December 15, 2008


UK's milling wheat premiums increase on wet harvest
Milling wheat premiums in the UK have exceeded the GBP50 per tonne over feed mark last week due to supply shortages following a difficult and wet harvest.


Crops in northern and western areas were worst affected, therefore premiums shot over GBP50 per tonne, while premiums were about GBP40-45 per tonne in the further south and east regions where many producers managed to get milling wheat in before the wet weather set in, said merchants.


Strong prices for Group 1 varieties such as Solstice, Xi19 and Malacca were also having a knock-on effect on Group 2 varieties, which were trading at a GBP6-10 per tonne discount, said Simon Ingle from newly formed Openfield.


There are more demand for Group 1 wheat in December but supplies are short, said Ingle, adding that too much wheat are still wet at 16-percent plus moisture and the higher yields indicate there are more lower-protein crops about.


Quality wheat prices have stayed firm, despite big falls in feed wheat prices.


To maintain supplies to mills, millers are allowing fallbacks to 11.5 percent protein.


Nick Oakhill of Glencore said producers should capitalise on the premium, as some millers have switched to 'mid-spec' wheat and were blending it with higher-graded wheat imported from Germany or Canada.


"The consistency just isn't there in the UK this year. If the millers' dependence switches to mid-range proteins, the premiums we have seen for top-spec wheat in the past might not be there in the future," said Oakhill.


Wessex Grain's milling wheat trader, Ed Britton, said the premium could fall back to about GBP20-30 per tonne next year and farmers should buy into decent premiums sooner than later as securing premiums for next year is "sensible".


US$1 = GBP0.6645 (Dec 15)

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