High harvest estimates hit wheat prices
BULLISH harvest estimates from some trade sources are blamed for undermining wheat prices in the past few weeks when many farmers had to sell grain.
Several companies predicted a big wheat crop, notably Dalgety and SCATS/BDR at 15.9m tonnes.
"Throughout the second half of September, the market price fell by £3/t during which time the value of sterling hardly changed," says Ian Douglas, managing director of Allied Grain. "Therefore, the fall can be attributed to concern over crop quality combined with the potential for a very high wheat exportable surplus well in excess of 4m tonnes."
His own company went for a much lower figure of 15.25m tonnes based on MAFF area estimates, closer to later NFU and HGCA forecasts and just 150,000t above MAFFs recently released provisional figure. He hopes this weight of opinion will help to stabilise prices.
The NFU is also concerned. "We are not suggesting that the trade is trying to talk the market down," says chief economist Siôn Roberts. "It could be a sampling problem. MAFF tend to do the job more thoroughly." But those conducting surveys are "honour bound" to produce a figure near to the final estimate, he says.
Stephen Maxwell, director of grain trading at SCATS, agrees. "We report what we find at the time. It is certainly not in our members interests for prices to go down."
Dalgety is sticking by its forecast, says commercial manager Trevor Harriman. "We always look to see if there is any more information coming forward to change our minds. But our regions were quite happy with what they sent, and continue to be so.
"Before we stood up and gave our results, the market had already fallen about 60p/t." It continues to show reluctance to trade at levels a 15.1m tonne crop would suggest, he adds.
Feed wheat prices climbed about £1/t during the week on talk of possible export business, notably to Korea, and aided by a sharp fall in the value of the £ against the k.
Ex-farm values in some areas hit £70/t, an important psychological marker, says merchant Cargill, adding that this sparked strong farmer selling, dampening the chance of further gains. *