Tightening wheat stocks push prices up

Old crop feed wheat prices look set to break the £100/t barrier by harvest as season-end stocks grow increasingly tight, according to traders.

Values have rallied by up to £7/t in the last fortnight, creating an opportunity for farmers with old crop wheat still to shift before harvest.

Spot prices reached £95-£97/t in many areas this week (18 April) with some traders quoting forward prices of £100/t closer to harvest.

Grainfarmers’ Simon Ingle said lower-than-anticipated end of season stocks had brought domestic buyers back to the market.

Volatility to continue

“The tight end-of-season balance sheet has triggered short covering and consumer buying.

“This volatility is likely to continue as we move towards harvest, with uncertainty as to how much unsold wheat is left on farm to meet consumer needs.”

Planting estimates suggested the UK could face an exportable surplus of about 2m tonnes after harvest, similar to this season’s.

Farmers with grain left to sell could do well to take advantage of spot prices, Mr Ingle said.

Glencore Grain’s Nick Oakhill said farmers still held about 10% of the crop in stores.

Finely balanced demand

Prices for July movement were already reaching £100/t in some areas, but farmers should be mindful of a return to volatility in the market, particularly for new crop wheat, he said.

David Sheppard, managing director of Gleadell Agriculture, said the supply and demand situation in the EU was finely balanced, “in the UK as much as anywhere else”.

Britain had successfully shipped most of its 2m-tonne exportable surplus, he added, while virtually bare Brussels’ intervention stores had increased volatility in the market.

“Now we have had three weeks of dry weather in most of the key grain-producing regions of the EU and this is forecast to continue for the next fortnight.

“Coupled with drought in North Africa, low rainfall in Australia and planting problems in the USA, this suggests the risk is on the side of an upswing in prices.”

New crop futures prices had improved about £3/t in the last week, Mr Sheppard said.