New crop wheat at £180/T? Yes please!

Last week proved to be another non-mover for the grain markets. Old crop feed wheat values have remained around the £205/T ex-farm mark for spot collection, generally unchanged on the week previous, whilst new crop values are slightly firmer at around £180/T ex-farm for October/November collection.

Regardless, trade volumes have been slightly better this week despite similar price levels. With regard to old crop, farm-sellers appear to be taking advantage of what little demand for this season’s crop remains, at least while the £200/T+ mark is still on the table.

As for milling wheats, finding homes for everything from full specification group 1’s to low specification group 4’s is incredibly difficult. Smaller, local mills seem to be fairly well covered for the time being, larger homes in Liverpool/Manchester will not even entertain the idea of dragging across 73kg/hl wheats when they have a readily available supply of German/French/American 80kg/hl equivalents on their doorstep.

As for new crop feed wheat, trade volumes have also been fairly good this last week given that ex-farm values are generally unchanged for the fifth week running. Post- harvest collection is currently worth around £180/T ex-farm, generally for October/November movement – a price which, in our opinion is definitely worth some consideration.

This time last year the amount of winter drilled cereals in the ground both here and around the globe was simply huge; not only that, but the majority of the crops were in a very reasonable condition. £150/T ex-farm for post-harvest collection, at the time, was a very profitable option.

As it turned out of course, 2012’s harvest was by no means the harvest we anticipated. Fortunately, it was by no means the harvest we anticipated around the globe either. Global World Grain Supply fell from 2.315 billion in 2011/12 to 2.244 billion in 2012/13, a fall of 3.1 percent.  Markets soared and as a result forward sales at £150/T didn’t exactly pay off, particularly as ex-farm prices hit £230/T last November.

However, it is important to remember that despite retreating from the recent highs of nearly £200/T, new crop wheat values remain at historically high pre-harvest levels. And although there is undeniably very little winter sown crops in the ground here in East Yorkshire, there are simply huge amounts around the rest of the globe.

Record high ex-farm prices have encouraged record high crop plantings. Global World Grain production is predicted to hit 2.406 billion tonnes in 2013/14, with notable increases in key exporting regions such as North America, South America and Southern Russia.

Furthermore, high prices have eased demand from key importing regions; particularly from China (cereals and oilseeds are a very price-sensitive option here – if the price is not right import demand simply declines).

Now I am by no means suggesting that come November 2013, ex-farm feed wheat values will be sub £180/T; I am merely stating that given the sheer amount of crop in the ground worldwide, the declining surplus demand and that pre-harvest futures are currently at a historic high – £180/T has to be a profitable option, or at least not a bad place to start for marketing next season’s crop?

As a final comment, locating spring barley seed has become VERY difficult in recent weeks and the likes of Concerto, Belgravia and Tipple are now sold out. We do however have limited amounts of CHRONICLE left in stock; the variety boasts a good resistance to lodging, yields 5% better than Tipple and has a good all round disease resistance. The seed is competitively priced and is available on a harvest movement buy-back contract. Please contact the office for more information.