Wheat prices fell this week as the knock-on effects of the swine flu outbreak hit confidence and demand across commodity markets.
Both new and old-crop prices had rallied towards the end of last week on the back of several “bullish” factors (see table), but the flu outbreak last weekend knocked all markets, including grain.
“Quite a bit of wheat traded last week at £120/t on-farm, but today new crop is nearer £116-117/t,” Glencore‘s Nick Oakhill told Farmers Weekly on Wednesday (29 April). “Unease about swine fever is the main reason, but people are also more relaxed about supply after the recent rain. Crops in the south andeast were looking quite sick before, but now there appear to be few crop-related issues here and elsewhere.”
GRAIN PRICE FACTORS
|Lower planted area in Europe and North America||Large carryover from 2008 harvest|
|Floods delaying US spring wheat and corn plantings||Signs of recovery in condition of US winter wheats|
|Fears over lack of rain in parts of England, Denamark and Baltic states||Recent rains in UK and Europe alleviated many crop concerns|
|Stocks relatively tight by historical standards – weather problems affecting planting/yield could have significant price effects||Swine flu and economic problems could hit market confidence and reduce global demand for grain|
Futures prices equated to £100-105/t ex-farm for May and £115-119/t for November 2009 as Farmers Weekly went to press.
“Prices have drifted lower, but the fundamentals remain unchanged and new crop is still very sensitive to production issues,” Openfield‘s David Doyle added.
In its first assessment of the upcoming harvest, the Food and Agriculture Organisation put world cereal production at 2217m tonnes (including rice), 3.1% down on last year’s record harvest, but still the second-largest crop on record. Global wheat production was estimated at 655m tonnes, 5% down on 2008, largely due to falls in the European and North American wheat area.
But the report expected little impact on prices, as the smaller crop would be offset by a 19% increase in world end-of-season stocks.
Read more on the H1N1 ‘swine’ flu outbreak