It has been an interesting seven days for the grain markets; this time last week markets had significantly rallied following a weekend of hot and dry weather across Western Europe alongside less than ideal conditions for the US spring wheat crop.
The rally continued for a further 24 hours buy by lunchtime on Wednesday, the bullish sentiment had stalled and the futures began to retreat.
For old crop values, there was little change to physical ex-farm values and £147/T looked like a realistic offer for most looking for spot collection.
As for new crop values, the benchmark £150/T ex-farm was initially offered for collection in spring 2018.
By Tuesday afternoon, this was offered for collection in the New Year 2018.
Currently, £150/T ex-farm is offered for May 2018.
As for the harvest position, feed wheat for as available collection off the combine at harvest continues to trade in the region of £140/T ex-farm.
Feed barley remains a significant discount to wheat at £110/T ex-farm.
According to DEFRA’s latest supply and demand estimates, the UK will end up a net importer of wheat this season and will enter the new marketing season on the 1 July with a relatively low level of stocks.
Imports of wheat this season have been forecast at 1.7 million tonnes, a 13 per cent increase on the previous season. Exports meanwhile have reached 1.5 million tonnes, a 47 per cent reduction on the previous season.
It is also worth noting that human and industrial use of wheat over the last 12 months or so has increased by 10 per cent year on year, predominantly due to a rise in bio-fuel usage.
However, wheat used in animal feed has also risen by two per cent with a rise in poultry demand being the main driving force. Will this trend continue next season?
In its latest update, France AgriMer have reported that 68 per cent of the French soft wheat crop is said to be in a “good – very good” condition in the week ending 9 June.
This is a six per cent reduction on the week previous. Although it may seem small, this weekly drop is the largest seen this season.
Hot and dry weather in France is said to be behind the deterioration in crop condition, with some reporting of “scalding damage”. However, based on what I have seen on Twitter, the first of the winter barley crop is now safely in the shed and quality seems to be average but comfortably around the “63-64”kg/hl mark.
Perhaps this apparent “scalding damage” applies to the wheat crops and not the barley? Either way it is very early days yet and whilst it’s always good to keep an eye on things, I wouldn’t get too carried away with any rumours at this stage.