All to play for in 2017?

Old crop values have succumbed to significant market pressure over the last few weeks with current values trading just above the recent market lows of £100.00/T ex-farm.

Following a very successful harvest last year, the UK is believed to have produced around 16.7 million tonnes of wheat, the largest crop seen since 2008.

With export opportunities limited due to tough foreign competition, around 3.5 million tonnes worth of this crop is expected to be carried over into the next trading year; put simply, the UK has a 3.5 million tonne ‘head start’ to this year’s harvest before it has even begun, which ultimately limits the value of new crop wheat for the late summer period.

However, ex-farm values for movement at the end of the year and beyond are a different story; with two harvests to complete by the end of the year (one from the Northern Hemisphere, one from the Southern), the grain trade has the potential to look rather different by this time next year. The further on we are in the monthly calendar, the greater the potential for variability.

As we enter into the spring months, trade attention remains firmly on the re-emergence of Northern Hemisphere winter sown crops, the majority of which appear to in a good condition, particularly those located throughout central Europe. Black Sea crops also look promising despite some earlier concerns.

Regardless, rumours of ‘weather issues’ are constantly tainting the market’s perception of this year’s upcoming harvest, enforcing volatility onto the new crop market.

Furthermore, this season’s Southern Hemisphere harvest is still underway and market opinion is mixed regarding both quality and quantity. Again, there could be some potential price drivers here.

Aside from physical supply and demand, politics, currency and time can all play their part. For one, the looming European Referendum has enforced a sense of uncertainty upon all commodity markets, including grain. The value of the pound against the Euro fluctuates each day, altering the comparable value of UK wheat to a foreign alternative.

For farmers looking to commit grain for movement in the short-term, a lack of export demand and a substantial stock carryover should limit price potential. For those of you looking to make a sell in the long-term, it could all be to play for as we head into 2017.