Values retreat from recent highs

It has been another quiet week for the grain markets over the last seven days. End-user demand for pre-Christmas delivery has thinned, farm-seller interest has been pretty scarce and trade volumes have thus been rather slow.

London feed wheat futures have continued to drift for the third week running and although new crop ex-farm prices have kept relatively firm, we are just beginning to see old crop ex-farm prices slip below the £220/T mark for New Year collection. Spring collection would probably still make £225/T ex-farm but movement further forward would not offer much more at this time.

Milling wheats have also remained unchanged with ex-farm values ranging anywhere between £230/T for good quality hard biscuit wheats, to £245/T ex-farm for full specification group 1’s. Good quality soft milling varieties are continuing to be good value at around £240/T ex-farm for Feb/March time due to good domestic demand – a price which may be worth considering before the next instalment of competitively priced French soft wheat arrives in the New Year.

Feed barley values have slightly improved this week, also due to renewed domestic demand. Prices are currently around the £200/T ex-farm mark for spot collection, with a couple of pounds carry available for movement further forward. With regard to the malting trade, there is some limited tonnage available for good quality spring varieties in the New Year at £210-15/T ex-farm.

As for New crop values, futures have ultimately retreated from the £200/t historic trading high we saw last week. Ex-farm prices have however managed to maintain the £190/T mark for November collection, whilst harvest movement would make £185-8/T.

There are two main reasons why market values have come under pressure this week.

Firstly, the announcement from Mario Monti – that he would be resigning from his position as the Prime Minister of Italy in the New Year – didn’t exactly give investors the greatest sense of security in European commodities. With further uncertainty in store, confidence in an economic recovery for the Eurozone was once again rocked, causing those who would usually invest money in European Ag. commodities (including our London wheat) to retreat.

Secondly, American grain markets have significantly retreated this week which has ultimately encouraged our equivalent London markets to follow suit. Prospects for next harvest’s ‘drought stricken’ winter wheat crop were said to have improved due to ‘moderate rainfall levels across the southern plains’ towards the end of last week.

Improved conditions for Argentina and Brazil have also heightened prospects for next harvest, with both making ‘better progress’ with maize corn and soyabean plantings. The latest monthly world agricultural supply and demand estimates from the US department of agriculture are due this week – it will be interesting to see what their take on these ‘improved prospects’ will be, and how the grain market will react.

To finish, I would just like to add that supplies of spring barley seed are just beginning to get scarce – and expensive. I appreciate that some of you may still be undecided on your spring cropping options, but for those of you who have already decided on spring barley, it may be worth securing your seed order sooner rather than later.

Variety advice and price information is now available for both spring linseed and spring OSR seed, with buyback contracts available for the majority of both the above. For more information please contact the office – see the ‘contact us’ page.