Wheat prices surged again last week, surpassing the highs of August, as global supply problems boosted demand for British wheat and the UK harvest was smaller than expected.
The delivered price of bread wheat had jumped to £204/tonne as BB went to press, up from a previous peak of £190/t in August when Russia first announced a ban on exports. The new high is likely to put further pressure on flour prices, which rose last month when Rank Hovis added £89.37 to a tonne of flour and other millers followed with price rises.
Prices have been driven up by a new announcement from Russia extending the wheat export ban until the end of next year’s harvest, coupled with a poor-quality German harvest, resulting in demand for British wheat.
Gary Sharkey, Rank Hovis’ head of procurement, predicted that 600,000 tonnes of British wheat will have been exported by the end of September with the UK’s exportable surplus for 2010/11 estimated to be just 800,000-1m tonnes. "There’s a danger that, by Christmas we will have used up that surplus and will have to start importing wheat, which could add as much as £40/tonne," he said.
Around 95% of the UK harvest had been brought in at the time of writing, with yields predicted to be 3-5% below the five-year average. However, the harvest was expected to be slightly higher than last year at 14.5-15m tonnes and crop quality is good.
Alex Waugh, director general of Nabim, said expectations about the size of the UK harvest were raised early in the year, due to good winter growing conditions and increased plantings, but a dry and cool spring and late summer rains had taken their toll.
Prices could be further affected by the US maize harvest, expected to be down on last year, and the Canadian harvest, which has been hit by frosts. "In the short term, there doesn’t seem to be much that will push prices down" said Waugh.
Lewis Wright, ADM Milling wheat director, said of the UK harvest: "Fundamentally there is a good-quality crop. This has led to great demand for UK wheat, which has resulted in competition between domestic and export markets."