Wheat prices in the UK have continued to buck global trends with ongoing demand from end users and merchant shorts underpinning the market.
But with the key US and EU export markets struggling, it was unclear how long the domestic market could maintain this ‘bullish stance’, Gleadell trading director Jonathan Lane said.
US wheat continued to look expensive against the rest of the market. As such, US exports were behind forecast, with a reduction in projections likely. And the first USDA estimates were predicting wheat planting up 3 per cent on the year.
In Europe, the market was also struggling with its pace of exports, despite a lift in Russian export origins.
Mr Lane said the volume of EU exports could increase in the weeks ahead, but they were running about 23 per cent lower on the year.
Despite pressures elsewhere, the old-crop UK market remained one of more buyers than sellers.
“The continued demand from end-users and merchant shorts has kept the market underpinned, despite the balance sheet still projecting adequate supplies of wheat,” he said.
Premiums over the London futures market had moved higher, especially where demand was high.
And confirmation one of the country’s bioethanol plants had restarted operation ‘added fuel to the fire’, said Mr Lane.
However, the volume and length of time the plant would remain operational was unclear.
The rise in prices was now starting to draw in feed wheat imports from Denmark and France.
“Perhaps the time has come for on-farm long holders of wheat to take advantage of these season-high prices,” he added.
SCOTTISH GROWERS’ WEATHER WORRIES
WEATHER was still dominating growers’ and buyers’ concerns in Scotland, with the next few days ‘key for the Scottish crop’, according to Sam Scott, grain buyer Scotland at Cefetra.
The break in poor weather two weeks ago had allowed growers to apply fertiliser and drill spring beans and oats, but the return of freezing rain and snow had meant soil temperatures were too cold for sowing spring barley.
Mr Scott said: “Of more concern is the soil moisture, which will have a greater bearing on sowing dates and potential spring yields and with the total winter crop area down 11 per cent year on year; barley down 20 per cent, the lowest since the 1970s; and wheat down 11 per cent; the next seven to 14 days are going to be key for the Scottish crop.
“Old crop feed barley remains in good demand with prices nearing parity to May 18 wheat futures.
“Domestic old crop wheat supply also remains tight with the prices moving up to meet import parity circa £155/t in most areas of Scotland.”