8 October 1999

Soft wheat premiums soar

By Robert Harris

PREMIUMS for soft wheats are reaching historic highs in some areas.

Damage caused by the wet harvest is becoming more apparent, and many farmers are not selling, says Robert Kerr of Glencore Grain.

Full specification softs – varieties like Consort, Riband or Claire of 180 Hagberg, 11.9% protein and 74kg/hl – are worth £71-72/t ex-farm, says Mr Kerr.

In areas like the Midlands, where there is plenty of basic feed wheat, that amounts to a £6-7/t premium. "We havent seen that sort of difference for a decade or more."

Although it is becoming clear that at least one-third of UK soft wheat will be consigned to the feed bin, Mr Kerr suspects these premiums will not last. "Ultimately, there should be enough to supply the circa 2m tonne demand."

But, for now, many farmers are reluctant to sell. They are busy with autumn cultivations and have not found time to undertake the detailed sampling needed this season to identify good wheat, he adds.

Lower grade softs may also carry a small premium as markets develop, says Mr Kerr. "We are starting to revisit some parcels of wheat which we wrote off earlier in the harvest."

In stark contrast, the high quality of the French wheat crop has been confirmed by cereals intervention agency, ONIC. Only a fraction of the crop falls below 200 Hagberg, and bushel weights average over 78kg/hl.

Output is thought to be 35.5m tonnes, 8% down on last year, but still the second largest crop on record.

Prices across the Channel have risen by about k4/t (£2.60/t) since July, mainly due to the better quality, says Ian Wallis of Cargill. But prices are now at a slight premium to the intervention value, so there is little chance of further gains, he adds.

Higher values should help support UK values, as the French market sets the tone for Europe. "But it will be difficult for UK wheat to compete, particularly for intra-EU sales. Domestic levels will need to trade at a discount, though it is difficult to gauge how much. In 1992/93, the discount grew to about £11/t."