UK wheat prices fall further due to global supply pressure
© Tim Scrivener Increased global supply and limited demand are putting pressure on grain prices, both in the UK and globally.
Ex-farm feed wheat was averaging £213/t for spot collection, according to the Farmers Weekly price survey on 25 January, with prices ranging from £208/t in Oxfordshire and Northamptonshire to £226/t in Northumberland.
This compared with an average of £217/t a week ago.
See also: UK arable and horticulture area down 3% in 2022
The weaker tone has also been felt in the futures market. London May 2023 feed wheat futures opened at £224/t on 25 January, down £27/t since the start of the month, and a full £130/t lower since they peaked in May 2022.
Meanwhile, both Chicago wheat futures and Paris futures are also down, with the May 2023 Chicago contract nearing a 16-month low this week,, according to the AHDB.
World market
Global markets are being driven by changes to supply in the US, Argentina and Russia.
US wheat production prospects are improving following recent rainfall, which has helped to reduce drought conditions in some key growing regions, according to the United States Department of Agriculture (USDA).
Earlier in January, USDA drought monitor data had forecast about 80% of durum wheat and 60% of winter wheat in the US were facing drought conditions.
Rainfall in Argentina is also helping to offer some recovery following severe drought conditions in that major wheat exporting nation.
A large exportable surplus in Russia is also putting further pressure on prices.
Frontier farm trader Sophie Whiteman said a record 2022 Russian wheat crop of more than 104m tonnes had resulted in notable exports, increasing Russia’s global market share.
UK market
Closer to home, Millie Askew, AHDB senior analyst, said: “With the UK having a substantial exportable surplus of grain this season, UK prices are tracking global market movements closely.
“With that in mind, any developments with US weather and crop conditions will affect UK price movements too. US weather and crop conditions remain a key watch point as we move towards a new season.”
Feed prices
Livestock producers are beginning to feel the benefit of an easing in feed input costs, following a prolonged period of falling wheat prices.
Demand for feed from the livestock sector is forecast to remain fairly stable as producers look to use grazing and forage to minimise costs.
However, feed demand from pig and poultry businesses is projected to decline in 2023, as the UK pig herd has contracted and significant financial pressure remains on egg producers.
Jim Turner, head of poultry at feed manufacturer Wynnstay, said falling wheat prices were translating into lower feed costs for farmers, but high soya prices and a weak sterling exchange rate were still having a supporting effect.
Spot prices for HiPro soya collected midweek by Farmers Weekly were quoted at £549/t for a full-load delivery, up £14/t on the month.