The grain market appears to have taken a quiet turn this week as many growers enjoy a well-earned break over the half term holidays.
Feed wheat for spot collection has continued to fluctuate anywhere between £140/T -£145/T ex-farm; values don’t seem to drop below the £140/T ex-farm position but equally they seem reluctant to break £145/T ex-farm.
Many growers appear to be holding out for the benchmark £150/T ex-farm but with little fresh news out there to boost the market, I would be surprised to see this sort of level bid before the end of the year.
Milling premiums are difficult to gauge given the volatility within the feed wheat market. Full Specification group 3 and 4 soft wheat at £147/T ex-farm may look good when feed wheat is £140/T ex-farm but, if the feed wheat market rallies towards £145/T ex-farm, the soft wheat ex-farm values are unlikely to move in accordance.
The same goes for full specification group 1 milling varieties – £155/T ex-farm has been offered for the New Year for several weeks now regardless of movement within the feed wheat base.
As for feed barley, those of you looking to secure £130/T ex-farm will have to start looking at movement for the New Year now due to end user demand. As for malting barley, contracts for harvest 2018 are now available – please speak to the office for more information. Looking ahead, many growers appear to be hiding behind the idea of a “disastrous Australian Crop” which could, if realised, add a boost to UK grain prices in the New Year. However, this may not be the case.
Following a “challenging growing season down under”, the current forecast for wheat production by the Australian government is 21.6 million tonnes with the expectation that “this number could certainly fall lower”.
At 21.6 million tonnes, this figure is firmly below the five year average and is below levels seen this decade.
Regardless, AHDB have added that this figure is “by no means a disaster for Australia or a game changed in the world market”.
In the drought years of 2006 and 2007, Australian wheat production fell to 10.8 million tonnes and 13.6 million tonnes respectively.
Also, it is important to note that the lower forecast output in 2017 follows a mammoth crop in 2016, from which there is likely to be stock carry-over to cushion lower production this year.
Globally, the sheer size of the Russian crop is a dominant supply fundamental this season; the 2016 wheat crop set a new record for Russian production. This year’s wheat crop surpassed this previous record by a further ten million tonnes.
Put simply, it will take more than a below-average Australian wheat crop to knock supply figures this season!