New high for grain futures

Grain prices spiked again this morning (Monday) as keen buyers pushed the London November wheat futures market above £171/tonne delivered.

Buyers and in particular millers were finally waking up to the swift pace of UK grain exports and the fact that we will need to import wheat before the current season is out, said one national trader. This sudden increase in interest from domestic consumers of wheat comes on the back of a the latest DEFRA supply and demand figures which show that the UK started this year with 232,000t less wheat in stores than had previously been estimated.

The figures were compiled by DEFRA in a slightly different way this year so that the survey excluded holdings with small levels of farming activity. The revisions showed the 2009 wheat crop at 14.084m tonnes, which was 295,000t lower than the previous estimate for that season. The barley and oat crops were also revised down. In addition, the UK exported more than 250,000t of wheat in July this year, the highest for July since the current series of figures began.

Further firming factors in the world grain market include a downwards revision in the expected size of the Ukraine grain harvest and wet harvest weather in Canada. However the Australian harvest has been estimated higher at 25.1m tonnes, up 14% from the previous forecast.

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