21 December 2001

Think before selling

FARMERS should think carefully before selling new crop wheat forward, as prices could rise in the spring, one of the UKs largest farmer-owned co-ops has warned.

Centaur Grain says the general feeling that a possible record wheat crop in 2002 will cut prices may be misplaced.

"UK wheat currently looks too cheap," says export trader Nigel Stevenson. "We are about £10/t cheaper than US soft red winter wheat, and £7/t below French wheat fob (on board ship). After freight costs, this leaves the UK undervalued by £2-5/t."

Trade estimates put the 2002 wheat crop at 17-19m tonnes, but Mr Stevenson expects it to be at the lower end of the scale. "This would leave us with about 4.5m tonnes to export. If the quality of the UK crop is reasonable, producers could be in a good position to take advantage of any opportunities, at realistic prices."

But Richard Whitlock of Banks Cargill says there is only a finite market for soft wheat within the EU. "The rest will have to be shipped to third countries like Africa, and as the UK is trading in an increasingly global market, it is not just US and French wheat we will have to compete against."

Mr Whitlock is predicting an 18m tonne crop. Good quality is a must to avoid a sharp drop in prices to world feed wheat levels.

"However, the crop looks excellent, and world stocks are low. Currency will also have a significant effect, and if we move towards joining the k, the £ is likely to weaken, which would help on exports." &#42