UK wheat surplus retains costs in test at £180/t ex-farm

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A big UK surplus and aggressive export markets are placing strain on feed wheat costs.

Some business figures have urged that the UK has a 1m-tonne wheat surplus this 12 months and with UK exports remaining comparatively uncompetitive in contrast with different main international exporters, markets are prone to stay pretty bearish.

Nevertheless, the AHDB’s early steadiness sheets for 2023-24 have estimated that after accounting for a rise in demand, the excess obtainable for both export or free inventory is about 734,000t, which is considerably under final 12 months’s ranges.

See additionally: UK feed wheat stalls as exports battle to achieve traction

UK feed wheat futures opened at £187.8/t on 8 November for the November contract, with costs having remained comparatively flat since early August. In the meantime, Could 2024 futures climbed again above £200/t this week and stood at £202/t midweek.

Provide

Crop circumstances and grain provide forecasts in main exporting areas, together with South America and the Black Sea, proceed to affect markets.

In Argentina, the Buenos Aires grain trade (Bolsa De Cereales) diminished the Argentinian wheat crop to fifteen.4m tonnes.

Russian exports stay very aggressive after one other bumper wheat crop, regardless of it being down on the earlier 12 months.

In France, plantings are barely behind year-earlier ranges, however the complete 2023 cereals harvest is 5.4% larger on the 12 months, in response to FranceAgriMer.

Merchants at Norfolk-based retailers Dewing Grain mentioned winter plantings in Ukraine had been 89% full inside the wheat space, which is estimated at 4.36m hectares – down 2% from final 12 months.

In the meantime, within the UK, merchants mentioned the moist climate has been inflicting points for farmers and their crops throughout the nation, stopping any work being carried out within the fields.

Market fundamentals

Zoe Andrew, grain dealer at Frontier, mentioned provide and demand stay the important thing market drivers, with geopolitical components having much less of an impact for the time being.

Costs have stayed inside a set vary in the course of the previous few months and the final important value rally was again in July, in response to Ms Andrew, with loads of feed wheat obtainable and ample provides of grain globally.

She added that milling wheat premiums have been important for some time and stay near historic highs.

“There can be some milling wheat imported from Germany, however just like the UK, additionally they had high quality affected throughout harvest.”

Spot costs collected by Farmers Weekly on 8 November put milling wheat at £244.8/t, a £64/t premium over feed wheat. This hole has grown from £45/t this time final 12 months.

International fertiliser markets

Fertiliser producers CF Industries’ international nitrogen market outlook mentioned the costs had been supported by sturdy demand and a tighter nitrogen supply-demand steadiness in the course of the third quarter of 2023.

The corporate additionally expects demand by means of the top of 2023 and into 2024 to stay sturdy, led by India and Brazil.

CF Industries mentioned: “In the long run, administration expects the worldwide nitrogen supply-demand steadiness will stay optimistic, underpinned by resilient agriculture-led demand and ahead vitality costs that point out a steep value curve.”



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