Concerns over quality see milling premiums soar
© Tim Scrivener/Rex/ Shutterstock Quality concerns at home and abroad have sent UK milling wheat premiums soaring.
Average prices for spot ex-farm, full-specification bread milling wheat in July have risen sharply since June and had reached £139/t today.
This put new-crop milling wheat premiums at about £30/t for July – an increase on last week’s premiums of £25/t, when prices were averaging £133/t.
Average premiums for August and November were about £28/t for July.
In the same month last year milling wheat premiums reached £22/t in the week ending 3 July, before dropping back.
French crop quality in doubt
Helen Plant, analyst with AHDB Cereals and Oilseeds, said milling prices were currently well supported as people waited to see what quality was like, particularly in France, where a significant proportion of the crops is thought to be in poor condition.
See also: Harvest 2016: Lack of sun hits barley and OSR yields
The market was also waiting to see how the lack of sunshine over the May/June period has affected the UK crop.
“Milling premiums, and milling wheat prices, into the new season will depend on how these quality concerns play out,” she said.
“Bear in mind, though, that if feed wheat markets also begin to firm, this could eat into the milling premium somewhat, so it is also important to keep an eye on actual milling wheat prices themselves.”
See also: Financial advice on budgets and contracts prior to Brexit
Ms Plant said the market was waiting to see what was happening in France and for a clearer indication of the condition of the US maize crop.
Feed wheat futures hovering
UK feed wheat futures (Nov 16) were at £131.45 /t on the morning of 20 July, up from £122.15/t at the close of trading the day before. However, they slipped back to £121.75/t by lunchtime.
James Bolesworth, director of CRM AgriCommodities, said there had been disparity between the domestic and global wheat market following the Brexit vote because of the drop in the value of sterling.
“If the pound comes back we expect prices to come back into line with the global market. We could see sterling start to recover which would put pressure on prices.”