Currency gives UK grain prices steady gains

Wheat prices have made further steady gains, holding on to the currency advantage which has made UK grain more competitive since June’s vote to leave the EU.

A significant price boost towards the end of last week was followed by a weaker tone midweek, showing continued volatility.

On average, in the week to Wednesday (27 July), feed wheat gained about another £1/t ex-farm for August, putting it in a range of £107-£114/t ex-farm depending on region.

See also: Concern over quality sees milling premiums soar

Ongoing widespread reports of poor French soft milling wheat quality mean the size of the feed wheat harvest is growing, potentially depressing prices.

On the other hand, an estimated drop of 25-30% in yield compared with 2015 means the total French soft wheat harvest is already being forecast as low as 30m tonnes compared with 40m tonnes in 2015.

The poor French results mean that EU wheat exports are expected to drop by about 10% to 30m tonnes this season, although the campaign got off to a good start in the first three weeks of July.

However, merchants and analysts point out that despite real troubles in France, grain yields in Russia and Ukraine are good, alongside expectations in some other EU member states.

The EU’s crop monitoring unit (Mars) has raised its EU 2016-17 soft wheat yield estimate from 6.07t/ha to 6.1t/ha, with higher yields in Romania and Bulgaria offsetting reductions in France.

“There’s plenty of Black Sea grain available, in contrast to the drop in supply in France,” said James Forster, wheat trader at Norfolk-based Saxon Agriculture.

As a result of the vote to leave the EU, UK ex-farm prices were about £13/t higher than they would otherwise be, with November feed wheat at about £116/t in his trading area. “On face value, these are good prices to be selling at,” he said.

At grain co-op Openfield, head of sales and trading David Doyle said the quality problems appeared to be limited to northern Europe and world grain stocks were at levels which would prevent any serious climb in prices.

However there was room for optimism on UK export prospects this season, subject to quality and yields, he said. 

A large world maize crop will give wheat much competition this season, while end of season world wheat stocks are predicted to stand at 35% of annual consumption.