Decrease in UK wheat exports protects prices
By Robert Harris
LESS wheat than expected will have to be exported from the UK this season to balance the books, according to latest ministry figures.
MAFFs balance sheet suggests just 3.2m tonnes will be available for export, about 200,000t less than last year and over 1m tonnes less than the top end of earlier trade forecasts.
It shows just over 17.7m tonnes of wheat is available this season. The harvest produced 15.1m tonnes, to which MAFF has added 1.5m tonnes of opening stocks and 1.1m tonnes of imports.
Just over 13m tonnes of this will be used in the UK, slightly less than last year due to a fall in animal feed use (to 6.1m tonnes) outweighing a slight increase by millers. But deducting expected end stocks of 1.5m tonnes from the remainder leaves the smaller exportable balance.
"At 3.2m tonnes, it is quite a bit lower than earlier estimates," says Gerald Mason of the Home-Grown Cereals Authority. But even allowing for MAFFs "confidence factor", which could increase its production forecast by 150,000t, and slight changes in usage, the figure is unlikely to exceed 3.5m tonnes, he says.
Latest figures suggest the UK will have exported about 1.2m tonnes of wheat by the end of November, slightly below last years 1.5m tonnes but still in line to shift the surplus, says Mr Mason.
Its good news, says Ian Douglas of Allied Grain. "At least prices wont fall any further. Were past the doom and gloom stage. We are on a par for quietly working our way through the crop."
Allied is loading almost 55,000t of wheat onto the first South Korean grain boat to berth at Tilbury for two years, he adds. "It is too early to say if it is a one-off. The South Koreans could take 250,000t of feed wheat without too much trouble. That would sort out our problem of poorer quality wheat."
But it is too early to predict a repeat of last seasons late price rally, says Martin Parry of Andover-based Group Cereal Services. "There is always a chance it might happen. Historically, the ministry have produced one of the more accurate crop forecasts, and last year it was lower than the trade thought."
But he believes that sterling also needs to weaken to tempt more buyers into the frame, and convert potential business into firm orders.