Milling wheat premiums continue to fall: Grain market daily

• UK feed wheat futures (May-25) closed at £175.75/t yesterday, down £2.75/t from Friday’s close. The Nov-25 contract lost £2.65/t over the same period, ending the session at £190.20/t.
• Domestic wheat futures followed global prices down yesterday, pressured by weaker maize prices, as US import tariffs on goods from Canada, Mexico, and China take effect today, along with concerns about potential retaliation. Additional pressure came from Australia's 2024/25 wheat production estimate, which was increased by 2.2 Mt to 34.1 Mt, 31% higher than the previous year (ABARES). Chicago wheat and maize futures (May-25) dropped by 1.4% and 2.8% respectively, while Paris milling wheat fell by 1.5%.
• May-25 Paris rapeseed futures fell €5.50/t yesterday, closing at €527.25/t.
• European rapeseed prices were pressured by Chicago soybean prices yesterday, amid concerns about possible retaliation to US import tariffs. China, the largest buyer of US soybeans, could impact US soybean export demand with a countermeasure. The soybean harvest in Brazil, now at 50% of the planted area, is also putting pressure on prices.

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In January, the difference between the UK’s monthly average ex-farm spot prices for bread and feed wheat narrowed to £22.8/t, down from £24.50/t in December and £66.40/t in January last year. The gap remains significantly lower compared to the five-year average for January, which stands at £38.80/t. Since the start of the season in July 2024, ex-farm milling wheat prices have dropped each month, while feed wheat prices have fluctuated.

This is now the sixth consecutive month that the ex-farm milling premium has dropped since the season began, with a 62% decrease from July to January. More recently, milling premiums seem to have fallen even further. In the week ending 13 February 2025, UK spot ex-farm bread milling wheat was £23.30/t more expensive than feed wheat.

Delivered prices, which include haulage costs and other expenses, for old crop bread wheat have seen a decline in premium compared to feed wheat futures. Bread wheat for delivery into the North West in May 2025 was quoted at £222.00/t last Thursday, carrying a £44.50/t premium over May-25 futures. This is lower than the same time last year, when bread wheat for May 2024 delivery was priced at £92.00/t premium.

Competitively priced milling wheat imports have helped ease premiums. Limited domestic supply and lower protein levels this season led flour millers to rely more on imports. From July to December, the UK imported 1.70 Mt of wheat, 642 Kt more than last year and 74% above the five-year average. A large portion of these imports is milling quality, with Germany and Canada supplying over half. Of this, 616 Kt came from Germany and 286 Kt from Canada during the same period.

Demand remains very low even at these reduced premiums. This is largely due to the large amount of imported wheat already in the system, with flour millers having overbought. As a result, there are no new buyers, causing prices to continue dropping, while farmers hold off, waiting for the right time to sell. As noted in our January balance sheet, the pace of imports is expected to slow during the latter part of the season.

Global price pressure is also impacting domestic prices, driven by easing weather concerns in key producing regions, uncertainty over potential US import tariff countermeasures, and weak demand.

Looking ahead

As the season goes on, domestic premiums will probably continue to be shaped by how competitively priced imports are, with any countermeasures to US import tariffs being an important factor to watch.

Although production  is expected to rise this year, with our early bird survey showing a 5% increase in area, we are unlikely to reach the levels seen in 2019-2023 unless yields are above average. Given this, imports will likely remain steady, meaning premiums are unlikely to return to last year’s levels anytime soon.

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