Wheat price down as crop shows good development

Good development of the UK wheat crop has been reflected in a drop in the price of feed wheat.

East Anglian feed wheat was quoted at £169.50 a tonne (t) for May delivery, a drop of £27/t to harvest and £23/t to November. The drop is the largest seen for this time of year since April 2011, according to the AHDB Grain Market Daily newsletter.

AHDB Market Intelligence senior analyst James Webster said the drop was reflective of the good development of the new crop wheat.

He pointed out, however, that although the drop from old crop to new crop is large, values for new crop delivered feed wheat in East Anglia are currently the highest they have been since 2014. Dry weather last year in many parts of Europe pushed up prices, and the price of milling wheat remained up around 20% year on year in March 2019 [Mintec].

Alex Waugh, director of the National Association of British and Irish Flour Millers, advised that futures market prices are an indicator of the general price expectation which, like long range weather forecasts, may or may not be accurate.

"There is a long way to go, with both quantity and quality of the 2019 crop still unknown," he added. "Developments over the next three to four months will be critical in determining the outcome."

According to the ADAS crop report published this month, conditions for UK crop growth were good last winter, with mild temperatures and below-average rainfall allowing crops to establish well, with good survival over winter.

Cereal crops, in particular, are in good condition, with low levels of weeds, pests or disease.

At the end of March this year, 92% of the overall UK winter wheat crop was rated as either ‘good’ or ‘excellent’. A ‘good’ rating means yield prospects are normal, while ‘excellent’ yield is expected to be above normal.

Stand-out UK regions included the south east (56% excellent) and north west (80% excellent).

Lack of rain is also a concern for some European crops this year, although prospects are good in many major exporting regions.

In the US, 60% of the winter wheat crop is classed in ‘good’ to ‘excellent’ conditions, in line with expectations. In Canada, overall wheat production is forecast up 8%, driven by spring wheat.