The UK looks poised for a bumper wheat harvest, at a time when it has substantial amounts of the 2014 crop left over, raising the prospect for "horrible" prices – short-term, at least.
The UK may, for a second year running, reap a harvest of 16m tonnes, to go by early harvest results, many commentators say, well above early expectations, with ADM Germany as late as late month pegging the drop at 15.23m tonnes.
"Yields are just off the scale this year," one trader told Agrimoney.com, flagging reports of results above 5 tonnes per acres (equivalent to more than 12 tonnes per hectare, or 180 bushels per acre), although there are some ideas of dryness damage to crops in the key eastern wheat belt.
Traders at a major commodities house, while acknowledging that "people continue to talk" of a 16m-tonne harvest asked: "Is the crop really that good?
"Many on the eastern side of the country suggest not, because the second wheats, and those on lighter soils, are not doing well – unlike last season where crops under virtually all conditions thrived."
However, other observers point to a strong barley harvest, expected to end up showing a record yield, and the surprisingly strong wheat result too in neighbouring France, where officials this week pegged the harvest at a record high.
The prospect even of a half-decent crop looks like testing further UK storage already holding substantial production left over from last year's harvest, which was pegged by the farm ministry at 16.61m tonnes, some 2.0m tonnes ahead of domestic needs.
The UK was able to trade away only a small amount of that surplus, with data on Friday showing the UK managed net exports of a little under 270,000 tonnes in 2014-15 - well short of its historic trade performance, before the wet-devastated 2012 harvest, one effect of which was to introduce customers to other markets.
"There are 10s and 10s and 10s of thousands of tonnes of grain in store," the trader said, citing one silo which had been unable to take even 10 tonnes of barley on Monday.
The result could be a "rough six weeks" for the market, as it attempts to swallow new crop supplies, at a time of limited free storage, and with export demand hard to come by at the moment to.
"Prices at current levels are good enough to get wheat put on a boat, but there are not the customers," the trader said.
Frontier Agriculture, the UK grain trader part owned by Cargill, noting that "the significant old crop carry over has left the UK market oversupplied ", also highlighted that "export opportunities are scarce and millers remain mostly on the sidelines".
The result could be that "we get six weeks of horrible prices", the trader said.
Why only six weeks?
One big hope for UK farmers, big producers of lower-quality wheat, is that the European corn crop, lives down to recent expectations, forcing buyers to switch to other feed grains.
There has been some talk of an EU corn harvest as low as 60m tonnes after officials in France, the bloc's top corn producer, pegged the drought-hit domestic crop at a six-year low.
"The first time London wheat futures approached £200 tonne was after the maize crop failed in France," the trader said.
While imported Ukrainian corn looks an obvious alternative, expectations for this harvest have been reduced by heat too.
Furthermore, there are some ideas that much of the wheat in storage has already been sold, as buyers exploited the carry in the market earlier in the year, which at the time more than covered the cost of storing grain for a few months.
The exit of this wheat would at least free up storage space, and potentially start the process of uncovering fresh demand.
Still, some observers do believe that threat of weaker prices may last longer than the end of next month, without perhaps a drop in sterling to improve UK export competitiveness.
"With stores still carrying old crop grain and no export competitiveness, I am firmly of the view that the harvest burden from forced sellers will put more downward pressure on prices for the next few months," said Richard Whitlock.
By Mike Verdin