Grain prices are entering a weather market, where they will be pushed about by crop news from around the world.
Tight maize stocks continued to keep the old crop market firm; the weather and what happens with spring planting would set the tone for new crop, said HGCA analyst David Eudall.
While the EU area is up this season, concerns over drought and crop condition are to the fore, with Spain having had its driest winter on record. “March/April is always a critical time for the Iberian peninsula,” said Openfield feed wheat trader Nigel Stevenson.
New crop wheat is worth £143 to £145/t ex-farm at harvest and £148 to £150/t into the autumn. Growers are thought to have committed slightly less tonnage than in recent seasons, although a rise in futures prices early in the week tempted some sellers out. As Farmers Weekly went to press on Wednesday (14 March), London feed wheat futures were at £150.75/t for November 2013.
The UK would be well placed to supply any opportunities in North Africa and in EU member states, said Mr Stevenson. While Baltic area wheat was similarly priced, the UK had a better reputation for quality and reliability, but the trade was not there to be done at this stage.
The effect of drought and frost on winter-sown crops has seen Ukraine’s ministry of agriculture cut its 2012 wheat harvest forecast by 2m tonnes to 14m tonnes.
There have been reports of considerable winter wheat losses in France, but crops had a great ability to compensate, cautioned Mr Stevenson.
Russia’s agriculture ministry has said that despite expecting a bigger wheat harvest this year, it is unlikely to match this season’s record grain exports because stocks are low.
The December planting survey shows growers in England and Scotland have drilled 2% more wheat overall and 7% more winter barley, however this masks a 14% fall in the Scottish wheat area.
In the old crop market, UK compounders and other processors are buying hand-to-mouth as price remain relatively high, despite lower than expected UK wheat exports in January. At 219,000t, these were almost one-third lower than in December and disappointed the trade. However, confirmation of the figures may show a flurry of trade at the very end of the month, which the initial figures may not have revealed, said Mr Eudall.
Spot feed wheat is currently worth about £159 to £161/t ex-farm. Other old crop news included a downward revision of the end of season world wheat stocks by the US Department of Agriculture at the end of last week. The estimate was cut back by 3.5m tonnes to 209.6m tonnes.