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Harvest Update - Friday 5th November 2004
UK Harvest
With Christmas fast approaching we face a period of strong seasonal
demand. The milling wheat market is, however, relatively quiet at the
moment with farmers still being reluctant sellers. Possibly the biggest
demand is coming from the feedwheat market, where an ongoing U.K. export
programme is providing strength to both the futures (LIFFE) and cash
markets. This has been aided by exporters of wheat from the Black Sea
regions finding it difficult to arrange shipping due to reduced freight
availability and increased cost. It will be interesting to see if this
demand can continue into 2005. Certainly the U.K. has the supply and
need for a good export programme.
Obtaining good quality is still the main hurdle in the milling wheat
market. Hagberg is the main focus, but specific weight and other miscellaneous
problems are a challenge we are having to tackle..
Imported wheat continues to be used as expected. Early in the season,
it was thought that German usage might see a big rise, but a tight freight
market has muted the supply. Coaster rates to the east coast U.K. from
the Baltic are up nearly 50% since the start of harvest. That means
the replacement value of imported wheat has risen, this raising the
current upper price limit for domestic milling wheat by £5/tonne
at port facilities. This firm freight situation is not likely to ease
in the coming weeks. The stronger euro is also having its impact.
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