Traders expect a record wheat harvest

By Robert Harris

COMBINES are harvesting one of the biggest wheat crops on record, according to first trade estimates. Most of the crop has been cleared in the midlands and all points south, giving the trade a good feel for the crop. Crucially, quality looks better than last year.

Forecasts suggest the crop could match, or even beat, the record 16.1m tonnes of 1996. The Home-Grown Cereals Authority, which forecast a repeat performance well before harvest, now reckons tonnage could climb.

The authoritys Gerald Mason suspects the “trend” yield of 7.9t/ha used in that calculation may be too low. “It looks like we could end up with a yield of 8t/ha.” That would produce 16.3 million tonnes.

Mark Buckingham, economist for Banks Agriculture, predicts 16m tonnes or slightly higher. Allied Grain is playing safe, suggesting 16-16.5m tonnes. “It is still too early for a firm figure,” says the companys Mark Hughes.

Aerial view of grain store
Grain bins are filling rapidly this season, according to the trade

Exports may have to rise by more than the extra output, notes Mr Buckingham. “Terrible trouble in the pig sector, and continuing problems with beef could see animal feed usage drop by 0.5m tonnes. We could have an exportable surplus of 5.5m tonnes.”

Poor quality in Germany is likely to pressure UK feed markets from northern ports. Mr Hughes expects most third world business to be spot trade, such as the recent 200,000 tonne purchase by Bangladesh. “As an exporter, you have to remain hopeful. We are still chasing business.”

Mr Buckingham maintains poor wheat quality in Denmark and Scandinavia, as well as Germany, will open up quality export markets in Europe. But a more stable Pound is needed. “With the Pound at DM2.90 we can do business. It is the volatility that makes doing a deal so difficult.”

With more quality wheats in the barn this season, farmers may be tempted by intervention. November prices should equate to £75/t ex-farm, about £2/t higher than Group 2 wheats will be worth on the open market.

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