Prices the cereal killer – FWi REVIEW OF 1997


Compiled by FWi staff

WHEAT prices failed to find inspiration
this year and remained low throughout the season. The harvest was good
in terms of yield, but variable to poor in terms of quality. A drop of
£20/ t during 1997 caused some commentators to speculate that
area aid payments were the only life-jacket keeping many farm businesses


  • Feed wheat slips back
    to £90/ t ex-farm in January as a strengthening of Sterling
    knocks the UKs export competitiveness. The Pound starts the year worth

  • Milling wheat premiums are £20 over feed crops.
    But values are likely to come under pressure if mills start searching
    for alternative supplies, say traders.


  • Seed certification
    figures released in February confirm a big rise in winter plantings of
    new malting barley and wheat. Wheat plantings are up 3% on previous
    season at 256,000 t and point to another possible record harvest
    this year. Figures from the EU merchants body COCERAL suggest the
    harvest could be even bigger. The UK wheat area has actually increased
    by 7.6%, it claims.


  • Election fever sends Sterling tumbling and prompts a rise in
    cereal prices. At DM2.67, the Pound is 4% weaker than a fortnight ago
    and export competitiveness is improved.

  • A strong regional
    market emerges, with prices in East Anglia setting the pace. Feed wheat
    ex-farm prices for June reach £100/ t – £10 higher than
    their February low point. But traders warn the market could run out of
    steam if overseas buyers hold off and wait for the new crop.


  • The EU commission
    imposes an £11/ t tax on Third Country exports because it
    fears an exodus of grain out of the EU as world prices climb. The move
    effectively closes off the world market and domestic prices fall.
    Old-crop feed wheat is quoted at £91/ t. Traders condemn the
    tax as interfering with the free market.


  • The already-beleaguered
    grain market is under further pressure, with about a million tonnes of
    wheat due to be shipped in the last quarter of the season. The outlook
    is not encouraging, according to Gary Hutchings of Dalgety. Old-crop
    wheat drops £2 to £88/ t.


  • By the first week of
    June, old-crop wheat is worth £80/ t – the lowest level for 20
    years. The chances of the market recovering before harvest are “between
    nil and zero,” says Robert Kerr of Glencore Grain.


  • A shortage of new-crop
    supplies boosts wheat prices by £2 to £73/ t for August
    delivery, with another £2 premium for “off the combine” sales.
    Early samples suggest that concerns over crop quality may be

  • Milling wheat premiums push out to £22 for
    Class 1 varieties over feed. Until now millers have taken little cover
    on new-crop, preferring to watch feed prices tumble.


  • Wheat prices pick up
    – despite efforts by Brussels to keep a lid on prices by re-introducing
    its notorious export tax. World markets have climbed because of fears
    over bad weather, according to traders. August wheat is now worth
    £77/ t.

  • Grain markets shrug off recent Green Pound
    revaluations and prices edge higher, despite the drop in intervention.
    Feed wheat is quoted at a 12-week high of £82/ t ex-farm for
    September – considerably better than the £72/ t it was worth
    at the end of July.


  • Grain exporters
    will have about a million tonnes less wheat to shift this year,
    following a significant drop in the UK surplus, say analysts. But
    merchants say shifting the smaller amount could be difficult due to the
    poor quality of the crop and the strong Pound.

  • The average
    arable farmer in East Anglia has lost money on every tonne of grain
    produced this year, according to Michael Murphy of Cambridge University.
    If area aid payments are phased out or down, many farmers will go bust,
    he says.


  • THE feed wheat
    market bears the brunt of a rising Pound which causes prices to fall
    below £80/ t for the first time since August. Farmers bolt
    their barn doors in response and many refuse to sell. Trade is quiet.


  • CEREAL farmers
    brace themselves for massively reduced incomes this year as feed wheat
    prices continue to tumble.

  • The spot price for feed wheat falls
    to £76/ t ex-farm. Poor-quality samples fetch well under
    £70/ t. When this years poor yields are added into the
    equation, the only profit many farmers will see on their crops this year
    will be courtesy of their IACS cheque, say consultants.


  • Much of this years
    high-yielding low-quality crop has yet to be sold – compounding fears of
    an oversupplied domestic market. Export demand for UK feed wheat has
    also remained at rock-bottom levels all season.

  • Economic
    turmoil in Japan and South Korea hits UK cereal farmers hard in the
    pocket. As investors rush to move capital out of Asia and into more
    stable markets, Sterling strengthens once again – prompting UK feed
    wheat prices to fall to £74/ t.

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