Tighter than expected wheat supplies see prices rise

UK feed wheat prices rose by £2.70/t in the week to 8 March, to £144.30/t ex-farm for spot delivery – £46.70/t higher than 12 months ago.

According to Defra’s latest UK supply and demand estimates, UK wheat supplies may be tighter than previously thought.

It has cut its 2016 UK wheat production estimate to 14.383m tonnes – 84,000t lower than the earlier provisional forecast.

Imports have also been adjusted slightly down by 57,000t, to 1.6m tonnes.

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On the demand side, the human and industrial sector is forecast to increase consumption by 10% year-on-year, to 8.094m tonnes in 2016-17, with feed demand also rising, to 7.248m tonnes.

This is 29,000t up on December’s estimate and 157,000t higher year-on-year.

As a result, the wheat balance is forecast at 3.08m tonnes – 2.559m tonnes less than in 2015-16 and the lowest since 2013-14.

After taking into account the operating stocks requirement of 1.6m tonnes, this leaves an exportable surplus of 1.48m tonnes, says Amandeep Kaur Purewal, senior analyst at AHDB Cereals & Oilseeds.

With 1.09m tonnes having been exported by the end of December 2016, that leaves just 393,000t available to export in the remainder of the season.