Grain price holds steady on sterling’s weakness

Grain prices largely held this week as the weaker pound kept UK values competitive.

On Friday, spot feed wheat prices averaged £102.3/t ex-farm and ranged from £100/t in the South East and East Anglia to £106/t in the North West, with most regions sitting in the middle of this range at £103/t.

Milling wheat premiums stuck at about the £14/t mark, although in the North West it reached £18/t.

The feed barley/feed wheat price gap widened slightly to an average of £2.5/t, with feed barley worth £95-£101/t ex-farm depending on region.

See also: Politics and currency fluctuations exert influence on grain markets

Oilseed rape prices gained about £3/t on average, taking strength from a lower EU rapeseed crop forecast – down due to frosts in Poland, insect damage in France and the UK area down 10%. Also, more rain in Argentina has slowed soya bean harvest progress – 24% was harvested by 28 April against 62% a year ago.

The next cereal market move is likely to come with the release on 10 May of the US Department of Agriculture’s world supply-and-demand estimates. The figures may prompt speculative buying or selling, mainly of US futures contracts.

Defra’s latest cereal use figures show milling, starch and bioethanol use of wheat increased 5.2% in the year to the end of March to 584,000t. In contrast, brewers, maltsters and distillers’ barley use fell 6.1% to 153,000t, with wheat use down 18% to 57,000t. From July to March, home-grown wheat milled fell 3.7% year on year.

The forest fires in Alberta, Canada, and dry conditions in the Canadian wheat prairies may hinder plantings, say analysts. Meanwhile, some crop and stock figures have fed into the mix this week, mainly with a negative effect on prices. 

• The Brazilian second maize crop forecast from analyst Celeres was cut by 10% to 52.8m tonnes (2.5m tonnes down year on year)
• The USDA rated 61% of US winter wheat good to excellent, with a Kansas crop tour predicting wheat yields well above the five-year average
• The EU Commission increased its 2015-16 EU wheat end-of-season stock estimates by 1.1m tonnes to 18.3m tonnes due to increased production and import estimates. It also increased 2016-17 production by 300,000t to 142.8m tonnes, raising 2016-17 ending stocks by 1.4m tonnes to 18.7m tonnes
• The UN Food and Agriculture Organisation slightly raised its forecast for 2016 world cereal production to 2.526bn tonnes, similar to 2015 and potentially the second largest on record. Global use is up 1.1% year on year, so end-of-season stocks are forecast to drop 3.3% (21m tonnes)