The Agricultural and Horticultural Development Board (AHDB) has confirmed that UK wheat prices are continuing to underperform, relative to 2023.
December is on track to be the seventh consecutive month that UK nearby feed wheat futures have been lower on the year.
The monthly average nearby UK feed wheat price for December is currently £179.88/t, 3% lower than December 2023.
Furthermore, the average nearby UK feed wheat futures price for 2024, as whole is currently £17.09/t lower than 2023 levels at £178.87 and a staggering £91.55/t lower than the 2022 average.
In fact, the current 2024 average price is the lowest since 2020.
AHDB analysts also point out that while globally, the supply and demand of wheat is somewhat finely balanced this season, there have been enough bearish factors to prevent a rally in prices.
Firstly, Russia has been quite literally sending wheat out by the boat load, at an extremely competitive price, which has been putting a dampener on markets.
Meanwhile, prospects for next season’s United States’ wheat crop have improved too, with much needed rains advancing crop conditions and alleviating concerns there.
Larger maize crops are also expected in 2024/25, weighing down on wheat markets.
Looking ahead, United States’ crop conditions have improved, and the market is expecting a bumper wheat harvest from Australia, along with large South American maize crops.
On the other hand, while EU wheat production is expected to return to more typical levels next season, the balance of supply and demand is expected to be tight.
A key issue for early 2025 is going to be United States’ policy changes following the inauguration of Trump in January.
There have been some concerns that substantial changes to policies around trade, tariffs and energy under the new administration could have a negative impact on United States’ agricultural markets and thus a watch point for global price movement.
On average, 2024 UK feed wheat prices are going to finish the year down on year earlier levels for the second year running.
As it stands at the moment, the sentiment in the market is somewhat neutral.
The sterling exchange rate against the euro is another factor impacting on UK grain prices at the present time.
According to AHDB analysts, sterling has tended to strengthen against the euro over the past four months.
During this period, from the low in August to the high last week, sterling has appreciated by 4.5% against the euro to £1 = €1.2134 (London Stock Exchange).
For UK farmers, this means that imports of EU cereals and oilseeds are more competitive and exports from the UK are not stimulated.
The current sterling-euro exchange rate is at its highest level for eight and a half years (since the day after the UK’s referendum on EU membership) and it is putting additional pressure on commodity prices.
