Wheat growers must keep a keen eye on the futures
While recent jitters in the 2018 wheat futures market continued as the week progressed, growers should keep a careful eye on the 19 and 20 November prices with a view to hedging against Brexit uncertainty.
That was the message yesterday from the Agricultural and Horticultural Development Board (AHDB) economics division as the summer’s rise in wheat prices ran into considerable volatility this week. While there was some recovery from the £6 a tonne drop seen on Monday in the 18 November price, markets fell again yesterday – with experts blaming the reaction to rumoured developments in the Russian market.
While prices rose throughout the droughtridden summer on the back of production concerns – with Europe, Canada and Australia all likely to see significant drops in grain availability – prices rose again recently on the back of rumours that Russia was set to curb exports later in the year.
However, following denials from Russian government officials that such a move was imminent, prices moved sharply downwards. With the rumourmill in full flow, this was magnified by the possibility of traders increasing exports before any ban came into place.
Looking further to the future, AHDB market intelligence analyst james webster said that, although monitoring the 2018 futures was critical, producers should also keep a careful eye on the 2019 and 2020 prices: “Now that the majority of UK wheat has been harvested, farmers should take the time to consider their options for the 2019 crop. UK wheat futures have been trading in a narrower range this month, allowing time to consider a post Brexit certainty at what remains an above average price.” He
said that while the 2019 price had also fallen back slightly from the heights of summer, it was still £15.30/t above the average price for the contract.
He said that similarly, 20 November markets offered a potential opportunity to protect against uncertainty: “Although futures prices are currently below the contract average, the contract came online at a relatively strong point in the market (9 July 2018) and could still be worth consideration.”