Wheat prices firm but still remain volatile

Grain prices have firmed slightly but remain volatile, with many factors affecting the market.

November London feed wheat futures were at £148/t as Farmers Weekly went to press on Wednesday (19 February), having gained about £3/t over the past couple of weeks.

In spot trade, old crop feed wheat was worth between £144/t and £154/t ex-farm in most areas but up to £163/t in Scotland.

Prices firmed on the latest US Department of Agriculture estimates for grain stocks, which predict that there will be about three months’ worth of wheat and about two months’ of maize supply by the end of the cereal year on 30 June.

The UK picture is a complex one – on old crop, the smaller harvest of 2013 is challenged by heavy maize and milling wheat imports as well as by UK barley.

The 2013 UK barley crop was the largest for 15 years and along with maize and oats is being consumed at higher levels in compound feed production in place of wheat.

However, overall cereal use in compound feed production has been lower than in 2012.

In human and industrial uses, the better quality of the domestic wheat crop this year means that millers were using 83.3% home-produced wheat in December (including for starch and bioethanol) compared with 63.3% in July 2013.

Despite this millers used 3% less wheat overall in July-December 2013 than in the same period of 2012, mainly because of a fall in flour production.

Wheat use by brewers, maltsters and distillers has fallen by just 1%, although December saw an 11% drop. Barley use at 933,000t is 4% higher than during July-December 2012.

Wheat imports have remained at higher levels than many expected, with a surprise rise in December’s figure. These are coming mainly from Canada (42% of UK wheat imports in December 2013) and Germany. The Canadian wheat crop of 37.5m tonnes is more than 10m tonnes larger than in 2012.

Maize imports to the UK also rose through the first half of the cereal year, with 388,900t in December being the highest monthly tonnage for more than 20 years.

“The corn (maize) imports were surprisingly high and we won’t know the true surplus of UK wheat until we get to see the import figures for the first quarter of 2014,” said Mark Worrall, director of sales and trading at Openfield.