Week Beginning 29th February 2016

The London LIFFE wheat future for March 2016 closed at £101.50/T on Friday evening, (26th February), – £2.75/T lower than the week previous and the lowest close for a front month since the summer of 2010. In opening trade this morning, the future is valued a further £0.60/T lower.


Feed wheat for March collection is this morning offered in the region of £98.00 /T – £100.00/T ex-farm. Further forward, minimal premiums offered for collection into the early summer months – May/June is this morning valued in the region of £101.00/T – £102.00/T ex-farm.

Full specification, group 3 soft wheat’s are currently worth a £2.00/T premium to feed wheat.


Last week’s interest in feed barley has subsided this week – trade rumour would suggest that initial interest occurred because another merchant was trying to fill a barley vessel which arrives into Hull next week, hence the £97.00/T that was offered earlier in the week! The vessel in now believed to be full and feed barley is now valued in the region of £95.00/T ex-farm.


As for new crop values, the London LIFFE wheat future for November 2016 closed at £116.00/T on Friday evening, – £3.00/T lower than the week previous. There is now a £14.50/T difference between old and new crop wheat which is surprising given that we are expecting a carryover of almost 4 million tonnes worth of wheat into the next trading season commencing 1st July.


The current weakness of the pound against the US dollar (currently at a 7 tear low) and its further weakening against the Euro is perhaps the grain markets only saving grace at the minute – we could have easily seen values retreat below the benchmark £100.00/T ex-farm by now if the sterling/euro exchange rate was that of 6 months ago.

With the pound weaker against the Dollar, our home grown commodities are now more competitively priced in dollar priced markets and we should, in theory, therefore see an increase in demand for UK based products. However, in such an over-supplied trading year this has a limited impact.

With the EU referendum now confirmed to be taking place on 23rd June, markets are braced for an ‘extreme period of currency induced uncertainty’ between now and that time.


DEFRA’s latest supply and demand estimates (published last week) have made further adjustments to this season’s production/consumption figures. A list of the key points worth noting is given below or please see their website for more information:

  • Total wheat production in 2015 was 16.44 million tonnes, an increase of 273,000/T on the initial estimates given last November.
  • Wheat consumption is reduced to 14.66 million tonnes, a decrease of 111,000 tonnes since the initial estimates and a 4% drop year on year. This is predominantly due to “the use of other ingredients such as pulses and soymeal in British animal feed, offsetting some of the demand for cereals”.
  • The unallocated wheat surplus which will be either exported or carried over into the next trading season is now forecast at 3.964 million tonnes following a 415,000/T increase to initial estimates. This is a 38% increase year on year and is nearly twice the five year average.
  • Total barley production in 2015 was 7.37 million tonnes, the largest barley harvest since 1997. “Feed barley inclusion within animal feed is expected to increase year on year but this is unlikely to offset the higher supplies and lower demand from human and industrial usage”.
  • 760,000/T of barley was exported between 1st July 2015 – 25th February 2016. 1.95 million Tonnes worth of feed barley is therefore available for export between now and the end of June, otherwise this will be also be carried over as unallocated stock.


    With such a large carryover forecast, it is easy to understand why prices have been pushed to six year lows – and why new crop prices are reluctant to rally. As we head into March and the very early signs of spring begin to show, autumn sown crops throughout the Northern Hemisphere are beginning to re-emerge from winter dormancy. This is when we begin to see the weather stories; what condition are crops in following a relatively mild (if not slightly wet) winter? Will we need to see a particularly favourable spring?

    However, with such a large carryover forecast for both the UK and the rest of Europe, we will need to see a fairly substantial weather issue / a significant threat to supply in order for markets to react.

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