Wheat prices in London fought a negative lead from Chicago
after officials estimated the UK crop at 12.1m tonnes, lower than many
investors had expected after a late-season improvement in the weather, after a
London wheat futures for November, the spot contract, touched
£164.20 a tonne, a gain of 0.7% before easing back to £161.80 a tonne in lunchtime
deals, feeling the weight of a weaker market in Chicago, the world bellwether.
London futures for delivery further ahead managed to keep
hold of positive territory, with the January contract up 0.9% at £161.25 a
The performance followed the release by Defra, the UK farm ministry,
of an initial forecast for the UK wheat harvest of 12.1m tonnes, a 12-year low,
and down 8.5% year on year.
While farmers had expected a below-average harvest, following
persistent rains which forced many farmers to abandon some autumn plantings, expectations
had ticked higher after decent conditions for spring sowings and for much of
the following growing period, besides largely benign harvesting weather.
With anecdotal reports of strong yields, many commentators
had foreseen a result as high 12.5m tonnes, well above figures of 11.5m tonnes,
which would have been a 20-year low, talked of earlier in the season.
'False sense of security'
A grains analyst told Agrimoney.com: "The figure is a little
"Depending on how much has been imported over the summer,
when imports apparently continued pretty strong, it may mean buyers having to
pay a little bit more than they thought."
UK grain trader said: "The figure was lower than many people
thought, which was why you got that bounce in the futures.
"I think people had let themselves by lulled into a false
sense of security by all the talk of strong yields in the farming press, when a
lot of farmers were getting only average yields.
"I am not sure the acreage was there either that has been
talked about," with more land left fallow than many investors have factored in,
the trader said.
The final harvest estimate, still some weeks away, could
come in "more like 12m tonnes or below".
Jump in sowings?
However, the upside to the amount of land left fallow is
that it has, coupled with good sowing weather, allowed farmers to make a rapid
start to autumn sowings.
"We could be looking at 2m hectares," the trader said, a
figure last seen in 2008.
Defra also released an estimate for the barley forecast of
7.1m tonnes, a 16-year high, and seen as closer in line with market thinking.
Sowings of the grain were boosted by a switch by farmers to
spring crops thanks to the extent of land left vacant by the poor autumn – a dynamic
which has also left the UK looking at a surplus in oats which merchants have
warned may be difficult to shift.
Shipments of feed barley have begun 2013-14 at a strong pace,
Agrimoney.com has heard, exploiting the window before supplies from Australia