Heavy crops depress harvest grain markets

Big crops slashed almost £5/t off ex-farm prices in the week to Wednesday (5 August).

Prices slipped despite little grain being offered to the market, to put new crop feed wheat at £102-£110/t across most of England.

The top end of this range was in the North West and Yorkshire, while buyers were paying £117/t for old crop in the borders.

Barley is trailing wheat by about £10/t and midweek was worth £91-£96/t ex-farm for August.

See also: Winter barley yields show 18% increase this harvest

The London feed wheat futures November 2015 contract has lost almost 14% of its value since early July and stood at £116.87/t as Farmers Weekly went to press, a fall of £3.20/t on the week. Sterling continued to strengthen, adding to the pressure.

Both wheat and barley yields are outperforming expectations at home and in several mainland European countries. Further afield, almost everywhere that was suffering from drought has had some rain, said Mark Smith of Saxon Grain. This includes Canada and Australia.

Those looking for hope for higher grain prices here should keep an eye on the progress of the central and southern European maize crops, he said.
Drought and heat are reducing yield prospects almost daily and quality ratings for the French maize crop have dropped sharply.

UK winter barley yields, at about 7t/ha, are 0.5t/ha above their five-year average and reports of good quality French spring malting barley results have added price pressure.

EU exports have kicked off the new season at a higher level than the previous year, with soft wheat export licences awarded for 1.6m tonnes by 28 July (compared with 1.3m tonnes to same date last year).

Barley export awards are also running well ahead of last year at 1.4m tonnes (900,000t a year ago), while maize imports are behind those of mid-2014 at 800,000t.

While global wheat stocks are at high levels, the world’s main exporters hold only one-third of those stocks. This may make the wheat market more vulnerable to production challenges than the headline figures indicate, said AHDB Market Intelligence senior analyst Helen Plant in a recent report.

“Much of this shift has come from a build-up of stocks in China and a decrease in stocks for Russia and the US,” she said. World wheat production for 2015-16 is forecast by the International Grains Council (IGC) at 710.3m tonnes, with consumption at 707m tonnes and a slight fall in carryover stock.  

The IGC’s latest report expects world grain production of 1.97m tonnes this season, just 2% less than the previous year’s record.