Big crops keep grain prices in narrow range
© Tim Scrivener Grain price movements are likely to be limited in the medium term due to harvest pressure and aggressive export competition, say traders.
The start of the week saw a limited price rally, led mainly by speculative investment in grain futures in anticipation of a US Department of Agriculture report due on Friday (11 September).
See also: Dairy and chicken hit hard as £300m knocked off food exports
“Disappointing early harvest results for maize and soya beans in parts of the US have led markets to expect a cut to yield estimates,” said Brenda Mullan, acting senior analyst at AHDB Market Intelligence.
Fears for the Chinese economic outlook and aggressive bids for wheat export business are weighing on commodity prices.
The pressure continues despite the reluctance of growers across Europe to sell, with feed wheat worth between £97/t and £104/t ex-farm on 9 September.
Feed barley was on average worth £9.50/t less than feed wheat while the premium for full-spec breadmaking wheat was between £18/t and £25/t.
Storage had become another marketing option while money was cheap, said Gleadell trading director Jonathan Lane.
Increased feed wheat use by compounders was the only potential positive, unless a fundamental factor changed, said traders.
Higher than average wheat protein content this year is making wheat competitive with maize but the size of the UK crop – possibly 16m tonnes-plus for the second year running – is adding pressure.
UK wheat export pace is well behind that of last year. “We would have to run at about 250,000t a month for the rest of the season to clear the likely surplus and at present there’s no chance of us doing that,” said Mr Lane.
Grain market consultant CRM AgriCommodities pointed out that at about £111/t early in the week, the London November feed wheat futures price was below the bottom third of the market over the past 10 years.
