The price of UK cereals have continued to show strength throughout the last month. Concern over global availability has pushed the value of May-21 UK feed wheat futures to fresh highs. Additionally, new crop (Nov-22) feed wheat has been trading at more than £200 per tonne through the latter half of November. This offers a good opportunity to think about your average prices for next harvest. This support in the futures market has translated into strength in ex-farm prices. In the week ending 18th November, AHDB Corn Returns prices quoted ex-farm UK feed wheat at more than £214 per tonne.
One of the main drivers behind the continued strength in grain prices has been poor weather, delaying harvests in Australia, and causing quality concerns. Available stocks in the Northern Hemisphere wheat exporters are tighter this season than they have been for many years. The market is looking to Australia (and Argentina) to relieve pressure in the market. However, delayed harvests and quality concerns puts a squeeze on availability.
Domestic milling wheat prices are also showing continued strength at present. UK ex-farm milling premiums were quoted at just over £52 per tonne over feed wheat, in the week ending 18 November. This reflects tight availability of quality, domestic wheat.
Barley values also remain supported. The discount of feed barley to feed wheat has narrowed to levels last seen in August 2019, at less than £10 per tonne. The surplus available for either stock or export this season is seen at the lowest level since 2018/19. Strong domestic demand early in the season, combined with 267,000 tonnes of exports up to the end of September, has eaten into the exportable surplus and narrowed the wheat-barley spread.
Oilseed rape prices have backed off slightly over the course of November. This is not overly surprising given how strong rapeseed prices have been. The value of rapeseed oil is curtailing demand and this has removed some support for rapeseed prices. Strength in the Pound has also pressured domestic rapeseed prices. Sterling hit the highest point against the Euro since February 2020 in November. This trend in Sterling may continue as we move towards the next meeting of the Bank of England Monetary Policy Committee on 16th December. Close attention will be paid to decisions on interest rates at the meeting, with inflation still prevalent in the economy.
Pulse prices are also remaining firm for human consumption markets. As with wheat, wet weather in Australia is causing concern for short-term availability. Feed markets are under some pressure, with buyers absent in the short term, either through having purchased sufficient volumes or due to a lack of haulage making any further buying challenging.