Market Update 17th May 2024

The wheat futures have been on an upward trend since mid-February and peaked this week @ £225 for November with this bullish run the question is, has the organic market followed suit.  Theoretically yes but in practice only partially - values have risen slightly.  Most of the buyers are reasonably well covered and wheat remains in good supply and with the market only being a physical market buyers will only buy when they need to rather than responding to the futures movements.

So what are prospects for new crop?  There are some positive signs and the strength of the conventional market will push values upwards especially in a season that isn't anticipated to be very high yielding.  That said winter crops are looking pretty well.  Spring yields will be lower due to the late planting of most crops.  Also, a positive indicator is that milk values have been creeping higher and with fewer cows (following some de-certifications in the last year) cow numbers are lower and so dairy farmers will be encouraged to feed for a bit more yield.  A reversal on when rations were being cut to the bone to save costs as milk was plentiful.  So a strong conventional market and encouraging signs in the dairy sector should push values higher but as ever we will be subject to the value of imported supplies.  These are generally priced based on the conventional market so in theory this should be positive.  However, the imported market has become more competitive with Cefetra coming into the UK organic market.

The other challenging factor is the French market.  A large French coop recently reported a likely carry-over of 110,000 tonnes of feed grains.  The French market took a significant hit when inflation was high and as here the livestock sector saw de-certification leaving a lot of grain unsold.  Their values have been at very small premiums over conventional and we recently heard of new crop feed wheat trading at €290 delivered (£250).  If it stays at this price it would be competitive with Black Sea or Baltic origin grain. 

There is talk that some grain has been sold at £285 delivered but this seems cheap given the fundamentals described above.