The slide in grain prices has continued as we move into February. The latest AHDB Grain Market Report shows UK feed wheat futures (May-24) at £175.95/t, and the Nov-24 contract at £193.25/t, both considerably down from where they closed in January.
Domestic wheat futures followed global price movements on the back of weak global demand and falling Russian export prices. At the end of January, the price of 12.5% protein Russian wheat scheduled for FOB delivery in March was quoted at $235/t, down $3 from the week prior (LSEG).
Rapeseed prices also fell over the same period. Paris rapeseed futures (May-24) on February 1st were listed at €428.25/t, the Nov-24 contract at €428.00/t. Concerns over Chinese demand (LSEG) being a primary factor.
Oat outlook more positive
But it is better news with oats. The latest ex-farm Corn Returns data UK shows ex-farm milling oat prices reached a 19-month high at £252.20/t, up 5.8% from December’s average and up 14.4% from the same month last year. The premium of milling oats over feed oats for January reached £76.70/t, the highest recorded in at least 10 years.
With the milling market geared towards contracted supplies, particularly in England, spot ex-farm prices do not reflect the prices paid with contracts agreed 12 to 18 months ago.
The increase comes despite the discount to feed wheat and a firm premium over feed barley.
In AHDB’s latest UK supply and demand estimates published at the end of January, the total availability of oats for the 2023/24 season was estimated at 995 Kt, down 16% on the year, on the back of reduced opening stocks and a smaller crop.
Oat usage in animal feed was forecast down 21% at 278 Kt, partly due to the relative price of feed oats to other feed grains remaining high.
However, human and industrial consumption was forecast up 3% on the year, to 507 Kt. Despite reports of sluggish global demand for oat products, there are expectations of increased hulling losses from this season’s domestic crop, as well as increased capacity. This yearly uptick in demand, combined with reduced availability is likely the reason for the rise in milling oat prices, with the extent of the extra capacity continuing to be assessed throughout the season remainder.
Another factor influencing prices is a firm export campaign, with total exports this season currently forecast at 100 Kt, largely due to some demand on the continent from shortfalls in Scandinavian oat crops. This season to date (Jul-Nov), UK trade data shows oat exports totalled 57.8 Kt. The EU commission has also reported that up to 29 January, the EU had imported 76.2 Kt of UK origin oats.
For the remainder of the season, low availability and an uptick in milling demand in particular will likely keep milling prices elevated in at least the short term. While feed oats will also likely stay firm relative to other feed grains, the extent of this support will depend largely on ongoing export demand from the EU.
