Wheat begins to recover after falling below £180/t

UK wheat markets have started to pick up this week after reaching a new contract low on 12 October.

Market sentiment remains fairly neutral in the short term, but analysts have a slightly more bullish outlook towards the end of the year and into 2024.

Last week’s World Agricultural Supply and Demand Estimates (Wasde) report, released by the US Department of Agriculture (USDA), added some support to global grain markets, with gains for both Chicago and UK wheat futures.

See also: Lacklustre wheat trade limits sales on farm

The London November 2023 feed wheat futures contract opened at £188.20/t on Wednesday 18 October, up by £8.60/t since markets bottomed out at £179.60/t last Thursday (12 October).

Spot prices collected by Farmers Weekly on 18 October averaged £179.7/t for feed wheat ex-farm and £245.1/t for milling wheat.

The USDA cut its global wheat crop estimate for 2023-24 by 3.5m tonnes to 1.051bn tonnes in the latest Wasde report, with higher production in the US offset by lower production estimates in Australia, Kazakhstan and Ethiopia.

Global wheat consumption estimates were lowered by the USDA by 3m tonnes to total 792.9m tonnes.

However, global ending stocks for 2023-24 were cut by 0.5m tonnes to 258.1m tonnes, despite the reduction in global consumption.

Modest climb 

Traders at Frontier said futures prices climbed modestly following the release of the mildly market-friendly report. Markets are also being supported by dry conditions in the southern hemisphere, particularly in Australia.

Rabobank associate analyst Edward McGeoch said drier conditions across many regions in Australia were playing a significant role in the tighter supply outlook, with expected year-on-year falls exacerbated given the high-output  season experienced last year.

“Production of all cereal and coarse grains, including wheat, barley and oats, is expected to decrease, with wheat seeing the biggest drop to 26.91m tonnes,” he added.

But a large availability of wheat from the Black Sea region, despite ongoing attacks on Ukrainian grain infrastructure, is limiting further price gains.

Oilseeds

Oilseeds markets are also generally bullish overall, with UK delivered prices for oilseed rape at about £355/t midweek.

Production in both the US and Canada were reduced in the Wasde report, but output estimates for the EU were increased marginally to 20m tonnes, leaving the overall supply picture fairly unchanged.