Last week, the US Department of Agriculture (USDA) published its WASDE (World Agriculture Supply and Demand Estimates) report, noting that global wheat supplies were up 6.6m tons.
Speaking to BakeryandSnacks.com, Helen Plant, senior market analyst at the UK’s Agriculture and Horticulture Development Board (AHDB), said wheat production had hit new records.
However, demand was not enough to absorb all the extra production, she said, causing surplus wheat stocks and putting pressure on prices.
This was a major turnaround compared to the past few years, she said.
“It’s quite a contrast, we’ve now had two years of relatively good, even very good at times, weather conditions and that’s really replenished supplies after two years where we were looking at production-demand deficit.”
France ‘significant’ wheat quality drop
However, there were clear challenges this year despite improved supply, Plant warned.
“One of the challenges this year has been, or is becoming… there is a quality issue emerging.”
This, she said, was keeping milling wheat prices at a greater premium to the feed grade wheat compared to last year.
The main problem had been rain at harvest, particularly in France but also other parts of Europe and Ukraine, she said. “We are seeing overall the availability of the high quality wheat being impacted.”
France, for example, estimated provisionally that 59% of the wheat crop would be good or very good for milling; that compared to 95% in the previous year, she explained.
“Although you’ve got a greater supply of grains overall, the availability of the sort of quality end of the market certainly looks to be tighter.”
The France drop in quality was a significant drop, she said, but it was something that market had been monitoring since early July, she said. Persistent rain had been a cause for concern throughout this harvest, she said.
“It’s only now as you get after-harvest finish that the statistics come out to back it up.”
Plant said focus would now be turned to the US maize harvest which was in its early stages – about 4% complete but also the Australian wheat harvest which was at its critical yield-forming period.