One of the longest UK wheat harvests is now all but complete, having started under burning hot skies in mid-July. Because of the early drought and heatwave followed by August rains the quality of the crop is variable. Soil type, geographic location and individual variety of wheat all play a part in this variability. Millers and grain traders will therefore have to be more selective than ever in their purchasing.
Northern Europe experienced the same extreme weather conditions as the UK. Consequently, expectations of a record harvest of good quality have not been met. Crop estimates have been steadily reduced and are now 10% below January expectations. Together with quality problems, especially in Poland and Eastern Germany, this has driven European grain prices higher. The UK has been caught up in this and wheat market prices are now about 25% up on last year.
The variability in quality, with later harvested wheat particularly affected, means there is greater north-south variation than normal.
Overall, wheat harvests across the world have come in slightly below expectations. Agencies such as the US Department of Agriculture anticipate that wheat stocks will fall again and the ratio between stocks and wheat usage will fall to its lowest ever level of 21% (ie, global wheat stocks will be sufficient for about 70 days’ usage).
This tight supply situation is expected to underpin the grain market during the season ahead.