Grain price rollercoaster rolls on amid global uncertainty
© Masterskuz55/Adobe Stock Grain prices have firmed again following the escalation of the conflict in Ukraine, but with global economic uncertainty ready to pull them back down.
These opposing factors mean the wheat market continues to be volatile, with daily price movements of more than £10/t on the futures in the past week.
Saxon Agriculture trading director Mark Smith summed up the week as: “Another chaotic, headline-driven week on grain markets with speculators trying to second-guess domestic and international political developments… Proceed with caution!”
London’s November 2022 feed wheat futures contract has been in a range from £282/t to £293/t for the past three weeks and was at £280/t at lunchtime on Friday (14 October).
See also: Have your say in the digital grain passport consultation
Over the same period, the November 2023 contract has traded just £13/t to £14/t below the 2022 contract.
UK grain is export-competitive but is struggling against cheaper maize and faces relatively slow demand at home.
The latest HMRC data show that UK wheat exports in July and August were 110,800t, compared with 81,000t during the same period last year.
The US Department of Agriculture world supply and demand estimate this week prompted a lift in soyabean prices but little change for wheat and maize.
Slow milling demand
Price and cash considerations, along with an uncertain retail and hospitality outlook, are making for a slow milling trade, with millers relatively well covered this side of Christmas, merchants say. However, there remains a lot of demand to fill in the new year.
Feed barley is also finding it difficult to compete with maize in export trade, while feed demand at home is subdued.
Black Sea export corridor
With the Black Sea grain agreement, which has allowed exports from Ukraine, ending on 19 November, there is speculation about the possibility of an extension, which must be negotiated.
The corridor has proved more successful than many thought in terms of the tonnage of grain shipped.