Miller warns on this years wheat profit

By FWi staff

WHEAT prices could continue to rise for the next 10 years, predicts a leading flour miller, but increases this season may still not be enough for growers to make a profit.

“With estimates of a 12 million-tonne crop this harvest, cereal farmers will have to see prices rise by about 40% just to stand still,” says Peter Jones, wheat director of Rank Hovis.

Latest MAFF estimates of plantings last December were 20-30% down on the previous season, and appalling weather will undoubtedly lead to reduced yields, he adds.

“Feed wheat futures have already risen nearly 20/t since last October to 77/t for May 2001.”

The UK position has also been reinforced by world market pressures, where stocks are falling. In 1997/98 stocks were nearly 140mt, 24% of the stocks-to-use ratio.

“This figure has now dropped to 18%, the bare minimum according to the FAO, and some analysts predict that it could fall to 13.5% for the 2001/02 season,” says Mr Jones.

As a result world values are rising with November 2001 wheat about US$15 above todays price of $105/t. Some economists have predicted that by 2002 world wheat will be worth over $150/t.

“Year-on-year prices will rise another 15-20/t – and lingering foot-and-mouth problems could push values up further if harvesting progress is restricted,” he adds.