Markets Stagnate

There has been little change to UK feed wheat values over the last seven days as ex-farm prices for spot collection continue to maintain their £150/T position.

The “on screen” values have once again tested the waters at the equivalent of sub £150/T ex-farm, but the physical end-users have kept this benchmark figure obtainable in order to keep trade moving. Demand has been slightly better over this last week, particularly for movement into the soon to be re-opened Ensus bio-ethanol plant at Wilton.

According to CropEnergies (the German-based biofuels group which bought Ensus two months ago) “final cleaning and optimisation” is now well underway and although they have not given an exact date, commissioning is due to begin this autumn.

Once restarted, the plant will require around 100,000 tonnes per month; a substantial proportion of this year’s UK wheat harvest (which is currently estimated at around 12.3M/T).

However, given the continuing rate of wheat imports into these northern ports, I wouldn’t depend on this to encourage ex-farm wheat values just yet.

According to HMR&C, 328,000/T of wheat was imported into the UK in the month of July – double the amount imported in July 2012 and the biggest monthly July quantity since 1992.

After last year’s disappointing harvest and with both the quality and quantity of this year’s harvest then yet to be determined, July 2013 was always going to bring a fairly substantial amount of wheat into the country; 328,000/T has however far exceeded all initial expectations. That’s a serious amount of wheat to wind through the system – and that’s all in the same month that our own harvest became available to trade.

As for milling wheat, trade interest is also slightly better this week as end-users continue to make cover for November/December. Full specification group 1 varieties for bread making should currently make a £12-15/T premium to feed wheat for spot collection. Low specification varieties which are a little light on protein should make a £5-7/T premium depending on variety.

Group 3 soft wheats are currently offering a £3-5/T premium – the upper end of this only being available for those of you who are fairly flexible on movement.

With premiums this small, group 4 wheats (whether soft or hard) are purely trading as feed wheat.

Looking further forward, all trade eyes are now firmly focused on the upcoming American maize corn harvest. 4% of the crop is now believed to be in the shed and a ‘mostly dry and mild’ forecast for the week ahead in the south-west should make way for good progress to continue.

It will probably be a couple of weeks (or when at least 15-20% of the crop is harvested) until we start to see some confirmation of quality/quantity; between now and then I would expect UK feed wheat values to stagnate around the £150/T ex-farm mark.

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