End-of-season stocks worry wheat trade

By FWi staff

WITH the Pound reaching its highest level ever against the Euro earlier this week, traders are keeping a close eye on the wheat export market and the potential level of end-of-season stocks.

The Home-Grown Cereals Authority (HGCA) believes end-of-season stocks will reach 1.85 million tonnes so long as exports continue at levels seen in February and March.

That would be in line with official estimates from the Ministry of Agriculture

But some concern has been caused recently because UK exports appear to have stagnated at about 200,000 tonnes per month.

Any increase in shipments depends on whether UK wheat costs less in relation to supplies from other European countries, said Gerald Mason, HGCA economist.

Storage space has now been found for at least some of the 5m tonnes of wheat offered into intervention by French farmers.

That has helped push up prices and May futures in London closed yesterday (Tuesday) at £75.70/t for May and £77.15/t for July.

But whether the UK will maintain its export business is difficult to say.

Robert Kerr of Glencore grain is doubtful whether exports will be sustained until the end of the season.

“I dont see any new export business,” he said.

“Were trying to compete against the huge surplus in France and, with currency as strong as it is, the market is not at all bullish.”

British farmers are only really selling wheat at the moment to satisfy domestic demand, Mr Kerr added.

If the domestic market slips, values will have to fall £3-£4/t to achieve competitiveness on the export market, he said.

Last year exports only really picked up in May and June as the value of wheat fell to about £72/t, said Mr Kerr.

And unless a similar fall occurs, some producers may be forced to carry over any stocks into next season.

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