Old crop UK feed wheat at import parity following EU pressure

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With the first full working week of the year, there’s been little change in grain prices. The latest AHDB Grain Market Report lists UK feed wheat futures (May-24) and new crop futures (Nov-24) a little down on the previous week’s close, ending on Thursday 11th January at £191.95/t and £205.50/t respectively.

Over the same period, Paris rapeseed futures gained a little on last week’s close with (May-24) at €427.75/t and the new crop futures contract (Nov-24) closing at €435.75/t.

This followed gains with Chicago soyabean futures which were supported from technical buying and short covering. Further to that support, crude oil helped support the oilseed complex too. Brent crude oil gaining $1.47/barrel over the week.

Shift in UK European trading down to multiple factors

Over the winter months, there has been a shift in the UK’s trading relationship with the continent.

Last autumn, the May-24 and Nov-24 UK feed wheat futures were trading at a discount to the comparable Paris milling wheat futures. Now, new crop (Nov-24) UK feed wheat futures are trading at a premium to Paris (Dec-24). This premium reflects the wet Autumn in the UK which has led to a challenging sowing campaign. At the same time, old crop futures (May-24) are now trading at parity to the continent.

This changing relationship with the continent is due to pressure on the Paris milling wheat futures contracts. Since the start of November, UK feed wheat futures (May-24) have fallen 2.0%, while Paris wheat futures (May-24) have been pressured by 7.6%, in sterling terms.

What is causing the continental pressure is the strength of the Euro v the Dollar and the competitiveness of Black Sea supplies, including large Ukrainian imports into the EU.

Implications for UK feed wheat

The old crop UK domestic price is going to be even more reactive to price movements on the continent from the pressure on Paris milling wheat futures. The changing pricing relationship with the continent will limit any significant exports of UK’s old crop wheat.

As for the new crop, futures are now at a premium to the continent which is signalling that the UK could possibly be in a wheat deficit for the next marketing year, with the prospect of a lower harvest 2024 production from a lower wheat area. The Early Bird Survey will be re-run early this year, when the weather allows, to gain further insight into possible changes in UK planting intentions.

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