UK grain prices under pressure as harvest starts
UK wheat and oilseed prices seem set to remain under pressure through the summer, as harvest gets under way.
Impressive prospects for the British harvest, world production helped by favourable weather and the pound staying strong against the dollar and euro have combined to keep pressure on prices.
Analysts and traders have predicted the bearish mood to continue into September.
See also: Harvest begins in South of England
On Tuesday 9 July, London November 2014 feed wheat futures closed at £133/t, down only slightly on the week after several weeks of reductions.
The November price had slipped to £132.5/t as Farmers Weekly went to press on Wednesday (9 July).
Little has altered the market mood since the US Department of Agriculture’s quarterly stock and production report two weeks ago.
US maize stocks on 1 June were 39% higher on the year and outstripped trade estimates, with this year’s harvest predicted to beat 2013 due to better yields, the report said.
Soya bean stocks on 1 June were 7% down on the year but both stocks and plantings beat market expectations.
Harvest in Kansas and Oklahoma is reportedly proving disappointing so far, as was expected after months of drought, but signs point towards better results as the combines moves north.
“It is all looking too good at the moment and unless something happens there is going to be a bearish pull on prices.”
Amandeep Purewal, AHDB/HGCA senior analyst
In Europe, the EU Commission confirmed predictions of “above average” 2014-15 production in its short-term outlook, forecasting a total cereal harvest of 303m tonnes, slightly up on 2013-14.
Worries over crop quality in Romania and Bulgaria appear to be unfounded, but the French government cast some doubt on bumper European predictions by suggesting its production could fall 800,000t this year.
However France’s early rapeseed harvesting hints at strong yields and forecasts of a 19% production rise on the year back up predictions of a record EU crop.
AHDB/HGCA senior analyst Amandeep Purewal said the market was fundamentally bearish and was running out of time for a major weather event to occur.
“It is more and more looking like a bumper crop in the USA and in the UK as we enter a critical stage for volumes and yields,” she said.
“So far, should this weather continue, we are looking, for example, at wheat production of 15m tonnes or maybe more.
“It is all looking too good at the moment and unless something happens there is going to be a bearish pull on prices.”
Ex-farm prices in the UK have continued to slide over the past week
Midweek, Merchants were offering £118-128/t for feed wheat at harvest, though milling wheat premiums were still strong at £28-30/t.
Feed barley was worth about £10-20/t less than wheat, at £108-110/t.
British oilseed rape came under similar pressure to grains, worth about £233-248/t ex-farm at harvest.
Openfield head of exports and risk David Doyle said confidence in high production levels had given buyers the comfort to back off for the moment.