Grain prices fall to new season lows
© Tim Scrivener Wheat markets hit fresh season lows this week on both old and new crop.
London wheat futures dropped to £107.25/t for May 2016 on Wednesday, with November 2016 reaching £118.50/t – both about £4/t down on the week.
Ex-farm values held up slightly better, with spot feed wheat losing about £2/t to average £99/t, within a range from £97/t to £104/t, depending on location.
See also: Outlook 2016: Bumper crops set to keep grain prices down
However, milling wheat fell by almost £5/t to average just £107.60/t ex-farm, after Egypt rejected two cargoes of wheat this week.
Enforcing new rules on zero tolerance of ergot, Egypt rejected a 63,000t shipment of French wheat and a smaller load of Canadian durum. As a result, sellers boycotted the latest tender by the state grain buyer, GASC, leaving markets uncertain over where Egypt would source wheat in the months ahead.
“Traders have viewed the risks of bidding for Egyptian business too high,” said AHDB analyst Arthur Marshall. If France did not continue to export to Egypt, it would further increase its already heavy wheat surplus.
“While Egypt may well still source wheat from somewhere in the world, higher-than-anticipated stock build-up in the European market [rather than elsewhere] could also affect UK prices.”
End-of-season French wheat stocks were already forecast to be their highest for more than 20 years, and with abundant global supplies and few weather concerns over new crop development, prices for the 2016 harvest remained under pressure.
One slightly brighter note was a marginal rebound in spot oilseed rape values, to average almost £257/t ex-farm as Farmers Weekly went to press on Wednesday.