Ex-farm spot wheat outperforms futures prices

A hefty premium has emerged in the last year between ex-farm spot prices and UK feed wheat futures contracts, according to analysis by grain trading platform Hectare.

Ex-farm prices for farmers in the Midlands were at a £3/t discount to futures contracts last July, but are currently trading at roughly a £9/t premium, marking a notable shift in market dynamics.

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Luke Carr, chief revenue officer at Hectare Trading, identified there had been a disconnect develop in the marketplace between physical and futures prices that has persisted into 2025.

He said: “As the futures prices started to drop off in mid-February, we saw a divergence between the ex-farm prices that were being offered by buyers and where the futures price was.

“The futures price has dragged down prices overall this season, but we have seen an increased premium above futures for ex-farm spot prices.”

He added that the trend had been across all regions, but was particularly noticeable in the Midlands and the South, where traditionally the ex-farm price would be below the futures price.

Mr Carr noted this premium had largely disappeared for new crop, with very little difference between futures and ex-farm prices post-harvest.

UK feed wheat futures for the November contract received some support in the last week, lifting to £183/t on 18 June, its highest point for three weeks.

Meanwhile, the milling wheat premium over feed wheat has stabilised at roughly £20/t, having fallen back from almost £60/t at harvest last year.

Ex-farm spot prices collected by Farmers Weekly on 18 June put milling wheat at £183/t, down by 14% since the start of the year.

Feed barley has also seen a shift. The discount relative to feed wheat has tightened from £20/t a year ago to roughly £10/t currently, due to strong demand for barley in livestock rations.

Hectare Trading observed exceptional buyer interest for feed barley, with demand exceeding supply by 183%.

Traded volumes

The quantity of wheat being traded in the first half of 2025 has been lower than previous years.

Trading activity initially slowed in February as prices fell, and despite a slight uptick in April, a further price drop in May led to a significant reduction in volumes sold.

Some farm businesses have held onto crops and plan on carrying larger quantities into the new season in the hope of better prices, according to Mr Carr, while others are frantically trying to sell ahead of harvest.

He said: “We are also seeing a significant reduction in activity for new crop sales and a halving in forward selling of new crop.

“The risk is farmers are holding on to old crop and are also not forward selling new crop.”

Mr Carr said while prices are lower than everyone would like at present, selling a bit could help to reduce some exposure.

Record imports

UK wheat imports reached a record high of 2.6m tonnes between July and April, 71% higher than the five year average.

Yuriy Ruban, cereals analyst at AHDB, said: “Market participants in the UK are focusing on the volume of wheat and maize imported, as well as the volume of barley and wheat exported in May and June of the current season, as changes to the expected full-season trade would also affect the carry-in stocks and supply outlook for next season.

“This could, of course, also impact the price of the 2025 domestic grain harvest.”