Global wheat prices have soared to new record highs, driven by a mix of political uncertainty and supply pressures.
India’s ban on wheat exports from the region has been the latest key market driver alongside the conflict in Ukraine and reduced global supply estimates.
Farmer’s Weekly spot wheat prices on Wednesday 18th May fell slightly by £1.78/t to a total of £326/t compared to the previous week.
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Meanwhile, UK May 2022 wheat futures contracts closed on Tuesday 17 May with a new high of £361/t, up £17.50/t from the previous week.
UK wheat futures for November 2022 contracts also rose sharply to a peak of £360/t on May 17 before closing at £351.5/t
Vikki Campbell, Manager of Arable Market Specialists at AHDB, said: “With the global supply situation being tight for both old and new crops and the UK being a net importer of wheat this season, feed wheat prices in the UK are very closely tied to the global prices to price movements.
Any global volatility, both up and down, will have a direct impact on UK prices.”
market leader
The Indian government announced a wheat export ban on May 14 to stem rising domestic prices after a period of exceptionally hot weather that has impacted crop quality.
It’s not yet known how long the ban will last, but some industry reports suggest it’s expected to last at least several months.
According to AHDB, exports from the region were previously expected to reach 10 million tonnes this season and the market is looking to India to meet some of the global demand for the remainder of the season.
According to analyst CRM Agri, the ban is not a blanket ban as governments can import, and Egypt has reportedly already agreed to an order of 0.5 million tonnes of Indian wheat.
Short supply
The latest US Department of Agriculture (USDA) report on Global Agricultural Supply and Demand Estimates forecasts lower global wheat supply for the 2022-23 season.
The USDA report also forecast global wheat stocks of 267 million tons by the end of the 2022-23 season, up from 280 million tons last year.
Jonathan Lane, Head of Grain Trading at ADM Agriculture, said: “While some figures from the USDA may be overly optimistic, the report has confirmed the expected supply shortages in the 2022-23 marketing season.
“Given the unfavorable weather or soil conditions in several major growing regions, not to mention the problems in the Black Sea region, further crop losses are likely. This should support values in the short and medium term.”
The USDA’s Crop Progress Report, released on May 16, also offered more support to global futures markets as the quality of the US winter wheat crop was downgraded slightly from the previous week.
demand for barley
Barley markets have generally followed the broader trend for wheat and as a result prices have been relatively well supported.
However, the gap between UK feed wheat and feed barley has started to widen in recent weeks.
Farmers Weekly farmgate feed barley prices averaged £304.44/t on 18 May, up £2/t from the previous week.
This was a discount of £21.50/t for wheat feed compared to a gap of just £5/t from the previous month.
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