Grain markets are still nervous but got to midweek without any huge swings, with May 2011 London feed wheat futures at £193.50/t delivered. Prices dipped slightly on Wednesday following a reduced estimate from DEFRA for UK wheat demand for the current cereal year.
Lower use is expected in human, industrial and feed markets. Flour millers, distillers and UK bioethanol producers were all expected to use slightly less grain than previously forecasted while lower cattle, sheep and poultry numbers will dent demand from compounders.
End of season commercial stocks of wheat are now expected to be 1.6m tonnes, one of the lowest figures for many years. However, provided harvest was not late, this was adequate, said GrainCo managing director Gary Bright.
“The old crop wheat market will be tight at the end – that’s a given, but that doesn’t necessarily mean a big price.” Prices from here on would depend on many factors but there was competitively priced French wheat available across the early harvest period, he said.
For the time being, things were not tight, with most buyers covered until the end of the cereal year.
Farmers had taken advantage of good forward prices for 2011 to the extent that GrainCo had probably already bought about 35% of the tonnage it expects to trade next cereal year compared with a more normal proportion of 10 to 15% at this stage in the season. Growers had sold at an average of £140/t for November 2011, said Mr Bright.
Crop watching around the world will make for a continued nervous market, while uncertainty about political outcomes in the Middle East and north Africa, coupled with logistical recovery prospects in Japan will contribute more price instability.