Prices Retreat as American Outlook Improves

The American weather forecast has dominated the global grain trade for the last three weeks. High temperatures and a severe lack of rainfall were beginning to threaten the yield potential of this season’s maize corn crop.

As temperatures in America peaked, so did London wheat prices as feed wheat for spot collection touched £160/T ex-farm. As one of the largest feed grain supplies in the world came under pressure, our equivalent UK wheat crop was suddenly that little bit more valuable.

However, the arrival of cooler temperatures and heavy showers across the weekend has soon pushed values back to the £150/T ex-farm position – and although I’m not exactly one to say ‘I told you so’; well, I did warn you that this would happen.

It would appear that after all the hype surrounding the condition of the American maize corn crop, favourable weather over the last week or so has once again managed to convince the grain trade that they are back on track for record production – something which is hardly going to edge our equivalent feed wheat values back towards the £160/T position.

Consequently, those of you who need to move feed wheat this month would struggle to get anything more than £150/T ex-farm this morning. Movement into October would achieve somewhere around the £152-3/T ex-farm mark, whilst November-December collection would make £155/T ex-farm .

As for milling wheats, demand has been a little better this week as end-users look to extend their pre-Christmas cover. Full specification bread making varieties are currently valued at £170/T ex-farm for November, whilst lower specification varieties would make £165/T ex-farm. Demand for soft wheats is still poor as samples continue to test above initial expectations – group 3 varieties would struggle to make £160/T ex-farm for December.

Meanwhile, feed barley has continued to trade at a disappointing £20/T discount to feed wheat. Good export demand is however allowing for quick movement off farm so trade volumes have been high over the last seven days.

DEFRA released the results of their annual Cereal Stocks survey last week which indicates stock levels held by all UK farmers, merchants and ports at the close of the 2012-13 season (which ended 30^th June).

Remaining on-farm wheat stocks were 24% higher than a year ago as many farm-sellers awaited a repeat performance of last year – when feed wheat rallied almost £30/T in as little as six weeks. Stocks held by both merchants and in ports combined was 121% higher than this time last year; hardly surprising given the amount of imported we have seen arrive into the country in an attempt to compensate for the poor quality of our own harvest.

For barley, remaining stocks are around 30% higher, the majority of which is held by merchants after malting demand subsided towards the end of last season.