Low proteins and pricey imports maintain milling premiums

Full-spec milling wheat remains at a premium of well over £40/t above feed values.

Prices collected by Farmers Weekly midweek put breadmaking wheat at an average of £311.20/t ex-farm, just over £43/t above the feed wheat  average. Regionally, premiums ranged from £34/t to £51/t, with most in the high £40s/t.

The lower-protein year is maintaining premium levels, despite slow demand from millers, which are still taking in consignments bought on full-spec contracts down to 12% protein, with a 1% fallback for each 0.1% below 13%.

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A further factor in maintaining premiums is similarly low proteins in continental European wheat crops and a weak pound making imported wheat expensive.

Similar situation in Europe

David Brown, grain trader at Openfield, said: “It’s a similar situation in Germany and France. It’s a lower-protein year full stop in Europe – people have to pay more to get the protein requirements,” he said.

It is currently difficult to find a market for lower-protein biscuit-type wheats, said Mr Brown. However, this is not unusual, as this sector of the market generally does not develop until well into October, once millers have had a chance to work with and test the baking qualities of the new crop.

The UK typically imports about 15% of its milling wheat each year, according to the AHDB. The latest statistics show 485,600t was used for human and industrial purposes in July 2022, the first month of the cereal year. This was a rise of 15% on the first month of the previous year.

Little pressure to sell

With a 50% Basic Payment Scheme advance having been paid to farmers in July, cashflow on many farms is better than it would otherwise have been. Combined with slow demand from millers, this means there is little pressure to sell.

With the memory of the very high prices seen earlier this year, farmers are waiting for another rally to sell, said Saxon Agriculture trading director Mark Smith.

While there is much uncertainty, there is still plenty of upside in the market, he said. “At the same time, there is some downside – we are just £30 off the low set a few weeks ago.

“It’s clear we’ll have some wheat to export, the EU maize crop is going to be 15m-20m tonnes lower this year.”

Given the general uncertainty, he suggested growers should consider selling some 2023 wheat, which is worth about £250/t for harvest, while trade was also there for the 2024 crop at about £230/t ex-farm.