Grain markets rise to £4/t in weather-wary market

Grain futures markets have risen by £2 to £4/t today (26 June).

A series of weather and crop reports has made a nervous pre-harvest market even more jumpy.

Even old crop wheat, which had fallen on high stock reports earlier in the week, rose in price.

By late afternoon London’s July 2015 feed wheat contract was up £2.75/t on the day to £113.75/t delivered and November 2015 feed wheat was at £129/t, a rise of £3.45/t on the day.

See also: Cover crops may aid late wheat drilling on heavy land

Key grain market influences in recent days include:

  • International Grains Council cutting its global wheat harvest forecast by 4m tonnes to 711m tonnes – just 2m tonnes short of IGC’s expected global consumption but high stocks means there will still be more than enough wheat to meet global demand. Main cuts to wheat production were in EU, India and Australia, while IGC raised maize forecast by 2m tonnes to 963m tonnes and put UK wheat forecast up by 100,000t to 15.1m tonnes
  • EU Mars crop monitoring report slightly cut expectation of EU 2015 wheat yields to 5.85t/ha
  • US maize futures rose to their highest for two months on continued wet weather in Midwest, leading to concerns for wheat quality and feeding into European grain futures markets. Rain is delaying the wheat harvest and maize and soya bean planting
  • Rain is desperately needed in parts of Canada
  • Hot temperatures forecast in UK for next week, some drought stress beginning to show in crops here.

On the milling wheat market, Gleadell managing director David Sheppard said new crop premiums were currently at similar levels to those of old crop, which was close to the five-year average.

“With the spread between old and new crop widening, the opportunity is there for growers who can carry their milling wheat over given the £10/t or so carry between July and November,” he said in the trader’s end of week report.

“Higher yielding breadmaking wheat varieties – notably Skyfall – and a milling premium that has made up a greater percentage of the overall price of wheat has led to significantly higher milling wheat plantings for 2015-16.

“Coupled with the potential for high carryover stocks, supplies of Group 1s and 2s could be plentiful next season, making current premium levels look attractive.

“Despite the expectation of lower wheat production in Germany compared with this season, there is also an expectation for a high carryover there too.

“What’s for sure is that the coming weeks of weather are crucial in determining the quality of milling wheat crops both here in the UK and across Europe.”

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