Wheat exports essential this year but to where?

By Vicky Houchin

TURMOIL in Russia, along with significant downturns in the fortunes of Asia – the worlds biggest wheat and corn buyer – have helped drive world prices down to a 21-year low, said crop marketing development manager, Gary Hutchins at the annual Dalgety Harvest Review.

This has been made worse by the aggressive marketing of South American crops and the prospects of large crops in North America and here in Europe.

But with the wheat surpluses that are to be expected in the UK this year, it will be necessary to turn to exports. While there is still wheat out in the field in the north and Scotland, 80% of the English crop has been gathered ahead of the rain, which, with the prospect of exports, allows some comfort. On the whole, the UK has export-quality feed wheat.

Mr Hutchins reported that, despite a very slow start, there were indications that export figures for August and September would be reasonably buoyant. Despite a larger wheat harvest, traders were more confident than in 1997 that export should not be too difficult. This is based on the UKs current price competitiveness and good quality.

Within Europe, the Iberian Peninsula is, again, expected to be the biggest buyers. “Spain could take up to 950,000 tonnes and Portugal up to 350,000. Italy should take around 550,000 tonnes, while there is a potential to sell Class 2 wheats to Holland, Belgium and Denmark because of the quality,” said Mr Hutchins.

The troubles in Russia, along with the possibility of their cereal crop being down 20 million tonnes on 1997, might lead one to believe that the UK had a ready market, said Mr Hutchins. But, even if the Russians are able to pay for our exports, they appear to have reasonable stocks.

Despite earlier anticipations that Chinas harvest would be down by 14 million tonnes due to flooding and bad weather, export prospects look poor.

In the end, it may all fall down to the strategy that the European Commission chooses= when faced with stocks that could climb to over 20 million tonnes by the end of the season.

“While we are not here to second-guess the Commission, we can safely assume that, confronted with what looks to be a record EU crop and, even with 10% set-aside, the prospects of another large crop next year, they must be wishing that Agenda 2000 was in fact Agenda 1999, thus allowing them to manage the problem earlier,” concluded Mr Hutchins.

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