UK old crop feed wheat and feed barley prices are down by about £3/t on the week, to average £165/t and £145/t spot ex-farm respectively on Friday (15 February).
A wide regional range continues, with feed wheat at anywhere between £157/t and £173/t spot. Barley was on average £20/t behind wheat, but in a wider range, from £135/t to £168/t, with the highest values in north-east Scotland where it is at parity with wheat.
The reduction in values on the week reflects falls in futures prices around the world yesterday (14 February).
The drop was led by the US market, which saw its March wheat contract lose almost 3% on the day, mainly on the back of poor US grain export statistics and the possibility of further US sanctions on Russia.
The effect of this was to cause a fall in the Russian rouble, making Russian wheat competitive again on export markets.
A resulting fall in Paris futures saw the May 2019 UK wheat contract down £2.10/t yesterday to close at £170.40/t.
AHDB market intelligence analyst Peter Collier pointed to the big discount into new crop prices, offering little incentive to hold old crop.
“With reduced EU exports leading to higher than anticipated theoretical stock levels, and lack of incentive to hold wheat, the bearish outlook for the remainder of the season could very well continue,” he said in the daily grain report, pointing to several other factors bearing on the market:
- Favourable Northern Hemisphere weather, relieving some pressure on the US winter wheat area, which is forecast to fall by 4% next season. A smaller US crop increases price sensitivity to weather stories
- End of season stocks – the current season stocks-to-use ratio of major wheat exporters, at 14.7%, is the lowest since 2013-14. The low stocks levels mean that a large level of production will be required to return stocks to “normal” levels. This may cap some of the bearishness in old and new crop pricing.
- For the UK market, the continuing debate over the reliability of BPS and other crop data.