Wheat values continue under pressure on slow demand
© Tim Scrivener The drop in feed wheat futures values continues, with the May 2023 London contract dipping below £240/t on Friday 16 December.
The lower price has brought out a few buyers to take advantage of the reduction for delivery in the first half of 2023, but domestic demand is otherwise slow, say merchants.
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Global demand is stronger, as China eases some Covid-19 restrictions and action in Ukraine was stepped up this week.
Black Sea exports are very competitive and pushing UK wheat largely out of the running.
There is relatively weak demand for feed barley from both domestic compounders and export buyers.
Looking to new crop, November 2023 feed wheat closed at £228/t on Thursday 15 December, with no trade recorded before 1pm on 16 December.
2022 harvest estimate
Defra’s first formal 2022 harvest estimate released this week put the UK wheat crop at 15.54m tonnes, up 11% on the year off a slightly higher area and a rise in yields.
Wheat, barley, oat and oilseed rape yields are all put higher than the previous year, despite the effect of drought in some areas.
This is the largest wheat crop since 2019 and is 14% higher than the previous five-year average (2017-2021). Defra’s estimate is 123,000t lower than the AHDB’s provisional estimate in mid-November.
“While the final Defra production figure is down slightly from the provisional estimate, it remains the largest crop since 2019,” said the AHDB
“Therefore, if applied to the current supply-and-demand forecasts, the surplus available for either export or free stock remains the largest since 2015-16.”
Barley output was estimated at 7.385m tonnes, a 6% year-on-year rise and in line with the previous five-year average.
Oats were estimated at 1.007m tonnes, which is a drop of 10% on the 2021 crop, but a 2% rise on the previous five-year average.
Oilseed rape production is estimated to have risen 39% to 1.361m tonnes in 2022, with yields the highest since 2017.