The grain column with Emma Croft
Old crop feed wheat values have slightly retreated this week as Â£150/T ex-farm begins to slip from the farm-sellers reach. Most end-user bids for spot delivery are now in the region of Â£153/T-Â£155/T delivered, making it very difficult to put Â£150/T on the farm.
Currency is once again the biggest factor adding pressure to the market this week as the pound strengthens towards is highest level against the Euro since before Christmas.
Local trade rumours would suggest that there is a large boat arriving imminently on the Humber containing Dutch/French wheat for distribution to local feed homes.
If realised, perhaps we could see a local price adjustment?
Yorkshire feed wheat has traded at a significant premium to the rest of the country throughout the season because the level of demand struggles to be met locally.
If a boat arrives into the Humber, and ‘local’ supplies are suddenly abundant, will we see prices retreat?
As for the new crop market, ex-farm values are unchanged as the London LIFFE wheat future for November continues to dawdle around the £138/T ex-farm mark, the equivalent of £130/T-£135/T ex-farm for harvest collection.
According to AHDB, nearby UK wheat futures have this week traded at a £31/T premium over the nearby Chicago wheat futures which, in sterling terms, are the largest premium in four years.
They added that “there is no denying that currency movements have benefitted UK wheat prices with ongoing political uncertainty increasing volatility in exchange rates.
Over the past week alone sterling has appreciated by 3% against the US dollar to reach its highest point since last October” (£1 currently equates to around $1.28.
However, it is important to remember that there have been more than just currency factors at play this year.
A combination of a fall in domestic wheat output alongside a strong demand for the feed grain placed the UK in a unique position this year, particularly given the supply issues on the continent.
As for the US, they were faced with ample supplies this season and end of season stocks are currently forecast at a thirty year high.
With this year’s Northern Hemisphere harvests fast approaching, a general election looming and further political uncertainty ahead, it will be interesting to see how the trend continues. Will the premium between UK and US wheat futures continue to widen or will they narrow as harvest approaches?
Over in the US, minor weather concerns have eased this week and conditions have greatly improved for maize plantings. The arrival of rainfall across parts of the central plains and the Midwest has greatly benefitted the area and further showers are forecast into next week bringing favourable growing conditions.