As February draws to a close grain prices slipped further on the back of political tensions and improving crop conditions.
The latest AHDB Grain Market Report show UK feed wheat futures fell over the week to £180.40/t. The Nov-25 contract also dipped, now at £193.75/t.
The cold weather experienced across a number of US states and parts of Russia hasn’t been as damaging as first estimated with some crops protected from the extreme cold by insulating snow cover.
May-25 Paris rapeseed futures stand at €531.50/t, a small gain from last week’s close. High demand for rapeseed in European markets, limited supply, and palm oil’s premium over other vegetable oils is helping maintain support.
Pressure on malting premiums
The premium of malting barley over feed barley is under pressure. Corn Returns data in the month of December (the latest available premium price), shows that the spot ex-farm malting barley premium over feed averaged £19.20/t. This is down from November, when the premium averaged £24.60/t, and November last year when it reached £66.70/t. Ample supply of UK malting barley, and relatively weaker demand, are both key factors weighing on the premium this marketing year.
This season, barley usage by the brewing, malting and distilling (BMD) sector totalled 892.7 Kt from July to December 2024 back 7.6 % on the same period last year.
Total cereals usage by the BMD sector is forecast to decline further season, as the cost of living leading to a downturn in demand and partly the longer-term trend of fewer younger people choosing to consume alcohol.
Retail volume sales of beer and lager remained flat during 2024 following challenging declines during 2023 (Kantar 52 w/e 29 December 2024). Mintel reported that moderation of alcohol consumption has grown since 2022 and is set to further increase in the near future.
Spirits volumes sales also continue to dip, with affordability a key consideration for consumers for which finances may remain tight.
Another bearish factor is sluggish export demand. Full season barley exports are forecast by the AHDB at 500 Kt, down by 36% from last season. Exports from July to December totalled 257.2 Kt, a 37% drop from last year (HMRC).
