Wheat prices drift lower

WHEAT PRICES have slipped back over the past three weeks, so that farmers in some areas are being offered less than £60/t at the farm gate for feed wheat.

Recent highs of £64/t in northern England came in the week ending Dec 3 as exports soared on the back of Black Sea supply problems and the strong euro.

But the market has resumed its downward slide as buyer apathy sets in over Christmas.

Grain traders say that it is quiet for the time of year, and prices will depend on export orders picking up.

“All of the elements have conspired to contribute to the lower prices,” said Mike Adams, export director at Banks Cargill.

“Christmas is important, as a lot of original export contracts were on a September to December basis.

“The currency has started to get stronger again, which surprised people. Our economy continues to defy gravity and spend its way to a stronger pound.

“Buyers have also found that there are some alternatives. More ships are arriving out of the the Black Sea, and more are expected in February.

“And the European Union has opened the maize abbattimento for Spain and Portugal”.

But UK feed wheat is still the most competitive product in the European lower quality bracket, as better quality French maize trades at a premium.

And some grain traders say that there could be a small “flurry” of buying in January, pushing ex-farm prices back up “a couple of pounds”.

Freight rates are also pulling back from record highs as more large vessels become available. The forecast easing in rates would make UK wheat cheaper to export.

Mr Adams was less optimistic, predicting a squeeze on UK wheat values as buyers turned to other sources.

Despite the recent slowdown in export activity, the UK is still on target to shift at least 1.6m tonnes of its 3.1m tonne exportable surplus before Jan 1.

Some traders put year-end exports even higher, at 1.9m tonnes, leaving less work to do next year.