OSR hits £390

It has been a rather mixed week for the grain markets over the last seven days. Old crop wheat futures rallied slightly higher towards the end of last week, but have since retreated back to levels we saw mind-January.

Equivalent ex-farm values for spot collection feed wheat are between £212-215/T, slightly lower than the week previous. Movement further forward would probably offer a £1/T per month carry, with between £215-218/T ex-farm offered for May collection. Physically traded volumes are thin with end-users waiting for the market to indicate at least some kind of price direction and farm-sellers quietly observing a market which is doing little other than trade sideways.

Milling wheat values are also little unchanged and finding a buyer continues to be difficult – Polish, German, French and Canadian wheats are still proving a better alternative for our domestic millers. Full specification group 1’s would still make between £236-240/T ex-farm, whilst low specification group 1’s and some group 2 varieties would make between £228-232/T ex-farm. Good quality soft varieties are valued slightly less at £227-230/T ex-farm. Dragging wheats across to the likes of Liverpool is tending to fetch a couple of pounds a tonne more (even with the additional haulage charge), but is tending not to be preferred by farm-sellers due to the variable quality of this year’s crop – i.e. they want the ‘job to be kept as local as possible’, which narrows the search down just that little bit more!

Last Wednesday (30^th January) brought the release of the second official estimates made by DEFRA of UK cereal supply and demand for the 2012/13 season (the third set of estimates are not due until the 27^th March – the first set were released early November). The estimates are available to view in full on the blog section of our website, or can be accessed via the HGCA website.

UK wheat availability is increased 95,000/T from November’s estimates to 16.95M/T. A revision of this season’s harvest output – which has been lowered by 50,000/T, has been offset by an increase in imported quantities. 145,000/T more than previously expected has been added to the projected imports figure – taking the estimate for this season to a massive 2.2M/T. Availability of UK wheat may be scarce – but imports seem to be doing a good job of picking up the pace.

The OSR market has continued to steal the show this week as values for late summer collection are currently touching £390/T ex-farm; easily £420/T with bonuses and easily £410/T if you are accounting for storage charges. New crop values have also improved, with £350/T ex-farm available for movement off the combine.

Argentinian dryness has continued and after another week without rainfall, many southern regions are becoming ‘desperate’, particularly as the majority of plants are now in full flower. Conversely, wet weather in Brazil has continued for the fourth week running, severely delaying harvest progress. Furthermore, the Chinese have continued to buy what is left of the remaining US soyabean stocks, adding further pressure to the need for a timely harvest in South America.  Something which at the minute, doesn’t seem all that likely.