March 25, 2011
 

UK grain markets are more stable

UK grain markets are still jumpy but reached midweek without any huge changes; with May 2011 London feed wheat futures at GBP193.50/tonne (US$312/tonne) delivered.

Prices dropped slightly on Wednesday (Mar 23) following a lowered approximation from DEFRA for UK wheat demand for the current cereal year.

Reduced use is expected in human, industrial and feed markets. Flour millers, distillers and UK bioethanol producers were all expected to use a little less grain than previously predicted while smaller cattle, sheep and poultry numbers will reduce demand from compounders.

End of season commercial stocks of wheat are now anticipated to be 1.6 million tonnes, one of the lowest figures for many years. However, as long as harvest was not delayed, this was enough, said GrainCo managing director, Gary Bright.

"The old crop wheat market will be tight at the end; that is a given, but that does not necessarily mean a big price." Prices from here onwards would vary according to many factors but there was competitively priced French wheat available across the early harvest period, he said.

At the moment, things are not tight, with most buyers covered until the end of the cereal year.

Farmers had taken advantage of good early prices for 2011 to the extent that GrainCo had likely already bought about 35% of the tonnage it expects to sell next cereal year as compared to a more regular proportion of 10-15% at this time of the season. Growers had sold at an average of GBP140/tonne (US$226/tonne) for November 2011, said Bright.

Crop watching around the world will result in a continued nervous market, while ambiguity about political outcomes in the Middle East and North Africa, in addition to logistics recovery prospects in Japan will contribute more price instability.