Grain prices rise on crop fears
Grain prices continued to rise this week as supplies look increasingly tight. Almost every new crop figure released predicts less grain across the world in the current season.
The May 2013 London feed wheat futures contract has jumped by more than £20/t in a month and was at £226/t on Wednesday (7 November). With drilling delays growing, prices for the 2013 crop have also seen big gains on futures markets, taking November 2013 above £193/t midweek.
It is not just in the UK where the prospects for the 2013 crop are suffering – drilling is also badly delayed in France.
Spot prices for feed wheat have never been in such a large range, worth between £200/t and £220/t-plus ex-farm on Wednesday, with the highest prices in Scotland where wheat is particularly short and stocks are already being drawn from as far south as Yorkshire.
Lack of farmer selling, prompted by the rapid rise in prices, was fuelling the rise as consumers took cover on the futures market, said GrainCo’s Jonathan Pearse.
Buying interest pre-Christmas was limited, said Gleadell managing director David Sheppard, although there was still a lot of committed grain to shift in this period.
Post-Christmas, there was a lot of business to be done and UK consumers would take grain down to 65kg/hl but it was still not clear what the market would be for grain of lower quality, he said.
Export customers were currently not willing to pay UK prices, while milling wheat premiums had fallen as imports rose.
New crop wheat is worth about £180/t ex-farm for harvest and £185-190/t for November 2013. While prices have been rising for several weeks, they could fall just as quickly, warn traders.
WORLD GRAIN MARKET FACTORS
Russia confirms a total 2012 grain harvest of 71.7m tonnes against 94.2m tonnes in 2011
China’s wheat harvest estimated by US Department of Agriculture at 10m tonnes lower than the 108m tonnes predicted by Chinese government
Rain in Australia, while relieving drought, may have come too late to rescue yields and is giving rise to quality concerns
Dry conditions in some key areas of the USA – latest weekly crop condition report from the USDA reported 39% of US wheat crop as good/excellent – lowest ever percentage rating for this time of year
Winter sowing is almost complete in Russia and Ukraine on a higher expected acreage – some drought stress in Russia.