Monday Market Briefing - 5th June 2023

We spent last Tuesday at this year’s Spanish Grain Bourse in Barcelona where we meet with millers and feed compounders to promote UK cereal exports. As you can see from the graphic, Spain are likely to have their worst ever cereal harvest due to lack of rain and extreme temperatures in Mar/Apr 2023. Current production forecast for this season is 9.11 mln MT. Naturally, we would expect demand for wheat to be good, and global grain prices to recover. However, global consumption is suffering from the cost-of-living crisis, and rising food inflation continues to hamper the affordability of products, including basic staples such as bread, flour, milk and eggs. Spanish food inflation is currently over 20% - even with the recent decline in energy values.

Therefore, Spain will be highly reliant on grain imports this season, which puts added pressure on port and warehousing facilities. All of the larger ports are exposed to delays from port worker strikes & breakdowns, and this may affect the ability to execute vessel unloading in an efficient manner. The UK can benefit from supplying coaster-sized vessels of milling wheat into smaller ports as an emergency buffer when the larger ports are busy. With Brazilian corn as the default feed grain before US corn becomes available, UK feed wheat is unlikely to price compete into foreign rations. With huge milling premiums available for new crop [full-spec at +£65/MT premium], UK growers should do everything they can to grow for quality, and make wheat crops more marketable.

Have a good week – and don’t forget to sign up for one of our Grain Marketing Breakfast meetings.