By Vicky Houchin
UK wheat prices look set to remain stagnant for the time being following a drop in milling premiums blamed on the strong Pound and an oversupplied market.
Ex-farm milling wheat premiums have fallen by about £5 to £15/ tonne since the beginning of the year, according to figures from the Home-Grown Cereals Authority.
Although the Dollar has strengthened against Sterling over the past eight weeks, the weakening Euro has pressured UK wheat prices.
Premiums for bread and milling varieties have collapsed, says the weekly market report for last Friday (19 February) from Banks Agriculture.
“The UK old-crop goose is looking well and truly cooked,” the report says. “We do not anticipate a sustained recovery in the market for some months.
“The UK bread market is polarising, with growth in demand for very high-quality premium breads at one end and ultra-cheap economy loaves at the other.”
An increase in imports of North American wheat by UK millers might be understandable, but has not helped the situation, said Banks economist Mark Buckingham.
The market is generally oversupplied and prices are dropping until buyers are found, he added.
Some millers, however, refuted suggestions that they were to blame for the market being in the doldrums.
Peter Jones of Rank Hovis acknowledged that premiums have fallen over recent weeks, but added that it was fairly dramatic to say they had collapsed.
Mr Jones blamed lower protein levels in the UK crop last year for imports of Third-Country hard wheats.
But he stressed that the current pace of imports is very little different from last year, and might even be slightly lower.
Its par for the course for one to blame the other, said Bill de Maria of the International Grains Council.
“Theres a great deal of poor-quality milling wheat in the community,” he noted.
Wheat is normally imported from Germany, but they have been exporting elsewhere this season, explained Mr de Maria. “And recently they exported 300,000 tonnes to Iran,” he said.