Grain market outlook dampened by economic uncertainty

Wheat prices have been in freefall throughout spring and global markets continue to look bearish in the short term.

UK feed wheat futures have fallen £20/t this spring, to just under £180/t on May 14 for the November contract.

Traders say farmers in the UK remain hesitant to sell grain at current prices, with low volumes being traded.

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The US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates report projects larger wheat supplies for 2025 and into 2026, with higher global stocks, greater consumption, and increased trade.

Meanwhile, the AHDB’s Spring Grain Market Outlook suggests supply and demand remain finely balanced around the world, with any major weather events likely to influence prices.

Helen Plant, senior analyst at the levy board, said there could be quite a nervy global market for the next few months, due to fundamentals.

However, geopolitical and macroeconomic uncertainty had generally added more bearish undertones to the market, she said.

UK production

A small domestic wheat crop last harvest and favourable exchange rates have encouraged greater volumes of wheat to be imported into the UK this season.

UK wheat imports are at record levels and are forecast to reach 2.7m tonnes by the end of the 2024-25 crop year.

Imports reached 337,000t in February alone. This marks the highest February import volume in more than a decade and is up 71% on the same month last year.

Wheat production is pegged at about 13.1m tonnes for 2025, based on average yields.

Olivia Bonser, senior cereals analyst at the AHDB, suggested this could indicate a reduced reliance on wheat imports later in the year, as long as quality thresholds are met.

“We are expecting a rebound in grain production this season, following the really difficult growing season last year,” she said. 

“But crop conditions are in focus at the moment. With the drier weather that we have been having there is potential for demand fluctuations and some opportunities there as well.

“If we struggle for domestic wheat quality, it could be that we have to import higher quality milling wheat again, similar to recent years.”

In the longer term, the UK continues to be a net importer of wheat, with the crop area repeatedly on a downwards trend as more land is put into schemes such as the Sustainable Farming Incentive.

Ms Bonser said: “The quality premiums aren’t particularly high at the moment, so that’s not really incentivising growers to meet those higher quality specifications and produce more.

“There is also more emphasis on rotations and regenerative agriculture, which are having an impact.”