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October 9, 2018

UK wheat recovers and remains at its highest since the 2012/13 campaign

Despite a fall in price since August, Nov-18 LIFFE feed wheat futures contract settled higher for a third consecutive quarter, +8% in Q3 or +25% since the beginning of the year. Of course, world fundamentals and in particular the Russian rhetoric is lending support but our domestic wheat stocks set to be at their lowest since 2013/14 and the fragile Sterling are also very good reasons for the rally. On the physical market, after two weeks of consolidation, UK wheat prices pick up and range between ~£165 in the eastern/southern regions of England up to £175+ in Scotland, therefore still the highest since the 2012/13 campaign when wheat was trading closer to £190/T. The ongoing drought has led farmers to push back as much as possible their winter wheat plantings to tackle the widespread black grass issue whilst winter barley sowings are underway in very dry top soil condition. The less than £7/T spread between feed wheat and feed barley is a very compelling feature of the UK grain markets as it would imply that maize imports could rise very rapidly over the next few months. As it stands, it is the lowest level in 8 years for this time of the season and compares to a 5-year average of nearly £14/T. Malting barley premiums are also on the rise, standing above £40/T nationally compared to ~£20/T on a 5-year average. There is simply not enough ‘good stuff’ this year not just in the UK but in the rest of the world.

Rapeseed crops, when emerged or not decimated by flea beetles, have highly benefited from the recent showers although it continues to struggle in many locations due to the drought with farmers having made the decision to reduce their planted area to avoid inevitable crop failure