Wheat prices have edged up this week as concerns mount about dry weather across the UK and Europe.
The UK futures price for wheat to be traded in November this year edged past £170/t on Thursday, for the first time since the end of March.
This is a gain of about £6/t in a week, helped along by the falling value of the pound against the euro, which meant UK buyers would have to spend proportionally more to buy the same amount of wheat from the continent.
Jonathan Lane, ADM Agriculture’s head of grain trading, said: “Northern hemisphere crop prospects seem to be fading after months of prolonged dry weather. Recent rains have been beneficial, but have not eliminated concerns.
“As the markets move towards the harvest period, weather, politics and uncertainty over future commodity demand make it difficult to predict price direction. That said, drier, hotter weather across much of the northern EU does not bode well for production.”
EU Commission forecasters reduced their predictions for average EU soft wheat yields to 5.72t/ha, down from 5.87t/ha last month, after recent rain failed to replenish soil moisture levels.
The UK forecast is 8.01t/ha, down 10% on 2019 and lower than the five-year average of 8.34t/ha.
However, Mr Lane said the continued effects of the coronavirus pandemic on demand means old-crop stocks will probably increase compared with recent projections.
The UK farmgate price for old-crop feed wheat this week was up by almost £2/t to £149 (21 May), according to a Farmers Weekly survey of merchants, with milling wheat selling for £170/t.
Barley also gained close to £2/t to stand at £121/t, but the premium of wheat over barley hit a new high of £28/t – its highest level for a year.