The UK wheat market is all about the weather, with the rainfall last week doing helping to alleviate the growing concern over dry conditions. It is hard to buy old crop grain, with farmers hanging onto what’s left in their hands.
“Rainfall in parts of Europe last week, including central and north east France and the UK, alleviated some dryness concerns for wheat crops in these areas,” AHDB Cereals and Oilseeds commented. “Nevertheless, more rainfall is needed across Spain, north east France and parts of Germany amongst others.”
It also reported delays to maize plantings in the US Midwest due to rain. “Furthermore, it is expected that in some areas, maize will need to be replanted due to the adverse conditions,” it said. “As at 14 May, while the USDA reported that planting progress was in line with the previous five year average, crop emergence was lagging behind.”
“Obviously the word on the street is all about weather,” Fengrain trader David Elderkin told Agritrade News. “That has been the main feature of the market for some time now.” Speaking ahead of last week’s day of heavy rain, he suggested that growers were already factoring in a yield loss with spring crops.
“What is left in this market remains in the hands of the diehards and while they could see a potential for the new crop yields to be down, it probably gave them a bit more stretch to their elbow to sit on it for even longer,” he said. “So buying old crop grain is not easy. There still seems to be plenty of Group 1 milling wheat and Group 2 types around and the premium for those is down to about £5/tonne over feed.”
AHDB analyst James Webster examined the effect of the rain on market confidence. “The rain will come as a blessed relief to many, and this may have translated to increased confidence in the UK new crop market,” he commented. “The dryness in the UK and wider Europe had led to a narrowing of the discount of new crop UK wheat to new crop Paris wheat.”
Rabobank also commented on the rain in its Agri Commodity Markets Research report for May. “Rains finally hit French core wheat areas, but soil moisture remains dryer than ideal,” it reported, estimating French wheat yield at 6.6 tonnes a hectare, under the 6.9 tonne five year average. 75% of French wheat was in good/very good condition, compared with 85% at the same point last year. Above normal precipitation had also replenished soil moisture in Eastern Ukraine and good precipitation in Australia’s southern and eastern wheat growing areas had stimulated the germinating crop.
The weather was also the story in the US where the impact of a snowstorm in early May now looked to be limited, the bank said. With US weather forecast cold and wet for early summer, the bank reported that some end-users were buying old crop wheat to secure protein.