Wheat Imports top 1 Million Tonnes

It has been an undeniably bullish week for the grain markets over the last seven days. The aftermath of this month’s world agricultural supply and demand estimates (released Friday 11^th) has managed to rally old crop wheat futures around £8/T over the course of last week, with new crop futures gaining a further £5/T.

Ex-farm values then currently stand at around £210-3/T for spot collection feed wheat depending on quality specification and farm location. March collection would probably offer a £2/T premium this whilst May collection would comfortably make £215/T for most sellers.

Feed barley values are slightly lower this week, with £200/T ex-farm now looking like a rather optimistic target (delivered prices are barely £203/T) for spot movement. Malting values remain little unchanged and there are still some good offerings for selected spring varieties.

Milling wheat values have also improved this week, but demand remains thin. Putting a price on various milling wheat samples is proving difficult as buyers seem to be in the market for ‘odd jobs’ for certain varieties and specifications, rather than to buy large quantities. Good quality soft wheat’s are struggling to be value at around £228-30/T ex-farm for February collection, but movement further forward would have to be priced accordingly. Full specification group 1 varieties should, in theory make £235+/T ex-farm but again movement is limited and it’s a case of securing a buyer first. Demand for good quality hard wheat’s is incredibly thin and finding a home for these varieties is challenging, even for samples with good bushel weights.

Last week brought the release of November’s custom data (UK export and import figures, see the HGCA website for more details). Exports for November 2012, which is viewed as the typically high point of the export year, stood at just 97,641/T – the lowest figure since November 2001 and a 77% reduction on last year’s quantity. Imports meanwhile topped 225,262/T, mainly from France, Poland and Germany (high protein German milling wheat accounted for 86,901/T of the imports – that’s more than we imported throughout the whole of last season).

Novembers confirmed contributions takes this season’s total exports (July – November) to just 477,000/T, whilst total imports stand at a staggering 1.04M/T – that’s more than the amount we imported throughout the whole of last season. It makes it a lot easier to comprehend why it is so difficult to find a home for our own 72kg/hl milling wheat…

Meanwhile, OSR prices have continued to rebound, with £370/T ex-farm back on the table for Feb/March collection. A weaker euro (£1 is currently 1.19EUR), concerns over continued dryness in Argentina’s soyabean growing regions, good Chinese demand and a delayed start to the harvesting of Brazil’s ‘record’ soyabean crop due to some severely wet weather last week have all contributed to the improved values. It is important to remember however that all these factors are short-term drivers – both Chinese demand and South American weather can change very quickly, and thus so too can price direction. It is also worth considering that this South American crop will enter the market come March, whether it’s a few million tonnes down or not.