News
22.12.2009
UK wheat farmers may be wise to sell now
UK farmers may be wise to sell wheat for both 2009 and 2010 harvests at current levels, Savills has said in a note foreseeing that two new ethanol plants will have a "relatively small" influence on prices.
For this year's wheat crop, "there would appear to be a greater likelihood of a fall in price than a rise", the UK-based land consultancy said, noting forecasts for growing global inventories.
These stocks look unlikely to dwindle even in 2010-11, given historical trends showing that years of rising plantings tend to be followed by further annual increases.
"The 50-year production and consumption trends for total grain suggest a small increase in stock following the 2010 harvest and consequently a small fall in price," Savills said in a cereals report.
"There is a slightly greater probability that supply will exceed demand than vice-versa."
Ethanol impact
Only a "very poor" world harvest next year was likely to return stocks to the 2007-08 levels which fostered a price rally.
The Ј10 premium that London futures prices were offering farmers for 2010 crops, compared with 2009 equivalents was a "very good price" compared with the average for the past decade.
While 2010 would see the full-scale opening of two UK wheat-based bioethanol plants, in the north of England, this would have a "relatively small positive" influence on prices.
"It is unlikely the plants will make more than a Ј3-a-tonne difference to the wheat price," Savills said.
London wheat for January closed up Ј0.05 at Ј104.25 a tonne on Monday.
Agrimoney
