By FWi staff
FEED wheat prices finished last season on a relative high, fuelled by a better-than-expected export campaign and fears of a delayed harvest.
But, a few days after harvest started, prices, as expected, came back sharply.
Apart from a blip caused by heavy, prolonged rain in the first half of August, the market has done little since, with feed wheat worth about £67/t ex-farm.
The harvest produced a heavy crop of variable quality. This, and a strong Pound, suggests low prices will remain a feature of the season.
Trade estimates put the total wheat crop at about 16m tonnes. Later MAFF calculations suggested 15.1m tonnes, but the market failed to respond.
But even at this lower figure, an exportable surplus similar to last years 3.3m tonnes would overhang the market.
Meanwhile, the EU was also harvesting its way towards another heavy crop of 89m tonnes.
The UKs main competitor, France, cut 35m tonnes of good-quality wheat, leaving the UK as one of the cheapest suppliers of feed wheat in Europe.
With the bulk of UK exports relying on intra-EU trade, the Pound:Euro exchange rate has been critical.
Unfortunately, the Euro has weakened by 6% since the beginning of August, putting further pressure on prices.
Nevertheless, UK shippers will have exported about 1.6-1.7m tonnes by Christmas, about half the surplus.
How the market shapes up for the rest of the season depends largely on the level of export business in the January-March slot.
Bread wheat is maintaining a £15-£20/t premium over feed wheat, averaging about £86/t.
With pukka supplies short, that differential is unlikely to fall. But this masks a huge range of values for imperfect bread wheats and low-quality milling wheats.