Wheat quality hopes up as combines push on
By Olivia Cooper
and Robert Harris
COMBINES have made the most of the recent dry spell in the main wheat growing areas, raising hopes that the potential record UK crop will compete on added-value export markets.
The fear was that quality, particularly Hagbergs, would be hit after last weeks rain. That would make selling the expected 4-4.5m tonne export surplus extremely difficult, and could drive prices down by as much as £7/t to match cheap feed grain from central and eastern European countries, where yields are put near last years record levels.
Some UK wheats have suffered. But, while merchants stress it is early days, recent samples suggest a variable crop, but with quality – and yield – holding up well in many areas.
Second wheats are struggling on Hagberg in some parts, says Dalgetys Trevor Harriman. But most soft wheats are better than expected. "We are definitely not writing off this crop. We are not looking at 16-17m tonnes of feed wheat. If we have the yield, we will have plenty of milling wheat, and enough grain to mix and match for export."
Much depends on the weather over the next few days. "By the middle of next week a hell of a lot of this crop will have been cut," says Mr Harriman.
Robert Kerr of Glencore Grain reckons about 40% of wheat is now in the barn in the south. "The last thing we want is rain. Much more of the crop will be vulnerable than was the case last week.
"The jury is still out. We have seen the odd regional dips with Hagbergs. But only if the overall exportable surplus is less than 74kg/hl, 180 Hagberg and 11% protein will premiums be unduly affected."
As-available feed wheat is worth about £52/t ex-farm. November values have risen by about £2/t, to £56/t, while Group 1 milling wheat premiums have widened to about £18/t.
Meanwhile, there are some positive signals on the world market which could support wheat export prices.
Drought has caused the US to cut its maize estimate by 10%, suggesting the smallest crop since 1995/96. The US usually supplies about 60% of world exports.
"This is a major, major event that has potentially enough impact to turn the market place around," says the Home-Grown Cereals Authoritys Gerald Mason.
US corn prices have rocketed by £10/t over the past fortnight, leaving traditional importers seeking cheaper origins like Ukraine and Russia. "If their prices benefit, then that will filter through to the UK market," says Mr Mason.
The US has also cut Canadas estimated milling wheat output by 5m tonnes, Australia by 3m tonnes and the US by almost 2m tonnes, again due to drought. Germany is downgrading much milling wheat after heavy rain.
French wheat quality is, so far, the best for several years, says Mr Mason. It is much cheaper than US wheat, and is cornering export markets like Egypt and north Africa. Export refunds are hardly required, so Brussels has made a very aggressive start to the season, granting 2.7m tonnes of export licenses since July 1.
Should UK wheat be of similar quality it could compete in the same markets, which could see soft wheat prices rise by £2-3/t, and hard wheat a bit more, says Banks Cargills Richard Whitlock. *