Are wheat imports pressuring our milling premiums?

We have seen a big return to volatility for the grain markets this week, with both wide inter-day trading ranges and day-to-day shifts of up to £5/T. Feed wheat sellers could have made anywhere between £188-195/T ex-farm for October movement over the course of the last seven days.

Soft group 3 varieties are trading at an almost £20/T premium, currently around £210/T ex-farm for spot movement. Low specification group 1’s & 2’s are trading between £220-225/T, whilst better quality bread wheats are valued between £235-240/T ex-farm.

Having spent the last twelve weeks or so on farm talking to you all (listening to you grumble) we have generally gathered that in our region, we are at least a tonne/acre down on where we should be and the arrival of a 29/T lorry seems to be making a bigger hole in the heap than it normally would. Looking down our own spread sheet of sample results, bushel weights are anywhere between 57-76kg/hl, with an average of around 68.9kg/hl.

Additionally, and in keeping with the formalities, the HGCA in their latest harvest update are believed to have a pretty good idea of both quantity and quality now that 98% of this year’s UK wheat crop has now been harvested. Average yields currently stand at an estimated 6.9T/Ha and despite average proteins and respectable hagberg’s; bushel weights have been seriously poor at an estimated 70.7kg/hl.

So whether you take our word for it or you take the HGCA’s, there is some pretty poor wheat about. And with all millers refusing to accept any loads under 70kg/hl whether it be for bread making, low grade flour production or a low specification biscuit job (even one load which tested at 69.8kg/hl at the point of arrival was refused entry); there is a lot of wheat which may test at 250+ hagberg with 13+ protein that, due to poor bushel weight, simply must leave the farm as feed.

It is no surprise then that group 1 full specification milling wheat’s have traded up to £240/T ex-farm in recent weeks, and with the amount of general farm gossip kicking around on the matter, that the minority of farm-sellers with wheat above 70kg/hl tucked safely away in their sheds are reluctant to part with it at these sort of levels.

There is however a small matter of imported German and French milling wheat’s that could be about to burst the milling premium bubble. Over the last two weeks, tens of thousands of tonnes of the stuff has arrived at ports across the North of England, supplying numerous mills within a 100 mile radius of the M62 corridor.

‘German A’ wheat is a group 1 equivalent wheat which is arriving at a min. 78kg/hl bushel and min. 13% protein at approximately £230/T ex-dock. ‘German E’ wheat is also arriving at a min. 78kg/hl but with a min. 14% protein, at approximately £240/T ex-dock. As for the French supplies, soft biscuit wheats are arriving at approximately £220/T ex-dock. Baltic low grade milling varieties are also arriving at approximately £215/T ex-dock and Baltic high bushel feed varieties (for blending) are arriving at approximately £210/T ex-dock.

We are not saying that wheat has topped out just yet because if this equivalent American maize corn crop continues to come off the combine as poor as it is doing, carryover stocks from last year’s maize corn stocks are in fact as low as we initially feared and Russia do finally make the decision to alter their rate of exports; then £200/T+ could indeed be back on the table.

But, with the strength of sterling against the Euro, the sheer volume and ready availability of wheat in easily accessible areas of Europe, all of which is arriving at a cheaper rate than current ex-farm values; trading at these current levels must surely good business. Furthermore, as the Grandfather of one of our farming friends used to say; “He that reacheth for all, very often graspeth nothing”.

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