Grain markets have tumbled this week following the spread of civil unrest across northern Africa.
Ex-farm feed wheat prices had fallen by almost £15/t in a week as Farmers Weekly went to press on Wednesday (23 February), to about £185/t for spot movement. Oilseed rape markets have been similarly affected, dropping by almost £20/t to about £364/t.
“The recent activity has been on the back of fund liquidation,” says Glenn Mason, head of committed marketing at Openfield. “Based on the civil unrest we’ve seen in north Africa and, most recently, Libya, the funds have decided to reduce their exposure to soft commodities in favour of the safer haven of gold or the US dollar.
“The unrest could stifle global economic recovery, but fundamentally nothing has changed [in the grain markets]. There is still the same amount of wheat in the world as there was a week ago; it is just sentiment that is driving the market.”
Concerns over winter kill of cereals in northern Europe and Russia, as well as very dry weather in the US, should be supportive to prices, he adds. “The critical period will be in the next six to eight weeks when we see how crops have come through the winter.”