Grain values slip on stronger pound

Stronger sterling pushed UK feed wheat prices down by more than £2/t this week.

This put ex-farm prices for February in a range from £139-£148/t.

“UK prices are slightly lower for both old-crop and new-crop, as sterling has strengthened following solid UK GDP figures and a resolution to the High Court Brexit case,” said Gleadell Agriculture managing director David Sheppard.

“Old-crop prices remain close to the season’s highs and at a hefty premium to new-crop, meaning carryover stocks should be vastly reduced from recent years.”

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“If you believe the official figures, the UK should have a further 500,000t to export this season.

“Currently, we are much closer to importing significant volume in the North East than exporting any tonnage out of the South and East. In this scenario, adding further sales is worthy of serious consideration for farmer long-holders,” said Mr Sheppard.

Encouraging export figures

While the immediate competitiveness of UK wheat has reduced, the latest export figures are encouraging, showing that between July and November, 987,000t of wheat left the UK – the highest level during this period for five years.

Of the total, 258,000t was exported to non-EU destinations – the highest level for 20 years – up from 6,000t in 2015 and the five-year average of 62,000t.

Milling wheat prices slipped slightly more than feed wheat, taking the average full-spec bread-making premium to less than £6/t.

Feed barley continues to lag well behind wheat, although the drop in wheat narrowed the gap slightly this week. February feed barley values averaged just over £119/t ex-farm, but the regional range was wide at  £112-£125/t.

Apart from currency, other factors affecting grain values more widely this week included:

  • A reported 33% fall in Chinese maize imports in 2016, to 3.17m tonnes – behind this is a change in farm support policy that makes domestic maize more competitive.
  • Lower EU weekly wheat exports – 173,000t in the week to 21 January, the lowest level since July 2014.
  • Higher forecast Russian wheat exports for the season – 37m tonnes, compared with earlier forecasts of 35m tonnes.
  • Weaker Chicago maize futures as markets react to US president Donald Trump’s likely policy direction and his undoing of free-trade agreements already negotiated.
  • EU winter cereals look in good shape, with minor frost damage and no further winter kill expected by the end of January, according to the European Commission’s Mars crop-monitoring service.

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