How to lock in premiums on milling wheat
2-MINUTE READ
When global uncertainty drives increased market volatility, milling premiums can move around more than many farmers expect, especially when you take regional variations into account. So how can you take advantage when an opportunity arises?
The premium for bread milling wheat over feed wheat, according to AHDB Corn Returns, stood at £13.30/tonne on 26 February. This represents a slight recovery from the single-digit lows seen around the turn of the year.
More importantly, the longer-term trend shows that premiums have been shrinking steadily since peaking at £79.50/tonne in June 2023.
Looking further back puts that peak into perspective. The unusually strong premiums seen between 2022 and 2024 were more the exception than the rule.
Monthly difference between spot ex-farm bread wheat and feed wheat prices according to AHDB Corn Returns
Between June 2015 and September 2021, milling premiums spent six years below £30. In only two months did the premium rise above £25, and it frequently dropped to single figures – hitting a low of £1.80/tonne in May 2017.
In other words, when good premiums appear, they don’t always stick around for long.
Why regional prices matter
It’s important not to rely too heavily on futures prices when judging milling wheat opportunities.
Paris milling wheat prices are influenced by factors specific to France, from weather patterns to regional logistics. Those signals don’t always translate directly into the UK physical market.
Check the latest milling wheat prices in your region via the Insights page on Hectare Trading. You can also test the market directly by listing your grain. This way you’ll see what a range of buyers are actually prepared to pay locally, rather than depending on theoretical benchmarks.
By selling your crop forward, you can also capture any carry in the market.
Lock in premiums with premium-only contracts
If milling premiums look attractive, one option is to use a premium-only contract.
This allows you to agree a premium on your 2026 crop now, while leaving the base price to be fixed later. Movement is then agreed at the point when the base price is set.
Premium-only contracts on Hectare Trading let you agree a premium for milling-grade wheat
Buyers can offer a minimum price only, a minimum and a maximum, or a fixed premium.
You simply review these offers in the same way you would any other listing, and there’s no obligation to trade unless the price works for you.
Manage quality risk with a feed base contract
Some milling wheat growers may want to fix prices early but hesitate because of the risk of missing specification at harvest.
Another option to try in this case is a feed base contract.
This locks in a feed wheat price upfront, giving you a guaranteed base. If the crop then meets milling spec at harvest, you receive a premium on top. If it doesn’t, you still receive the base price you locked in earlier.
It’s a way of securing a forward price without exposing yourself to quality risk.
Even feed wheat can earn premiums
One last but important detail: always include the full crop variety information in your listings.
Some buyers are looking for specific varieties and will pay extra, even for wheat that’s sold on a feed basis.
That means a crop you consider to be standard feed wheat could still attract an extra premium from the right buyer. The more detail you can provide, the more confidently buyers can price your grain.
Let the market compete for your grain
The unusually high milling premiums seen in 2023 show what’s possible when supply tightens, but history suggests they can fall back just as quickly. A premium available today may not be there later in the season.
By checking regional demand, testing the market with your own listings and using flexible contracts, you can manage both price and quality risk – giving you greater certainty over your marketing plan.
When you expose your grain to a wide range of buyers, you give the market the chance to compete. That’s often where the strongest premiums are found.
Track group 1 wheat premiums via the Insights on Hectare Trading. Or post a free listing to test the current market in your region.
This article is for general information only and is not an instruction to trade. While we make every effort to ensure the accuracy of the content at the time of publication, Hectare Trading makes no guarantee regarding the data provided.