Could the US, whose purchases of UK wheat rocketed last season, be about to return the complement?

UK grain merchants, typically focused on compiling grain cargos for export, are turning to looking at imports after a crop hurt by the wettest summer in a century.

The 2012 vintage looks like on production falling nearly 10% year on year to 13.80m tonnes, on estimates from grain trader Toepfer International, on a yield which was the worst for 20 years, and with one quality measure, specific weight, showing the lowest on records going back to 1977.

The shortfalls are throwing up some interesting dynamics, including imports of Ukrainian corn as feed, besides more traditional imports of German hard milling wheat to replace the UK Grade 1 supplies compromised by the poor weather.

It is also seeing talk of imports from the US to fill a particular hole in supplies of soft milling wheat.

The US was the country which in 2011-12, as a squeeze on domestic corn supplies began to bite, lifted its imports of UK feed wheat to 242,698 tonnes, from all of 3 tonnes the season before.

The imports were also well above the 60,000 tonnes or so that the US sent across the Atlantic the other way.

'Not very soft' soft wheat

"Millers are struggling to find anything in Europe to replace our Group 3 soft wheats," UK grain traders at a major European commodities house said.

"Some cargoes from Scandinavia have been tried but have been found to be not very soft," meaning premiums for UK home-grown supplies "have been rocketing", reaching some £15-20 per tonne.

The traders added: "The end may come when millers eventually look to the US for supplies," of soft red winter wheat, the type traded in Chicago.

Sure, it "is still relatively expensive against the UK market and it's not cheap to get it across the Atlantic," besides coming in cargos of 50,000 tonnes.

But "once millers bite the bullet, and buy the US wheat" in Panamax volumes, "they may lose interest in UK soft wheats altogether".

Undercut by Ukraine

At UK merchant Gleadell, trading manager Jonathan Lane said that such a trade was a "possible" but not yet, with soft red winter wheat likely to cost roughly £240 a tonne to deliver to a UK mill, some £15 a tonne above current domestic prices.

And the US does tend to ship the equivalent of a Panamax of wheat to the UK every year.

However, a closer call was in the feed market, the import of corn to replace feed wheat, with Ukraine maize being offered at £195 a tonne, the equivalent of a delivered price to feed customers of some £205 a tonne.

While undercutting feed wheat prices in many parts of the UK, such a deal does not appear a runner yet as mills, faced with the hassle of switching grains, are seeking a discount, of £5-10 a tonne.

There has also been some market talk of corn imports from Argentina, although given the threat of contamination with genetically modified varieties banned in the European Union "I do not think people will want to take a risk on South America", Mr Lane said.

'Little too complacent?'

The upshot is that "there is the threat" posed by the potential imports, "but we are not there yet" in it becoming a reality, Mr Lane said.

The major EU commodities house said: "UK growers may be in danger of becoming a little too complacent about the current high feed wheat prices."

Of course, many farmers themselves are more circumspect. "Traders trying to talk down the market – tell me something new," one told Agrimoney.com.

And one major co-operative is advising members to hold on for higher prices.

Still, it might pay holders of Group 3 milling wheat to keep an eye on grain shipping schedules from the US.