Go with grain and sell?
Growers with old crop wheat to sell should take advantage of the current high price of £97 per tonne, said Grainfarmers' trader Simon Ingle.He said the current levels could prove to be another crest of a wave in current volatile commodity markets.
Growers with old crop wheat to sell should take advantage of the current high price of £97 per tonne, said Grainfarmers' trader Simon Ingle.
He said the current levels could prove to be another crest of a wave in current volatile commodity markets.
Mr Ingle, who is head of milling wheat, said that the rapid rise of £7 per tonne is a result of domestic supply and demand concerns.
"The tight end of season balance sheet has triggered short covering and consumer buying. This volatility is likely to continue as we move towards harvest, with uncertainty as to just how much unsold wheat is left on-farm to meet consumer needs."
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Prices have been further driven up by reports of frost damage to US plantings and exacerbated by the unseasonably dry, warm weather over northern Europe. Both these factors sparked fears of compromised yields.
While the global picture for wheat supplies does look potentially serious, it is early days yet, stressed Mr Ingle.
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"Global wheat stocks are at near-record lows, including Brussels having liquidated virtually all intervention wheat stock, and the potential for a return to a 25 million tonne Australian harvest must be in doubt as drought continues there.
"However, frost damage to the US crop could prove to be a myth, and in the UK, although crops could do with a drink, they are looking well and water tables were replenished over the winter. The picture is similar across Europe.
"Being temperate, the UK tends to have a fairly consistent crop. Also, plantings are up on last year by two to three per cent or even 4.6pc if Defra's figures prove correct - so the UK is likely to have a similar surplus to this year of approximately two million tonnes."
And that takes into account one million tonnes that the new Manchester starch plant is likely to require, and, despite being high profile, the market for wheat for bioethanol is still not signficant, he added.
"There is still a big gap between old and new crop prices, and as we get closer to harvest the two have to meet. Either new crop prices have to rise or, more likely, old crop prices have to fall.
"The headline message is tight supplies and volatility - particularly as we are in uncharted waters with the impact of climate change - and until crops are in the barn in the northern hemisphere there could be many things that cause rapid rises in price.
"If the rest of the season goes well though, these current prices could look fantastic. It's not just one way traffic."