David Eudall, senior analyst for cereals and oilseeds at AHDB, told BakeryAndSnacks.com that the theme for wheat prices throughout 2012 would be “uncertainty”.
Prices were down before Christmas, but since then dry weather in South America has impacted the maize market which has had a knock on effect on wheat prices, he explained.
Although wheat crops were not directly affected by the drought, wheat is currently reflecting the maize market as global stocks of maize are currently low.
Blame it on the weatherman
“It’s a weather market that everyone is concentrating on,” said Eudall.
More rainfall in South America is thought to lead to a better maize crop, which would impact upon wheat prices.
Dry conditions would lead to low maize stocks which would create volatility in wheat prices.
He said bakery and snacks manufacturers would be well advised to monitor the grain market as a whole and closely observe the macroeconomic picture.
Jack Watts, another senior analyst for cereals and oilseeds at ADHB, had previously said that wheat prices would be lower in 2012 at a conference last month before the dry conditions hit South America.
“Prices for 2012 seem to be somewhat weaker for 2012. We have seen this downward pressure on prices for 2012, certainly since the crop was gone in the ground in September  the price has fallen £20 per tonne,” he said in December. [video available here]
Look out for July
Eudall said that the US was a key area for the world and had experienced two consecutive growing seasons with poor weather.
The US yield of maize will come in July. A poor yield would prevent a replenishment of global maize stocks and drive up prices for wheat, while a strong yield would push prices lower.
As of today, May 12 LIFFE wheat futures are up to £154.50 per tonne driven by fears for developing crops in Brazil and Argentina.