Wheat prices slip further as bioethanol industry shuts down

Grain prices have slipped further through the week as traders react to a growing surplus of wheat on the market and talk of an increased cropping area next season.

Average UK spot feed wheat prices today (26 October) stand at around £163/t, with lows of £159/t in the East Midlands, Cambridgeshire and Bedfordshire, and highs of £170/t in Shropshire and Cheshire.

Fears of tight supplies earlier in the season have vanished after the closure of the UK’s entire bioethanol industry for the foreseeable future, with Ensus this week following Vivergo’s September shutdown announcement.

See also: Ethanol producer Ensus to close in November

Earlier this month breadmaker Hovis removed a slice of demand from the flour market by announcing the long-anticipated closure of its milling factory in Southampton, which accounted for 10% of the UK’s entire milling wheat capacity.

British wheat performs worst

Managing director of Saxon Agriculture Mark Smith said in a trading note that UK wheat had been the worst performer this week on the markets, falling by £8/t relative to the European Matif index and £6/t to Chicago.

He said this was due to the rapid UK winter planting progress and general economic gloom, as well as the effect of the Ensus closure.

An open autumn has given growers plenty of opportunities to get drilled up, despite many holding back due to the late germination of blackgrass.

Future prices followed spot prices lower this week over the increased trade surplus and rising expectation of a higher 2019 wheat cropping area.

The Nov 2019 price fell to its lowest level since June yesterday (25 October) at £159/t, putting the spot and futures market at parity for the time being.

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