New Crop Feed Wheat at £150/T ex-farm

The grain markets tell a story of two halves this week as old crop feed wheat values fall under increased pressure whilst new crop prices maintain their position.

Reports of the ongoing political unrest over in the Ukraine have fallen suspiciously quiet over the last few days and there is little fresh news to feed the market place with at this moment in time.

Currently, grain is continuing to move out of the Ukraine ‘unhindered’ (they managed to ship more than 200,000/T of maize corn last week alone) although we are seeing some obvious delays from the Crimean port of Sevastopol.

Despite the disruption however the Ukraine remains on target to be the world’s third largest exporter of maize corn this season (behind the US and Brazil) and the sixth largest exporter of wheat; hence why old crop values have come under pressure this week following last week’s potentially over-estimated gains.

New crop values however follow a rather different story. The Black Sea region is both a keen and very competitively priced exporter of both wheat and maize corn in the June/July/August period when the majority of the Northern hemisphere is preoccupied with getting their own harvest in the shed – take them out of the equation and the European equivalent suddenly becomes far more valuable.

It should also be noted that the Black Sea region may not just be ‘taken out of the equation’ for physical supply reasons, but also due to general trade confidence; if traders and consumers begin to lose confidence in the area they may begin to look elsewhere, adding pressure (and value) to equivalent  US and South American supplies.

UK feed wheat for as available collection is therefore currently valued in the region of £150/T ex-farm whilst November movement would make £3-5/T more. Feed barley values are also moderately improved at £132-135/T ex-farm for September collection.

As for the week ahead, the numbers from this month’s World Agricultural Supply and Demand Estimates (WASDE) earlier in the week will need to be recognised at some point.

Although the estimates didn’t exactly reveal anything we didn’t already know, the market will have to balance the current political unrest against the imminent arrival of the “largest global wheat crop we have ever seen” at some stage – and presumably adjust its values accordingly.

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