Weather fears see wheat futures climb to contract highs of £157

Continued worries over weather issues in the US, Canada, Australia and the Black Sea region saw wheat futures climb to contract highs of £157 this week.

And with the weather set to have a major say in final output in these regions, trade sources yesterday said that the focus of the business was currently on the supply side of the equation, not demand – indicating that prices were likely to remain firm.

But while the outlook for the EU crop looked to be more optimistic, doubt has been cast on the accuracy of the official production forecast figures used to estimate the likely size of the UK wheat harvest.

AHDB Market Intelligence Director Phil Bicknell, yesterday said that while the latest May supply and demand figures pointed to the tightest UK wheat market in four years - down 6 per cent on the March estimate - the trade believed that supplies could be even tighter than these official statistics indicated. He said that the release of an “experimental” set of numbers from the Rural Payment Agency which used data from the Basic Payment Scheme showed planting in England to be 45,200 ha lower than the official estimates.

“Depending on the wheat yield assumptions you use, that could carry through to the official Defra wheat production figures being overstated by 300-400Kt,” said Bicknell.

He said that although official figures remained unaltered, the difference raised the possibility that the BPS figures might be more accurate – and this could be factored into future estimates: “My perspective is that if there is more accurate data available, then they should be used to update the official Defra figures,” said Bicknell.