GOOD EUROPEAN crop prospects have forced domestic feed wheat prices below £70/t ex-farm for harvest for the first time since early August last year.
Beneficial rains in Europe and the USA have caused London November wheat futures to drop by £3.50/t in the fortnight to Weds, May 20.
Feed wheat is worth just £67-68/t ex-farm for harvest – over £15/t down from the contract high of the season, but is still more than £10/t above the low set in March 2003.
Latest US Department of Agriculture figures put global wheat production 5m tonnes below consumption, causing wheat stocks to fall by 4% to 123m tonnes.
Coarse grain stocks are also forecast to drop by 15%, to 104m tonnes.
But EU and eastern European crops look good, and a potentially large exportable surplus is pressuring internal markets.
High freight rates and a weaker Dollar are making UK wheat even less competitive for export, according to Banks Cargill‘s Richard Whitlock.
“However, with low world stocks you are still going to have large volatility until the crops are in the barn.”
Simon Tubbs, Framlingham Farmers‘ marketing manager, said current forecasts were based on ideal weather from now until harvest, so were likely to be revised downwards in the coming months.
And the tight global picture could also help shore up prices, particularly if China needed to import large amounts to fill a widening gap between production and consumption.
Old crop markets have also plummeted recently, falling by almost £10/t in just two weeks, to about £84/t ex-farm for May.
Increased farmer and merchant selling combined with a lack of export interest were to blame for the drop, said Mr Tubbs.