April 22, 2010

UK wheat prices up on surging feed demand

The rally in London wheat gathered pace on Wednesday (Apr 21), driving the spot contract above GBP100 (US$153.9) a tonne for the first time since January, amid concerns that the hangover from a cold winter was biting into feed supplies.

London's May lot closed up GBP2.35 (US$3.6) to GBP101.60 (US$156.4) a tonne, its best finish for more than three months, with forward lots also making ground.

The rise represented a jump in demand for feed after a late winter delayed for some weeks the turnout of livestock onto pasture, a leading grain trader said. "Forage is very short. You get so many cold days over winter, and it's going to have an impact. The grass is still not growing," he said.

"The big merchants who were buying at GBP92 (US$141.6) a tonne a few weeks ago for their immediate needs just forgot to put their cover in for the coming months," he added, noting a tender from Frontier on Monday (Apr 19) for 2,500 tonnes of wheat and rising bids from users such as Cargill-owned poultry group Sun Valley.

Data on Wednesday showed the UK exporting 191,000 tonnes of wheat in February, down 20,000 tonnes from the January total.

Shipments since July, the start of the 2009-10 crop year, came in at 1.41 million tonnes, near-halving from the same period of the year before. However, many analysts expect an uptick in monthly shipments to about 3-400,000 tonnes in March and April, as the impact of recent export successes feeds through.