Grain prices are rising on the back of increases in global markets, alongside growing concerns for the UK’s crops in the ground and those yet to be drilled.
Old-crop UK feed wheat futures put on £5/t in the first half of this week, standing at £158/t for May 2020 on Wednesday (15 January).
Despite a fast wheat export pace so far this season, much of the bumper 2019 crop overhangs the market, limiting price rises.
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Weaker sterling has contributed to the most recent rises, with spot feed wheat also gaining more than £5/t on the week to 15 January to average £148.75/t ex-farm. Feed barley was up £2.50/t to average £122.61/t ex-farm midweek.
New-crop futures rose by a slightly greater degree, with the November 2020 contract up by just over £6.50/t on the week to 167.50/t at midday on Wednesday.
Many traders are reluctant to make firm new-crop bids because of the uncertainty over 2020 production.
New crop ex-farm prices
A limited number of price quotes obtained by Farmers Weekly put feed wheat for harvest movement at £152-£156/t and feed barley at £126-£132/t ex-farm.
One of the main firming factors this week was Russia’s decision to limit January-to-June grain exports to 20m tonnes.
The move comes as a result of rising domestic grain prices, and while traders say this is not a tough limit for the market, it has had an effect.
“More government involvement from the major wheat exporters could spell higher volatility ahead, increasing the buying activity in today’s trade,” said commodity analyst CRM.
Further global influences
Support for wheat prices also came with the US Department of Agriculture’s world supply and demand (Wasde) report late last week.
The US winter wheat area, at 12.466m ha, is the smallest since 1910. However, this was largely already factored in to grain prices, said traders.
The report also forecast the lowest end-of-season stocks for five years for 2019-20.
The size of the US maize crop remains uncertain, as 8% of the crop was still not harvested by 8 December.
A 6m-tonne increase in expected feed demand means tighter US end-of-season stocks and a reduced export forecast, also keeping prices firm.
December US stocks were down 5% year-on-year, with an increase in feed demand tightening supplies.
Further afield, Australia’s bushfire crisis has put a stop to farmer selling, pushing futures up to fresh contract highs, said Cofco traders.
Other global factors affecting trade include the planned signing this week of the first phase of a US-China trade deal. However, there is growing doubt over how much trade this will deliver, keeping markets nervous.
Ongoing Middle East tensions continue to affect market sentiment, most directly on oil prices.
UK exporters shifted 741,500t of wheat between 1 July and the end of November 2019, compared with 134,200t in the same period the previous year.
The large harvest and pressure to export by the 31 October Brexit deadline were the main drivers, helped by a weak pound.
However, HMRC figures show that at 67,700t in November, wheat exports were the lowest monthly volume since July 2019, and way down on October’s 257,300t.
Wheat imports at 39,000t in November were at the lowest monthly rate since February 2007.
Maize imports so far this season (July-November) totalled 1m tonnes, just below last year’s record of 1.1m tonnes.