Tough time ahead for wheat exporters

Friday, 24 September, 1999

By Robert Harris

TOUGH, but not impossible is how merchant Dalgety describes the task facing UK wheat exporters this season, after a combination of record yields and wet weather produced a huge exportable surplus of feed quality grain.

The company reckons the crop averaged 8.58t/ha (3.47t/acre), based on a survey of more than 1000 farms, says commercial manager Trevor Harriman.  

But the area was, at 1.85 million ha (4.57m acres), slightly down on previous seasons.

This produced a UK total of 15.9m tonnes of wheat, just short of the 1996 record.

“From what looked like a promising start, this crop, in terms of quality, went downhill rapidly. With much of the class 2 and 3 wheats failing any milling specifications, disposal becomes more difficult,” says Mr Harriman.

He suspects millers will have to import at least 1.2m tonnes of wheat this season, about 400,000t more than in 1998/99.

Add the carry-in from last season and total available wheat rises to 18.65m tonnes.

Assuming usage follows his predictions (see diagram) and 1.45m tonnes is carried over into the 2000/01 campaign, there will be 4.45m tonnes available for export, says Mr Harriman.

That is over 1m tonnes more than last season. “But it is not an insurmountable figure and one which was achieved as recently as 1996/97.”

Nevertheless, it will be a challenge, says Gary Hutchings, crop marketing development manager.

“We could, once again, be competing for the scraps on the world and European marketing table.”

Most group 3 and 4 wheats, which make up the bulk of UK exports, were still in the fields when the rain started, says Mr Hutchings.

Hagbergs, typically around the 170-190 mark for the main varieties, exclude UK wheat from many export markets, particularly milling homes, he adds.

That means that UK wheat will have to compete for market share with maize and barley, hence the £7/t price drop since July, taking values down to $95/t, slightly cheaper than Danish and US supplies and only a $3/t premium to US maize.

Mr Hutchings doubts that EU countries will be able to absorb all of this grain. Third World trade requires licenses granted by the commission.

But, given the need to reduce intervention stocks ahead of next seasons price drop of 7.5%, and the fact that this is the last marketing year before the start of the next WTO talks, Mr Hutchings hopes the commission will keep exporting aggressively.

“We would pencil a total of 700,000t of Third Country exports,” he says.

Trade to Europe is more certain. “The year has started on a promising note with the potential for 750,000t of trade by the end of September,” says Mr Hutchings.

Up to 1.6m tonnes of feed wheat could go to drought-hit Spain, where barley yields fell by more than one-third.

Portugal could take a further 250,000t, similar to last year. Germany and France could take up to 500,000t between them.

Italy wants soft wheats with decent protein and Hagberg values, which could cut exports by one-third to 400,000t, says Mr Hutchings.