London wheat market within reach of a new price record

In last week’s column I commented that November 12 London wheat futures had been ‘stuck’ trading within a £10/T range, between £197-207/T, for a little over nine weeks.

Last week saw futures trade in the top end of this range, putting £200/T ex-farm back on the table for spot movement.

This week however has brought an end to this 9 week rut as November 12 futures hit a life time contract high of £209/T; that’s the highest level we have seen for almost 18 months – and is just £8/T off breaking the all-time high price of £217/T we saw back in April 2011.

Ex-farm value’s then for spot movement feed wheat have advanced to around £202/T for spot movement, whilst £205/T would be a realistic offer for New Year collection. Spring movement should in theory offer a £2-3/T carry, but buyer interest this far forward in such a high priced marketplace is fairly scarce.

Milling wheats have also made further gains this week, but this is again attributed to a firmer feed base rather than improved premiums. Good quality soft wheats are currently trading around the £230/T ex-farm mark for Feb/March, whilst hard varieties would make £220/T. Group 1’s and 2’s are priced anywhere between £230-245/T ex-farm depending on variety and specification (and how well it compares to a cheaper, better quality German alternative).

Looking further forward, concerns are already beginning to materialise for next year’s harvest – and perhaps rightly so considering the reduced winter acreage currently in the ground across much of north-western Europe. November 13 wheat futures have thus advanced £5.60/T this week, sending ex-farm values to £180/T for Autumn 13 collection.

OSR prices have meanwhile continued to be volatile. £380/T ex-farm became briefly available towards the end of last week for November movement, but this has since retreated back to around £370/T ex-farm. For those of you with several loads left in the shed to sell, it might be worth keeping an eye out for any further/similarly valued price spikes like this one.

As the month of October finally draws to a close and the autumn weather is now in full swing, trade volumes have naturally begun to thin out a little. Post-harvest contracts have been fulfilled and the first beginnings of the popular November contracts are now being moved off farm, leaving many growers “struggling on” or in some cases simply “losing patience” (to put it politely) with what is turning out to be a rather difficult drilling season.

But, whilst I am not denying that it has been an incredibly hard 6 months for growers (and traders!), and that crops aren’t exactly going in the ground in the most ideal of conditions, it all seems to be taking the shine off the fact that wheat prices are just £8/T off an all-time record high.

Those of you with un-sold wheat still in the shed (albeit there is probably less of it than what you had initially anticipated) seem to be forgetting the fact that we are currently able to trade probably the worst crop most of us have ever seen – at a price that we have only ever seen once.

I’m not saying that it shouldn’t be that price, because in terms of global supply and demand such levels are completely justified – I’m simply reminding that we shouldn’t forget that it is that price. It may have been a hard 6 months; but at least we have £200/T on the table to ease the pain of it all.