Clear and occasionally hot and sunny weather has triggered a rush to harvest with combines out across much of eastern England over the last few days and considerable further progress expected. Quality is not as bad as feared after the recent wet period, but there may be more feed wheat than the domestic market needs.
“I would say as we speak, south of the Wash the wheat is around about 60% finished,” David Elderkin, senior trader at Fengrain, told Agritrade News on Tuesday afternoon. “Barley and rape are finished completely. It’s going fast because it’s 27 degrees and there’s going to be sunny weather this weekend so there won’t be much left after this week.
“Quality’s in the main have been pretty good,” he explained. “They all held up well against the weather surprisingly enough. Farmers are fairly pleased with their yields.”
However, the wheat doesn’t look being as high quality as some had hoped. “We have had wet weather and we have seen a drop in the Hagbergs, though not a substantial drop,” he said. “The feeling is that we have got probably more feed grain than we need.
“Also it hasn’t helped that Russia announced yesterday that they had probably got 10% more wheat than they thought they had, which is a big lump of wheat,” he continued. “So the wheat price has dropped. Currently London futures for November are around about £139/tonne, so that gives you an ex-farm price of about £130/tonne for November. That has fallen seven or eight pounds in three weeks.
“For growers who have got premium wheat, those premiums have increased,” he pointed out. “The base price has dropped and the premium is gone up.”
The USDA raised its estimate for Russian 2017/2018 wheat production to 77.5 million tonnes in its most recent World Agricultural Supply and Demand Estimates report, up from an estimate of 72m tonnes a month earlier. The previous year’s Russian crop was 72.53 million tonnes, itself already a record. “Winter wheat yields are forecast higher for both Russia and Ukraine, based mainly on harvest results to date,” USDA said. “Additionally, spring wheat conditions have remained very favourable for both Russia and Kazakhstan, resulting in higher production forecasts.”
“Usually, weaker sterling reduces the impact of falling global prices on UK futures, but that does not seem to currently be the case,” observed Helen Plant, senior analyst, AHDB Market Intelligence. “The UK price fall is despite sterling dropping to its lowest level against the euro since March 2010, reportedly due to Brexit uncertainty. This could be linked to sterling (£1) holding at close to $1.30, as the US political tension with North Korea continues to weigh on the US dollar.”