UK wheat hit by lack of export outlets

By FW staff

WHEAT prices slipped below £70/t for the first time since harvest in some parts of the country this week
as plentiful French supplies continued to undercut UK values.

Domestic demand is also weak. Export values
show little change over the next few months – there is little carry in the market.

“It”s a bit bearish. We need somewhere
in the region of 430,000t of export licences a week to the end of June to deal with the EU surplus.”

Even
then, UK wheat could struggle to find a buyer, he adds.

“The French are hammering wheat into intervention
where it suits, which leaves feeding type wheats which compete with the UK.”

At least Brussels is
continuing its more aggressive stance by granting export subsidies worth Euro33.48/t (£23/t) for 225,000t
of open market wheat last week. More than 5.5m tonnes of wheat export licences have now be granted since
the beginning of the marketing year. But homes remain scarce.

“To create new demand, EU wheat has to
price itself into a feed ration somewhere. But this means the Koreans could be buying wheat at around a
$10/t discount to maize,” says Gerald Mason of the HGCA.

For EU supplies to compete, the commission
would have to increase export subsidies by $8/t (£5/t), he reckons.

The UK domestic market fares little
better, with consumers having bought more than enough to meet their needs. As a result there is only 90p/t
difference in the value of March and May futures.