WHEAT PRICES must remain competitive if the UK is to successfully market its surplus stocks onto an oversupplied market, warn traders.
The future of the UK‘s 3.5m tonne exportable surplus came under further pressure this week (w/e Oct 8), as wet weather hit the Canadian harvest hard, downgrading much milling wheat to feed status.
Coupled with this, a bumper US corn crop looks set to dominate the global feed grains market.
At Allied Grain‘s annual harvest review in Peterborough, Cambs, group shipping trader Anthony Whitaker predicted a total UK wheat crop of 15.7m tonnes from this harvest.
He said if UK feed wheat did have to compete against maize grains into third country destinations, it would need to be priced at £55-£60/t loaded onto a ship – about £50/t ex-farm.
But he stressed this was a “worst case scenario”.
Cheap Canadian feed wheat exports to south-east Asia were another problem.
“Canada has been aggressively selling feed wheat off its west coast to cover sales to the Philippines and South Korea,” said Mr Whitaker.
Black Sea exporters could also now offer feed wheat to southern European destinations, he added.
“UK exports have reached 500,000t by the end of September helped by the relatively slow arrival of Black Sea wheat to Spain, but realistically, we need to hit 1.5m tonnes by Christmas.”
With a 28m tonne cereals surplus in the EU as a whole, and increased maize supplies from new EU accession countries, the outlook for the next few months was fairly bleak, said Mr Whitaker.
But the long-term outlook was more positive, said regional director Peter Jackson.
“Ex-farm values for November 2005 are about £65/t, and the Euro is relatively strong at the moment.
“Autumn milling premiums are often worth taking – another good reason for orderly marketing.”