Marked differences in wheat output forecasts
AS the UKs wheat harvest app-roached the halfway point midweek, confusion still reigned over the likely tonnage that combines will cut.
Trade estimates range from 11m tonnes to 13m tonnes. David Balderson, of co-op Viking Cereals, favours the lower end of the scale. "I really dont think people have grasped how small this harvest is going to be.
"Reports of first wheat yields are 10-15% down, with second wheats 25% below last year. And the worst is yet to come."
Total wheat area is 20% down on last year at 1.68m ha (4.15m acres). If yields suffer a similar drop to 6.5t/ha (2.6t/acre), output would be 11m tonnes, the lowest since 1988.
But James Maw, of Glencore Grain, reckons yields are about 7-10% down on last year, bringing production to 12-12.5m tonnes. This would leave the UK with 1-1.5m tonnes of surplus to export.
"But it is not the crop size that is of most importance," says Mr Maw. "Everybody has become so bullish that they have forgotten to think what imports can do to the market."
Dalgetys Trevor Harriman agrees that imports, both into the UK and the EU, will affect the domestic market. "Danish wheat is about £4/t above domestic prices, but does calculate into Scotland and Ireland.
"There is also some cheap Black Sea wheat being touted around, which has already cornered much of the Spanish and Italian market."
European wheat prices have been undermined further by a lack of export interest. London wheat futures fell by £1/t on Tuesday, placing UK wheat at about £79/t ex-farm for November.
Milling wheat prices remain well supported, amid concerns over domestic quality. But the general feeling from the merchants is that most wheat is still of milling quality.
Group 1 wheat values have eased slightly to about £90/t ex-farm for September, as German 14% milling wheat is being imported at similar levels.
Gerald Mason, of the HGCA, says there are a host of reasons as to why the prices fall – or rise. "What really counts is to know what price you will need to keep in business for another year and set about getting that price." *