Grain prices have slipped again this week, as the turmoil in the financial markets and the weight of a large world crop continue to put downward pressure on the market.

The NFU released its initial harvest estimate for wheat on Tuesday (7 October) in which it predicted an 18% increase in the English crop above the five-year average at 15.97m tonnes. This figure is based on an average wheat yield of 8.2t/ha and plantings of 1.94m ha – up 6.5% and 10.7% respectively.

“The increase (in yield) was largely due to excellent planting conditions last autumn and exceptional growing conditions during the season,” said an NFU statement. “It is believed that average yield might have been larger but for exceptionally difficult harvesting conditions this summer.”

The large crop has already been factored into the market, however. The real driver this week has been the continued fall-out of the banking crisis, with investment funds cashing in their positions in commodities to generate much needed cash, on both sides of the Atlantic.

“This has nothing to do with the market fundamentals. It’s just about people bailing out of the commodity markets,” said Alan Macaulay of Frontier.

The trend in November futures tells the story. Having stood at £106.25/t at close of play on 23 September they had slipped to £99.50/t a week later on 30 September. By Wednesday (8 October) they were trading at just £92/t.

Ex-farm prices have suffered a similar fate, with spot feed wheat values quoted at £83/t on Wednesday and milling wheat at £129/t – down £10/t on the week.

Few farmers were selling at these prices, said Richard Jenner of Centaur Grain. “They are out doing other things.” Buying was also muted, he added, with consumers just looking to fill spot orders rather than chase forward purchases on a falling market.

“There are not many friends out there,” he said. “Yes, the EU could reintroduce import tariffs and yes, the Argentinean and Australian crops could get smaller. But 95% of the crop is in the northern hemisphere and that has already been cut and is in the barn.”

But the NFU remains optimistic about the saleability of the 2008 wheat crop.

“Milling quality is better than last year and crops harvested before the worst of the rain will have broadly met bread flour milling specification,” said combinable crops board chairman Ian Blackhouse. “We are looking to millers to make use of as much of the UK crop as possible in a year where quality has been difficult across the EU.”