UK wheat prices drop as global supply surges

The monthly average nearby UK feed wheat price for December currently sits at £179.88/t, 3% lower than December 2023.

The average 2024 feed wheat futures price in the UK is currently £17.09/t lower than last year’s average of £178.87, and a significant £91.55/t down from 2022 levels. In fact, the 2024 price is the lowest since 2020.

AHDB analysts highlight that while global wheat supply and demand remain finely balanced this season, several bearish factors have prevented a price rally.

Russia has been flooding the market with wheat, offering it at highly competitive prices, which has weighed heavily on global prices. Additionally, improved weather conditions in the United States have alleviated concerns about next season’s wheat crop, with much-needed rains boosting crop prospects. On top of this, larger maize harvests are expected in 2024/25, further reducing demand for wheat.

Looking ahead, there are expectations for a bumper wheat harvest in Australia and large maize crops from South America, both of which could influence global wheat markets. While EU wheat production is expected to return to more typical levels, supply and demand will likely remain tight.

A key concern for 2025 is potential policy changes in the United States following the Donald Trump’s inauguration in January. There are worries that shifts in trade, tariffs, and energy policies under the new administration could negatively impact US agricultural markets, which in turn may affect global prices.

For UK farmers, 2024 feed wheat prices are set to close lower for the second consecutive year. The overall market sentiment remains neutral at present.

The strengthening of the pound against the euro is also impacting UK grain prices. Over the past four months, sterling has appreciated by 4.5%, reaching its highest level against the euro in eight and a half years.

This makes EU cereal imports more competitive, while UK exports are less stimulated. However, the stronger pound may reduce the cost of imports for UK farmers.