Wheat prices firm as harvest begins in southern Europe

Wheat prices have bounced back by around £3-4/t this week, although traders remain cautious about where prices will go next.

June feed wheat prices ended this week at around £94-100/t, depending on region, with futures prices for July 2010 just hitting £100/t and November futures at £105/t on Friday (18 June).

“There are enough weather related problems to keep the ‘bulls’ interested,” Gleadell Agriculture managing director, David Sheppard, said.

“The wheat harvest has begun in Spain and the USA with good test weight reported, although rain is seen slowing harvest progress and may cause quality issues. Canada with its wet conditions delaying plantings, Black Sea with increased winterkill, and weather concerns still over western Europe would confirm the lower USDA production number.”

Earlier this week the USDA revised its estimate for global wheat production to 668.5m tonnes, down 3.7mt from last month’s figure. EU production for 2010/11 was put at 143mt, 2mt lower than the previous month’s estimate, while 2009/10 global maize end stocks were revised downwards by 3.6mt to 143.4mt due to increased use by the ethanol industry.

Despite the USDA’s downward revisions, Mr Sheppard said overall 2010/11 stock levels were still set to increase.

“There seems plenty of wheat available on the EU, US and world supply and demand balance sheets. Unless we witness major production losses into and through harvests, wheat alone will continue to lack fundamental support, meaning any sustained rally would have to be led by other markets or external factors.”

Export progress

Meanwhile, latest HGCA figures show that in April, the UK exported a total of 279,000t of wheat (205,000t April 2009), with all-but 1,252t to EU destinations. Spain remained the largest buyer of UK wheat, taking 145,000t in April.

Cumulative exports for July-Apr 2009/10 now total to 2.012mt, equivalent to 87% of DEFRA’s total export estimate of 2.305mt.