Grain prices fall on improving world crop prospects

In the run-up to harvest, both old and new crop markets have lost ground on increasing crop estimates around the world and on concerns about the economic outlook.

UK old crop feed spot wheat prices lost a further £3/t in the week to Wednesday to average just over £161/t ex farm compared with a spot price of £200/t in early March.

Prices continue in a very wide range, from £158/t ex-farm in central southern England to £180/t ex-farm in north-east Scotland, where feed wheat is being imported. (For latest regional ex-farm prices, see p142.)

The latest UK wheat import figures, at a total 2.38m tonnes between July 2012 and the end of April this year, is more than three times the same period in the previous season.

New crop wheat is priced at £152-170/t ex-farm depending on region, with prices generally rising further north. The fall in prices of the past few weeks has seen growers sitting tighter than ever as far as marketing decisions are concerned, despite calls from traders and consultants to lock into some sales.

With the UK set to be a net importer of grain again next season, our wheat price has moved to parity with the cost of imports, said Mark Smith, grain director at Saxon Agriculture. Had the UK been looking at a more “normal” size harvest, giving an exportable surplus, grain prices would be about £15/t below current levels.

Although crops had caught up considerably in recent weeks, a late harvest still held the prospect of a last-minute price rise on old crop, said Mr Smith. French wheat import cargoes due to arrive in late July had been cancelled on the back of the old crop price drop, so UK supplies would have to fill any gap this caused.

The next price moves are likely to follow the release of US quarterly stocks and planting information late today (28 June). A year on from the start of the US drought, which caused the grain price rise of 2012, the outlook for the US maize crop is once again the biggest influence on UK grain prices and the most recent progress reports for maize and soya beans showed improvements.

The London November 2013 feed wheat futures price was at £166.50/t as Farmers Weekly went to press on Wednesday, compared with £161/t for November 2014. New gross margin estimates due out this week from HGCA were showing a lower margin from the 2014 crop than from 2013 but were still higher than in previous years, said HGCA senior grains and oilseeds analyst Charlotte Garbutt.

Spring malting barley premiums are holding up at about £25/t for the 2013 crop – but with feed barley at a £20/t discount to wheat. Provided quality is reasonable there is the prospect of hot competition with the French and Danes for export business.

Despite the UK being in deficit, oilseeds are under pressure from expectations of large soya bean crops, with new crop ex-farm values losing ground again this week to stand at between £315/t and £325/t depending on region.