Wheat Prices in the UK Continue to Drop Amid Abundant Global Supply

UK: In light of increased Wheat supply, decreased demand for cereals as animal feed, and the highest end-of-season Wheat inventories since 2016, UK grain prices are under pressure. The overall amount of Wheat available in the UK for the 2022–2023 season is 18.71 million tonnes, up 7.1% from the previous year, according to the most recent supply and demand projections from the AHDB. The increased demand for cereals from industrial and human use is expected to total 10.67 million tonnes in 2022–2023, a rise of 220,000 tonnes annually. This will be more than balanced by a bigger decline in demand for grains used in animal feed, which will fall by 336,000 tonnes to 12.88 million tonnes for the year.

Meanwhile, in the global market, according to the AHDB (The Agriculture and Horticulture Development Board), the May 2023 Chicago Wheat contract is about to hit a 16-month low this week, and both the Chicago and Paris grain futures are also down. Supply variations in the US, Argentina, and Russia are driving changes in global Wheat markets. According to the US Department of Agriculture, Wheat production prospects are improving due to recent rainfall that has helped alleviate drought conditions in certain important growing regions United States Department of Agriculture (USDA). Around 80% of durum Wheat and 60% of winter Wheat in the US were predicted to be in drought conditions earlier in January, according to USDA drought monitor data. Argentina, a significant exporter of Wheat, is currently experiencing some recovery because of recent rainfall.

This season, the UK has a sizable exportable grain surplus; thus, UK prices closely follow global market changes. Following a prolonged period of declining Wheat prices, livestock producers are starting to reap the rewards of lowering feed input costs. As producers try to use grazing and forage to minimize costs, the demand for feed from the livestock sector is anticipated to stay consistent. The head of poultry at a feed business also said that farmers were paying less for feed because of decreased Wheat prices.

As per the ChemAnalyst database, the price of Wheat is likely to decline, backed by the increase in supply in the domestic market of the UK. In addition, the prices are likely to decrease in the global market as well due to high production.