As grain traders and farmers, we are now entering the period of Pre harvest Tension (P.H.T).  That period of time where, as a farmer you have pretty much done all you can with the crop in the ground.  Regardless of establishment or agronomy, at this point in time, you have what you have, and the rest as they say is in the lap of the gods and good old mother nature.  From the grain traders perspective the vast majority of the previous year’s crop is traded and moved and the focus is on the coming harvest and the unknowns of yield and quality and how they are reflected in the individual traders attitude to the market and pricing.

Information, they say, is the key to good decision making.  With a few deft taps of the keyboard a myriad of information becomes available to all who care to look.

The USDA June survey for World Agriculture Supply and Demand Estimates, forecast Global wheat production at 773 million tonnes for the coming harvest. This last year, Global wheat production was 764 million tonnes.  Therefore, regardless of any detrimental weather reports, the World will produce more wheat than last year. Furthermore, Global wheat ending stocks, the amount carried from the 2019 crop to 2020 year are forecast at a record high, adding yet more to the pot!

Global maize corn production is forecast at 1188 million tonne – a new record! Whilst ending stocks from 2019 crop are their highest level since 1987.

In September 2019, a tonne of Chicago traded wheat, taking into account currency exchange on the day, was approximately £134 per tonne.  Then the USDA forecast Global wheat ending stocks for 2019/20 trading season at 138 days’ worth of use.  The average price paid for wheat in Yorkshire by this business for last September movement was £140 per tonne ex farm.

Currently the USDA are forecasting Global wheat ending stocks for 2020/21 this coming trading season, based on the estimated production figures above, and the fall in consumption due to reduced bio-ethanol demand is at 153 days.  Currently Chicago wheat is trading at about 5 Dollars per bushel for this autumn or the approximate equivalent of £150 per tonne.  Here in Yorkshire we have been paying £165 per tonne for wheat this autumn.

A quick look back at the average of prices we have paid for wheat for movement September and November in the years 2013 to 2019 tells me that the low average was £108 for September 2015 and the high average was £168 for November 2018. 

Our average Yorkshire purchase prices of the last 7 years: September £134 and November £141.

If as has been quoted here before and is oft stated; tops and bottoms are for fools: the low paid price within this quick survey being £100 per tonne Sept 2015 and the top being £190 per tonne Nov 2018.  Then as one of my young colleagues was heard to say this week ‘Explain to me why are these new crop prices perceived to be so poor? ‘

Of course, an Economic apocalypse or Global pandemic, unforeseen flood or drought somewhere in the World may come along and make a nonsense of the current fundamental numbers.  But that’s P.H.T for you.  It’s all in the unknown!

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