Gradual fall in wheat price forecast for 2019

Wheat prices are predicted to remain strong until the end of the year before gradually declining in 2019 on forecasts of a larger global wheat crop next season.

Prices are currently being supported by forecasts that Russian exports will have to slow down from their current unsustainable pace, said Seth Meyer, chairman of the influential US-based World Agricultural Outlook Board.

Spot feed wheat prices across the UK currently stand at an average of £170/t (17 October), down from their harvest peak of £184/t in early August, with little movement in the past few weeks.

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Russia has a smaller crop than last year, but they have a “very quick export pace” and the expectation of this slowing down is overhanging the global wheat market, said Mr Meyers, who leads the US government body that produces the World Agricultural Supply and Demand Estimates (WASDE) every month.

The last time Russia imposed controls, in 2014, there was a significant price increase, he said.

Speaking at the AHDB Grain Market Outlook Conference, Mr Meyer said controls could come this season, either through an explicit export tariff or indirectly by the government imposing additional checks at ports, which would slow down the flow of grain leaving the country.

The UK’s recent trend to being a net importer in the past few seasons has made it increasingly susceptible to global market fluctuations.

Prices forecast to fall in the new year

Rabobank commodity analyst Charles Clack said the bank was forecasting European wheat prices to stay at current levels until the end of the first quarter of 2019.

The majority of the demand generated on global markets by a decline in Russian exports would shift to the US, meaning prices are likely to rise further there than in the EU, he said.

Rabobank, which specialises in worldwide food and agricultural banking, is forecasting average EU wheat values to stand at about €200/t (currently £175/t) until the end of the first quarter in 2019 before sliding back €20 (currently £17.55) by July 2019.

Mr Clack said the EU rapeseed area is expected to fall by about 500,000ha in the 2018-19 season after a very variable harvest and challenging establishment season, with wheat expected to be the biggest benefactor.

American farmers grew a historically low wheat area this year, but are forecast by WASDE to harvest an additional 800,000ha of wheat in 2019, predominantly at the expense of soya.

This would be a 5% increase on the 2018 harvested area of 15.2m hectares.

The switch is being made in response to the ongoing trade war between the US and China, which has seen a soya glut in the US after China slapped a 25% tariff on imports of soya from the United States in July.

Uncertainty remains

Openfield chief operating officer Mark Worrell said the dry weather is creating concern about non-germination of sown seed in many planting areas across the EU and causing uncertainty for forecasters of cropping area and condition.

“If Europe gets enough rain over the coming weeks and the mild conditions continue, crops could establish.

“However, if temperatures drop dramatically and it remains dry, then this could reduce the overall winter crop sizes, pushing emphasis into alternative spring crops,” he said.