Tag: Grain Market

UK Grain and Protein Prices

Recent rainfall has been beneficial, and planting of winter cereals is underway in parts of England.  The East in particular, however, remains very dry.  Primary cultivations are being completed, but increased fuel use and worn metal from hard ground is raising costs.

Unsurprisingly, UK grain and protein markets continue to follow global trends.  UK feed wheat values have moved back up to £260 per tonne (spot) for the first time since the beginning of July.  New crop (2023 harvest) values are likely to be around £10 per tonne below this value.  This based on the assumption that they are worth around £10 per tonne below November 2023 feed wheat futures.  In reality, it is hard to gauge a value for new crop wheat in such a high-priced market.

Milling wheat is currently at a £40 per tonne premium to feed wheat.  Early data from the AHDB Cereal Quality Survey shows that protein content is down this year; averaging just 12.5% on UK Flour Millers Group 1 varieties.  This does not necessarily mean that there will be an increased premium for ‘in specification’ wheat, with much depending on the performance of the crop in baking trials.  At the moment, the crop is thought to be performing well.

Feed barley is moving at a discount of approximately £20 per tonne to feed wheat, or £240 per tonne. The discount is at broadly normal levels, given the elevated price of grains.  Demand for barley will be lower this season owing to the reduced size of the pig herd.

Globally, it appears that there is going to be a much-improved supply of oilseed rape and other oilseeds this season.  This is primarily due to increased production, year-on-year, in Canada.  As a result, the price of rapeseed, nearby, has moved to pre-Ukraine war levels, to around £500 per tonne.

Feed bean values have moved back up with wheat values.  That said, pulse markets are thought to be well supplied, both domestically and globally.  Increases beyond those tracking wheat are unlikely especially given expectations of favourable weather for crops in Australia; a key export market competitor, during their spring.

December Arable Update

Those watching the global wheat supply and demand tables will easily be able to see that global stocks are higher than they have ever been.  They will also readily be able to appreciate that wheat production has been hitting a series of highest-ever tonnages, including for harvest 2017.  However, what is often missed out is that consumption continues in an almost unavoidable manner to reach heady record levels too.  This is of course because population is still going up.  Having said that, the wheat stocks are comfortably high at nearly 19 week’s supply.

The discussion about DEFRA’s provisional estimate being rather high continued through November and early December within the trading sector, with many not able to replicate the sums.  Certainly, the market was not responding in as bearish a manner as if there was such a large surplus as the DEFRA figures indicated.  The milling premium has come down this month to about £12 in many regions; depending on location and quality.  Some feel that despite the large headline area of milling wheat, many farmers have grown high-yielding Group 1 varieties (such as Skyfall) and cultivated them as feed wheat. This means that despite the higher milling tonnage on paper, in reality, it might leave a bigger sorting job for millers and merchants.

It also appears that in the later parts of the autumn, the weather conditions for drilling gradually improved, meaning many growers managed to plant a higher than usual area of late winter crops.  This may slightly amend the figures found in the Early Bird Survey (see next article) which has a closing date for responses of early November.  It is now looking like the winter wheat area may be very similar indeed to last year’s and, at the moment, a small decline of winter barley.

News published this week by the USDA shows a projected increase in the area of oilseed rape in France, the largest crop in Europe, and, crucially, a rise of soybean area in the US.  It might seem miles away and a different crop, but as it accounts for 75% of the global vegetable oil market, it makes an impact to all oilseeds in the world including oilseed rape in the UK.

Overall markets are slow now, most buying completed ahead of the Christmas break, the surge in requirements has died away as bakers and other supply chain grain users are using their last tonnages before the New Year.  Pulses are not happening now until the New Year, and then, watch out for new crop supplies from Australia.