December was the fifth consecutive month that UK nearby feed wheat futures gained on the year. The monthly average nearby UK feed wheat price for December was at £136.58/t, 21% higher than the same month a year ago. Furthermore, 2016 was on track to be the first calendar year that this price series recorded an annual average gain since 2012, despite a fourth consecutive year of record global grain output.
Currency volatility, especially in the midst of Brexit, has helped to support UK prices. Since 23 June, we have seen the sterling fall 10% against the euro and 17% against the US dollar, which on the surface has been a benefit to a UK seller of wheat. However, it is not just currency volatility that has been influencing UK markets this year, a tighter supply and demand situation domestically has also had its part to play. In the first official Defra UK Supply and Demand update published in December, the wheat surplus available for either export of free stock was pegged at 1.85Mt, 55% lower than 2015/16.
This article was contributed by Isobel Robinson / Analyst – Cereals & Oilseeds, Market Intelligence, Agriculture & Horticulture Development Board