by about £2.50/t in the week to Thursday’s close. The November 2016 contract was flat at £127/t at lunchtime, Friday (5 August)
As the first UK wheat crops come off the combine, spot values around the regions ranged from £110/t to £117/t ex-farm on Friday, up £1.30 on the week. Full spec milling premiums averaged £25/t, down from the previous week’s £29.50/t.
Spot feed barley prices also gained more than £2/t in the week to Friday, averaging £96.80/t
Next week sees the release of an important world agricultural supply and demand estimate (WASDE) by the US Department of Agriculture.
Traders are expecting this to reduce production and end of season (2016-17) wheat stocks estimates considerably, mainly because of the poor yield reports from Continental European countries.
However, against the harvest challenges faced by EU member states, yields in the Black Sea region are up, Russian wheat is aggressively priced on export markets, US spring wheat ratings are good and there is the prospect of a record US corn crop.
Also, a lot of wheat will need to move for cash and storage reasons over the next few weeks, pointed out Gleadell’s managing director David Sheppard. “Cash wheat has to move, and in great volume, which could change the picture,” he said in the firm’s Friday (5 August) market report.
“Global large supply versus a clear problem in NW Europe are the key drivers for the market. We have to hope that the early reports of good UK quality and acceptable yields continue, and that this will give us opportunities in the weeks ahead.”
Consultant CRM has put the UK wheat crop at 14.5-14.7m tonnes on a 1.7% lower area and 10% lower yields. This compares with 16.4m tonnes in 2015 and 16.6m tonnes in 2014.