17 November 1995

Surge in grain prices stalls

THE recent upward surge in grain prices, which has seen spot feed wheat fetching £125/t and barley £118/t, ground to a halt this week.

But many in the trade believe this is just a temporary respite and the £1 drop in wheat and £2 fall in barley in the first half of the week is no more than a "breather".

As if the market was not bullish enough, MAFF has revised down its UK harvest estimate to 21.7m tonnes, although wheat is unchanged at 14.2m tonnes. That gives an "official" wheat export surplus of 3m tonnes, of which half will have been sold already by the end of November, according to some trade sources.

Driving force

In the home market, compounder demand for the new year has been one driving force, while the arrival of IACS cheques in recent days has reduced the supply off farms to a trickle.

David Balderson of Viking Cereals believes 40% of the crop is still to be sold. But this is quite normal for the time of year and farmers should not be blamed for the current firm prices. "Shippers and speculators are equally guilty of sitting on stocks," he says.

He believes prices will continue to firm in the coming months.