Wheat and barley export opportunities could be more difficult to come by this year if the UK crop fails to meet quality standards again, warn traders.
Alternative sources had to be found by many of our traditional overseas buyers in 2012 due to low specific weight and poor quality UK grain, they point out, so safeguarding these markets and finding other outlets is a key priority.
“In a typical year, the UK is a significant exporter of wheat to the European market,” confirms Stuart Shiells, trading director at Nidera, the company responsible for shipping over 20% of the UK’s wheat exports. “But after such a disappointing harvest in 2012, there are really no guarantees at all.”
Much will depend on forthcoming harvest quality, he stresses. “That means both the quality of our crop and those from other countries. Imports have been used to plug the quality gap this year, so the trade doesn’t want to see that happening again in a major way.”
As always, price will play its part. “Not surprisingly, UK new crop is looking expensive. We are expected to have a smaller wheat crop than usual, so we’re not competitive at the moment. But the situation is very fluid and past experience has shown us how quickly prices can change.”
A further consideration is that maize imports have risen and are expected to remain high, given the crop’s current price advantage over wheat, with implications for feed wheat usage and flow, he comments.
“At current levels, the UK won’t be exporting any feed wheat this year. Of course, we do have a considerable domestic requirement for wheat, especially if the biofuels plants are running in the north of the country.”
The most likely export markets for 2013 harvest are for the well-known UKS and UKP brands, suggests Mr Shiells. Spain, one of the largest buyers of soft wheat, has a preference for UKS, but has had to look for alternative supplies over the last 12 months, securing grain from the US, Russia, the Ukraine and other eastern European countries.
“Spain’s 2013 requirement will be down, as their own wheat crop is reported to be faring well,” he says. “What we need to do is seize the opportunities that we do get and keep that particular export market alive.
For growers, that means supplying Group 3 wheats and specified soft milling Group 4s, he adds. “Fortunately we are well placed, both geographically and corporately, to be able to do that.”
For Group 1 and 2 varieties, the situation is less clear cut. UK millers had to use a great deal of German wheat this year in place of sub-standard UK wheat and will continue to do so into the start of new crop, remarks Mr Shiells.
“Millers are always reluctant to make changes to the grist,” he explains. “And as long as German wheat remains cheaper than UK wheat, they will simply carry on for the time being. Our job is to find the opportunities when they do arise and react to them.”
This season, exports of UKP have been non-existent due to quality issues, he reports. Traditionally, UKP wheats make up a good proportion of our exportable surplus and consist of Group 1 and 2 varieties with a protein content of 11.5% or higher. “This is a good example of a market where it’s in our interests to make exports work. We don’t want to lose this on the back of one bad harvest.”
UK feed wheat has often been shipped to the Netherlands in the past, as well as to Ireland. “That’s very unlikely to happen this year, especially at the start of the season. With the Dutch market, it may take place later on in the year, so we’ll have to wait and see.”
Ireland, however, won’t be an export destination, he believes. “They’ve used maize instead, and will carry on doing so while the price is right.”
The situation with barley is different to that of wheat, reports his colleague, David Eudall. “We’re expecting a bigger crop, both of malting and feed barley.”
While it’s likely that more barley will be used by feed compounders, the traditional export markets will be very competitive given the extra supply, he suggests.
“Countries like Germany do have a requirement for barley for their specialist malts and we’ve had considerable success in the past. Of course, quality will be very important to any export campaign in 2013.”
Malting premiums could suffer due to the size of the crop, predicts Mr Eudall. “But there is good demand for barley which meets the requirement of Scottish distillers, providing it is low nitrogen and one of their preferred varieties.”
The UK markets two brands of wheat, UKP and UKS. These are used for international trade and make it easier to specify UK milling wheat.
- UKP – a blend of semi-hard varieties to suit both EU and non-EU breadmaking
- UKS – a blend of soft, extensible varieties well known throughout the EU for their biscuit-making and bread blending characteristics.