Shrinking forecasts for northern hemisphere crops have helped to bolster the world wheat market in recent days, but with UK farmers starting to focus on the upcoming harvest and the pound firming to mute any knock-on effect in the domestic market, gains here have been limited.
Stuart Attridge, trader at Harlow Agricultural Merchants said some barley had been cut “but it’s still very early days. There are quite a few barley cargoes to go out of the UK,” he told Agritrade News. “Once material becomes available it can get moved.”
“Until farmers across Europe really get their combines rolling, they will be very reluctant suppliers of the market,” he observed. Mr Attridge described the market as “marginally steady”.
Turning to 2020 harvest prospects, yields are being downgraded across Europe after the dry April and May weather. “You’ve got French crops being scaled back, European crops being scaled back, Ukrainian crop and Russian crop scaled down slightly and yet you have the likes of the Egyptians still buying wheat,” he said. “Russia, Romania – these guys are still getting the orders. They are dramatically cheaper for new crop than European supplies.
“They are very keen to maintain market share,” was his explanation. “Russia is becoming a much more aggressive new crop seller. In the latest Egyptian tender, Russia and Ukraine are priced well below the likes of French origins and the rest of Europe.
“You are looking at the difference of some $13 a tonne on a fob basis comparison,” he went on. “They are dramatically cheaper. They will continue to get market share for the time being without a shadow of doubt,” he concluded.
AHDB said in a report on Monday that the global grain market was supported last week by a cut in the estimated US maize area. However, wheat received less support. “The wheat picture continues to look better supplied year-on-year, with Southern Hemisphere supplies expected to offset cuts in the US, EU and Ukraine,” it noted.
However, the Board added: “There was also some support for wheat from a reduction to the Russian crop outlook,” noting that analyst SovEcon had cut its forecast of 2020/21 wheat production by 1.8m tonnes to 80.9m tonnes. “Further suggestions of tightness in global trade for the second half of 2020/21 have been mooted; with Russia’s agriculture minister suggesting the nation could make its April-June quota a permanent feature of grain markets,” it wrote.
AHDB also reported on Wednesday that Russian agriculture consultant IKAR has again cut its forecast for the country’s wheat production by 1.5m tonnes to 78.0m tonnes. “The French farm ministry forecasts an almost 21% decline to soft wheat production this harvest following a difficult season,” AHDB Analyst Alex Cook said. The crop is now forecast at 31.31m tonnes, down from 2019/2020’s 39.55m tonnes.
A rise in the value of the pound by 0.94% against the euro between Jun 26th and July 3rd had dampened the bullish effect of world markets in the UK, AHDB added.