UK feed wheat stalls as exports struggle to gain traction

The UK continues to be priced out the export market for wheat and has struggled to make substantial gains for several months now.

UK feed wheat futures opened at £185.5/t on 1 November for the November contract, with prices having remained fairly steady since early August.

Spot prices were fairly flat in the past week, with feed wheat rising by £3/t to £176.8/t ex-farm on 1 November, while milling wheat fell by almost £4/t to £241.7/t.

See also: Wheat begins to recover after falling below £180/t

Results from the AHDB’s Cereal Quality Survey have shown a drop in UK grain quality, with only 13% of wheat samples hitting group 1 milling specification, down from 33% last year, which is likely to help support the milling premium.

Grain traders at Cefetra said wheat lacked any real impetus at present, with markets struggling to break out to the upside and also unwilling to push lower.

Export demand is limited, with Frontier reporting ample supplies from the Black Sea region and northern Europe.

Traders at Frontier say only about 100,000t of UK wheat, from a likely surplus of about 1m tonnes, has been shipped, according to industry estimates.

UK wheat markets are expected to remain bearish in the medium to long term, with large global supplies forecast to continue putting pressure on prices.

Global picture

Both Chicago and Paris futures dropped last week, with improved crop conditions in South America and a large availability of exports from the Black Sea weighing on markets.

Conflict in both the Black Sea region and the Middle East are having an impact on global grain markets.

Ukraine’s agriculture ministry announced last week that grain exports had almost halved on year-earlier levels.

There were also reports on 26 October of a temporary suspension to Ukraine grain export routes due to potential Russian military attacks.

Rabobank analysts said: “Global wheat futures shrugged off the temporary closure of the new Ukrainian grain corridor last week.

“Although CBOT [Chicago Board of Trade] futures bounced slightly higher on the news, fears were quickly alleviated, as corridor operations slowly resumed.”

Meanwhile, Russian wheat estimates have been increased by 20% to 93m tonnes by the country’s ministry of agriculture.

The situation in the Middle East has provided another key watchpoint, and traders at ADM said that, although not specific to grain markets, it left the door open to some potential risk premium being added to the wheat price.