Wheat prices reach season high of £114/t

Cereal prices have put on another surge in recent days with UK ex-farm wheat reaching a season high of £114/t and barley topping £99/t, according to Farmers Weekly market price data.

This marks a gain of over £5 in the past two weeks and is £25/t more than they were worth last autumn.

The firmer tone has come despite the recent strengthening in sterling, which is now trading at 86p/euro, compared with 90p-plus during the first quarter of the year.

The main reason for the firmer picture is to be found in the international market.

The USA in particular has seen a dramatic rise in prices, due to a combination of currency factors, weather concerns and the reappearance of speculators on the Chicago futures market.

Nearby wheat futures topped $247/t (£150) on Monday (1 July) on the Chicago Board of Trade – a gain of more than $13/t (£8) over the previous week.

And maize and soya also hit eight-month highs of $175/t (£107) and $446/t (£272), respectively.

This has had a knock-on effect on the futures markets in Paris and London, helping to push values this side of the Atlantic.

Weather is a key concern at the moment, with rains delaying spring plantings in the USA, meaning up to a million acres earmarked for wheat could now go into soybeans.

And in Europe, prolonged dry weather could contribute to a 20% drop in output in Hungary, Bulgaria and Spain.