Malting and milling premiums rise on crop quality fears
© Tim Scrivener Crop quality concerns have nudged malting barley and milling wheat premiums higher as drought and rain complicate the outlook in different countries.
Combines are about three-quarters through the UK winter barley crop, with generally low nitrogen levels but disappointing screenings.
Early spring barley samples are variable and with more rain forecast, premiums have risen.
Indications of spring barley premiums for export quality (max 1.85% nitrogen) grain at harvest are in the £20-£25/t-plus range for varieties such as Planet.
This is £5-£10/t higher than two weeks ago, although some traders said UK grain looks expensive at present.
For the domestic malting market (maximum 1.65% nitrogen), harvest supplies of spring malting barley were worth about £175/t off the combine this week, said Ian Eastwood of Cefetra, while a full-spec sample stored until November could be worth £30-£35/t over feed barley.
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Maltsters are understood to have run stocks to almost zero, in contrast to this time last season, when the Covid-19 lockdown cut off demand and left them with high stocks.
Grain market key points
- UK feed wheat November futures contract at £187/t midweek – up £10/t on the week and the highest since mid-May
- Fears for grain quality are pushing up premiums – all grains higher than a week earlier, aside from maize, which remained steady on cancellation of Chinese import orders
- Dry weather has brought US spring wheat harvest forward, so progress is well ahead of normal
- Russian wheat harvest size estimates subject to repeated reductions
- Oilseed rape prices steady on the week – low crush margins dampening the outlook
Andrew Dewing of Dewing Grain said: “We’re all holding our breath on the spring barley, given the level of rain, but early signs are good on yield and nitrogen levels. I think it will be a very positive trade on both milling wheat and malting barley.”
Extreme heat in Canada has hit growing crops hard in the malting barley market, leading to offers being withdrawn, ADM reported recently. The indications on mainland European crop quality are unclear.
Milling wheat premiums rose by about £1/t on the week, to average just over £18/t, but ranged up to £23/t.
The first half of this week saw some premiums for immediate delivery of feed grains as the late harvest and catchy weather pushed some consumers to bare boards in their stores and French cargoes failed to arrive on time.
Wheat-barley price gap
Despite improved supplies to the market, feed barley prices gained about £5/t during the week, to average £150.50/t ex-farm midweek.
However, with the London November feed wheat futures pushed up by £10/t on the week, ex-farm harvest feed wheat values put on almost as much to average £173.70/t ex-farm for August.
This stretched the spot wheat-barley price gap back to about £23/t.
Other market influences include repeated reductions in the expected out-turn of the Russian wheat harvest, currently put at 73m-77m tonnes by the country’s own grain agency, compared with an estimate of more than 82m tonnes less than a month ago.
Hot, dry weather in key US grain-producing states continues to put a question mark over yields there, while wet weather in western Europe is posing quality risks.
Overriding all of this is the uncertainty that continues to be caused by the Covid-19 pandemic.
This is a factor not only in terms of the incidence of the virus and its effect on demand, but also the disruption to supply chains across the world.