Milling wheat premiums highest since 2015

Milling wheat premiums have risen to their highest level for more than six years, reflecting the lower levels of samples meeting full milling specification this season.

According to AHDB analysis, in October the average milling premium rose to £35.60/t, compared with £27.00/t in September and £17.20/t in August.

However, its most recent corn returns survey results (4 November) recorded an average premium of £40.70/t, based on a UK ex-farm bread wheat price of £255.40/t and feed wheat price of £214.70/t.

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The last time premiums reached this level was in 2015.

The AHDB’s research also shows that bread wheat samples hit their highest level in the history of the AHDB’s delivered cereals survey in the week ending 4 November.

Last week, the average delivered bread wheat price for December 2021 was £285/t in the north-west of England.

This is the highest since December 2012, when the price for nearby (current plus one-month) delivery reached £263/t (also in the north-west of England).

The AHDB said these record prices were reflective of current global trends and a tightness in supply in the UK.

Quality survey

The levy body has just published the final results from its cereals quality survey which shows that just 20% of Group 1 samples met a typical specification of ≥76kg/hl, ≥13.0% protein and ≥250s Hagberg.

This was 3% down from the provisional 2021 results and 12% down from 2020.

Low specific weights is the main issue, averaging 75.4kg/hl, the lowest level since 2012 (70.7kg/hl), which in turn was the worst result since 1977.

This may mean that more wheat is required to meet flour demand this season.

Current premiums

Chris Miller, wheat trader with Openfield, said milling premiums of £42-£43/t above feed wheat values were currently on offer.

While the proportion of the crop meeting grade 1 spec was down, millers were taking crop achieving 72kg/hl, 12% protein and 200 Hagberg, and making the relevant deductions.

It is possible that premiums might start to level off now that millers have a clearer picture of what is available and what they can mill.

Market update</h2

The UK feed wheat futures price for May 2022 stood at £219.50/t at the start of this week (8 November), down from the previous week’s high of £231/t (2 November).

Market sentiment is still bullish, say traders, but there are risks of downward pressure in the domestic market depending on the level of imports of maize and wheat.

However, at home things are looking tighter as many farms have already committed a good proportion of their crop.

Strong export opportunities are supporting ex-farm feed barley prices, which are about late £190s/t for December collection. Higher values are achievable in Yorkshire, with prices of about £205-£210/t.

Buoyant prices (about £580/t) continue in the oilseed rape market because of continued demand after the Covid-19 lockdowns.

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