UK feed wheat futures price rises in turbulent market

UK feed wheat prices have risen in a week of turbulent market movements.

As of Wednesday 2 June, the futures price for November 2021 stood at £180.75/t, up from £170.5/t seven days earlier.

It had risen to £175/t on Thursday 27 May, before settling at £174/t the next day, ahead of the long weekend in both the UK and US, following the global market.

Regional spot feed wheat prices gathered on Wednesday 2 June were up by about £3.50/t on the week at an average of £198.30/t ex-farm.

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The AHDB published its first estimates of 2020-21 end-of-season stocks for wheat and barley on Thursday, reporting marked year-on-year reductions for both wheat (-51%) and barley (-27%).

Animal feed rations are likely to feature more wheat next season, at the expense of barley. This, combined with the lower carryover stocks, means UK wheat supply and demand will remain tight, said the AHDB.

For barley, how brewing demand recovers as Covid-19 restrictions ease will be an important factor for the market.

Mark Smith, trading director at merchant Saxon Agriculture, said the latest AHDB 2020-21 balance sheet shows a wheat deficit of 300,000t, which would necessitate new-crop imports in July and August.

“It has been another turbulent week of large price movement, as speculators continue to react to their diet of developing stories and rumours,” said Mr Smith of last week’s trade.

“The market flips from all-sellers to all-buyers in a heartbeat, making it a dangerous place to operate for even the most disciplined traders.”

Global factors

Global grain prices rose sharply towards the end of last week due to more dry weather in US spring wheat areas, buying by speculative traders, and confirmation of big US maize export sales.

Paris December 2021 wheat futures rose €2.75/t (£2.37/t) to €212.50/t (£183.08/t), driven by potential EU export sales to Saudi Arabia.

Meanwhile, a new estimate of the Brazilian maize crop reduced the global maize end-of-season stock forecast, and higher animal feed demand, especially in China, led to cuts in global wheat stocks.

Recent cold weather in the US could negatively affect spring wheat and newly planted maize crops.

Conditions in Europe continue to look mostly positive, but more rain is needed in Russia to maintain crop potential.