Trade fears spark price surge

A combination of trade war fears and a predicted reduction in this year’s cereal harvest has seen wheat prices from the 2018 harvest in the UK rise a thumping £10 per tonne in the past week and that despite a firmer pound/ dollar exchange rate.

According to David Sheppard of grain merchants, Gleadells, the driver for the uplift in the wheat price in this country comes as a result of the yield potential of the UK crop being affected by the current heat wave.

Unless home demand takes a dramatic downward plunge, he reckoned that an estimated 14 million tonne crop from this year’s crop would, for the third consecutive season, place this country as a net importer of wheat.

European wheat prices have seen a similar rise in value in the past week as a hefty cut in the French wheat crop estimate last Friday was followed by a report that German farmers expect a poor harvest amid drought and record heat.

The head of Germany’s farmers’ association said that the country’s grain harvest is expected to fall to 41 million tonnes this year, down almost 20 per cent compared with 2017. He cited extreme conditions, particularly in the country’s north-eastern breadbasket state of Brandenburg.

Russia’s agriculture ministry reported that 5 per cent of the total area had been harvested, with early yields almost 15 per cent down year on year at 3.82 tonnes per hectare.

Meanwhile, across the Atlantic, traders are holding back until they know more about the tariffs which are being imposed on Chinese goods as well as any retaliatory action that might come from the Far East.