November 2015 wheat futures are at an historically high premium to spot prices, presenting an opportunity for growers to cash in on better market values.

As Farmers Weekly went to press on Wedesday, November 2014 feed wheat futures were £120.50/t, with November 2015 futures priced at £135.25. “It is more usual to see the new crop November futures at a discount to the nearby prices,” said Jack Watts at the HGCA. However, because the spot market was so depressed, the forward price was looking particularly attractive.

“So what can be done to capitalise on this? Detailed decisions would be reliant on individual storage and cash flow constraints,” said Mr Watts. “Broadly though, feed wheat could be priced for Nov-15 delivery instead of selling in the spot market. This provides protection from an overall fall in the grain market, while maintaining the opportunity to take advantage if the relationship between old and new crop prices change.”

If the premium between old and new crop narrowed, farmers could sell on the spot market and either cash settle the Nov-15 sale or allocate it to 2015 tonnage, he added. “If the premium widens, there is an increasing incentive to hold 2014 crops in store and release into the 2015 market.”