Wheat hits record high as heat sparks supply fears
November wheat briefly touched £190 a tonne yesterday on the London futures market after the continued scorching weather and drought around the globe saw supply fears drive prices to a record high.
While some of these recent increases were driven by forecasts of a lower European harvest, the trade put yesterday’s rise down to the likelihood of a reduction in the US spring crop output which had earlier been predicted to be well up on the year.
Early figures had shown that while the US winter crop was expected to be down around 6 per cent on last year’s levels, higher levels of spring wheat plantings and better yields were expected to see overall US production rise by an estimated 8 per cent.
However early indications from the latest crop tour organised by the US Wheat Council revealed that, while spring crop yields were expected to be up on 2017 levels, they were still likely to fall below the five-year average.
Taken together with reports of lower than anticipated winter wheat yields in Russia from Sovecon earlier this week, which could see exports drop for the first time in six years – and with the continued downward revisions on the EU wheat production – the futures market has climbed by almost 20 pounds in recent weeks.
At an EU-28 wide level, the total wheat yield is now forecast 2.4 per cent below the five-year average, a reduction of 0.2t/ha from the previous reports published in June. The most adversely affected EU wheat yields are in countries boarding the Baltic and across northern and northern central Europe.
Sweltering conditions in northern parts of Europe have also sparked concerns for supplies of spring malting barley – with the hot and dry conditions leading to increased fears over yield and nitrogen levels in many of the main areas growing malting barley.
The Agricultural and Horticultural Development Board (AHDB) said that temperatures in northern Germany, Sweden, Denmark and the UK had been significantly above average over the past few months, and rainfall had been lacking – and as a result the French agency Stratégie Grains was predicting that there will now be no surplus spring malting barley in the EU in 201819 – when a notable surplus had previously been expected.
The AHDB said that while it was still too early to know the full impact of the dry weather on spring crops both in the UK and northern parts of the EU, reports were circulating that the dry conditions had seen buyers extending the premiumofspringmalting barley over feed barley.