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 £10 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 £3-a-tonne difference to the wheat price," Savills said.

London wheat for January closed up £0.05 at £104.25 a tonne on Monday.