Wheat price risks alert

May 19 2005 By The Journal

You cannot afford to let up in the battle to manage price volatility in the market place. That was the key message from this year's HGCA Milling Wheat Conference.

Julian Bell, HGCA's senior economist, said: "Information on this year's world wheat crop is beginning to come through, but it is very early days and almost anything can happen at this stage. The market may move in a way no-one expects.

"Price volatility is a major risk and not just in the quality crop market. You need to keep an eye on the feed market and manage the milling premiums and feedbase separately."

The UK wheat area as a whole is expected to be similar to last year's but early indications are that the group one share is falling and group two plantings are significantly up.

Mr Bell said: "UK weather and plantings will determine the bread wheat premiums available. Last year the cereal quality survey showed substantial regional variations due to the effects of the wet weather at harvest time.

"In some parts of the country, millers paid more for domestic wheat than for the wheat they were importing."

The world wheat crop is expected to be lower than last year. Reports from Australia suggest that they are in desperate need of rain. Spain and Portugal are also vulnerable to drought.

Mr Bell said: "We are not isolated in terms of price. The world market has the potential to spring a surprise. Global weather remains key. A 50 million tonne swing in the world wheat crop is possible. Global wheat stocks remain low enough for a major crop problem to have a significant impact."