Price Rally Halts as Market Declines

UK feed wheat values are generally unchanged (if not slightly lower) to the week previous as the recent price rally grinds to a halt.

Feed wheat for spot collection has advanced to little more than £165/T ex-farm throughout the course of the last three weeks – a value we haven’t seen available for spot since late June.

A lack of American input (particularly in the form of the absent October edition of the WASDE report) gave the market a free reign to trade news and rumour rather than facts and figures – and whilst initially this appeared to be in the farm-sellers favour, this week’s trading headlines aren’t quite so favourable.

This year’s Russian harvest is finally approaching the finishing line after some initial delays with more than 92% of the total area (which already equates to at least 54M/T of wheat) now believed to be in the shed.

Winter plantings for next year’s harvest have also made good progress over the last fortnight after a delayed and rather wet start; 13.4M/Ha have now been planted, almost 85% of the original intended area. A favourable forecast for the week ahead should make way for this sort of progress to continue.

The quantity (although perhaps not quality) panic also appears to be over for the Ukraine after a similar forecast has also helped to draw their harvest to a close. Furthermore, the Agricultural Ministry over there is standing by their initial, once ‘overly optimistic’ forecast for a record harvest at 60M/T.

Elsewhere, an increasing amount of market attention is now being directed at the impending Australian wheat harvest. Beneficial September rains could result in a record crop this year, confirmation of which we should expect over the next 2-3 weeks.

It is important to remember that the 26M/T+ Australian wheat crop is of particular importance this year as it is likely to be an important source for Chinese importers who have so far, alongside Brazil, been actively buying US supplies.

Consequently, ex-farm value for spot collection feed wheat are somewhere in the early £160’s/T; for those of you looking for £165/T ex-farm, New Year movement could be negotiated depending on both quality specification and farm location.

As for feed barley, export demand is allowing for immediate movement off the farm at somewhere in the region of £135/T. Further forward, January/February collection would offer £140/T ex-farm.

The thing with trading news and rumour is that markets and thus ex-farm values can quickly become very volatile. It was all fun and games this time last week when the Black Sea Harvest looked never ending, Australia appeared a long way from harvest and wheat was £165/T ex-farm. Just seven days on and the fundamentals paint rather a different picture.

Roll on the 8^th of November for the release of the latest USDA report. Maybe then we will have a clearer outlook of grain supply and demand?