Wheat markets feel the weight of record crop

Wheat prices came under further pressure this week as markets reacted to reports of higher yields in the UK and across east and west Europe. The International Grains Council (IGC) raised its 2008 wheat crop estimate by 10m tonnes to a record 672m tonnes, after good harvests in the EU, Russia and Ukraine, plus much-needed rain in key growing regions of Australia.

Despite the rain-disrupted harvest here (News, p7), several merchants reported yields up 10-20% on last year, leading to speculation that the total crop might be well over 17m tonnes, significantly above the 13.3m tonnes last year.

“About 40% is still in the field, but assuming we get that in eventually, we should see a crop over 17m tonnes,” Gleadell trading director David Sheppard said on Wednesday (3 September). “That’ll leave us with a 3.5-4m-tonne surplus to shift.”

But the massive crops here and abroad had put considerable pressure on prices, Simon Ingle at Grainfarmers said. “Spot feed wheat is down to £105/t, while values are nearer £110-111/t ex-farm for November.”

Demand could increase slightly, as feed wheat replaced some maize and sorghum and new industrial outlets came on stream this winter, but it was unlikely to boost prices significantly, he added.

Independent grain broker Jeremy Cole said many farmers had only sold 25-30% sold forward by harvest and some had been forced to sell to ease cashflow or storage requirements. “But at £105/t ex-farm, there will be a lot of resistance to sell, which could push the market up a bit, although I doubt it’ll be much. If you can get £120/t for January, you ought to take it. I think that’ll be the best we will see.”