By FWi staff
WHEAT prices climbed this week as many farmers refused to sell grain despite strong demand from buyers. But traders warned that the stronger market could dip again before it stabilises.
Merchants who made forward sales when prices were lower earlier in the season had expected ample farm supplies, and are now running very hard to meet contracts.
As a result, feed wheat markets have climbed about £2.50/tonne for spot delivery, bringing prices to £66.70/tonne. Forward months are higher by around £1/tonne. Milling wheat prices are up £2 to average £84/tonne.
But prices could soon ease back again if Denmark enters the market with feed wheat, warned economist Mark Buckingham of Banks Agriculture.
“Producers need to be competitive and supply the market, or someone else will,” he said. “There is a large amount of wheat about this season as France is expected to produce an extra four million tonnes on last year, along with an increase of a million tonnes in the UK.”
Any increase in the strength of Sterling could also help push prices down. With this in mind, farmers should view the recent price rise as a temporary bonus and take advantage of the good bids being offered on-farm, said Mr Buckingham.
The market could be weakened within the next fortnight as producers with a lack of storage space are forced to sell, said Peter Leeding of Geoffrey Clarke Grain, Framlingham.
David Walker from the Home-Grown Cereals Authority said the recent price rise was partly caused by the delay in harvest, and by farmers waiting to see which way the market moved.
“Farmers are bound to be reluctant to move grain off-farm as prices vary so much between one harvest and another,” he said. “In the short term, prices are likely to fall, but we should see prices move up as we move through the harvest period.”