PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 16:36 UK, 12th Feb 2014, by Agrimoney.com
Surprise UK wheat import rise fuels harvest doubts

UK wheat imports staged a surprise revival last month, while corn buy-ins hit their highest in at least 21 years, raising doubts as to whether domestic grain supplies are as high as the market has thought.

The UK the European Union's third-ranked wheat producer, and usually a net exporter bought in 163,602 tonnes of the grain in December, customs data showed.

While down by nearly one-half year on year, the figure defied expectations of a declining trend in UK wheat imports, after a 2013 harvest which while weak on volume, officially pegged at 11.9m tonnes, showed a vast improvement on quality on the 2012 crop, which was hurt by persistent rains.

The December figure was up more than 34,000 tonnes month on month, besides far exceeding exports, which came in below 60,000 tonnes.

Overstated harvest?

Indeed, the extent of the imports largely from Germany and Canada, origins for hard milling wheat - raised questions over whether UK wheat supplies are as strong as has been thought.

"The puzzling thing is that milling wheat premiums have risen strongly," more than doubling to £27 a tonne since Christmas, "but that has still not attracted domestic supplies," one trader told Agrimoney.com.

"Farmers are now getting about £180 a tonne for milling wheat. That is not a bad price. It makes you wonder whether the wheat is there in the first place.

"It is entirely possible that last year's harvest is not 11.9m tonnes but something smaller," with the difficulties surrounding the crop - for which autumn plantings were severely hampered by rains, with much of what was sown flooded making it harder than normal to get an accurate picture of.

'Foul weather'

Another trader told Agrimoney.com of surprise that domestic sales have not been more forthcoming, but said it could be a reflection of the return of heavy rains, which landed much of southern England with its wettest January on record.

"It may be that farmers are looking at the foul weather and thinking that this year's crop is not going to be right, which will push prices up for what they have in the barn."

However, the trader forecast that imports would indeed resume their downward trend early this year, with a potential pick-up in exports.

One major UK commodities house said that a premium of £18 a tonne between prices in Scotland, a major wheat buyer for the distilling industry, and those in the main eastern England producing regions may play out in a rise in both imports and exports.

"Ideally, wheat supplies in East Anglia would be moved to the far north. Unfortunately, even if haulage rates calculate, there are simply not enough trucks to carry out these long hauls," with shipping only working on some routes.

"Consequently we may see more exports from the southeast to the near Continent and Ireland whilst imports from further north in Europe arrive in Scotland," the commodities house said.

Corn import record?

In the feed market too, UK buyers are turning to imports too, but of corn as a substitute for wheat, in what could be seen as a sign of relatively short supplies here too.

The UK imported 388,939 tonnes of corn in December, up 74% year on year, and the highest monthly total on records going back to 1992-93.

Besides being used as livestock feed, there is also talk of the UK bioethanol plants viewing the grain increasingly as a viable alternative to feed wheat and experimenting with higher corn ratios a fact reflected in a lack of details over co-products, such as distillers' grains, being reported by buyers.

The increase in corn imports is also seen in part as a reflection of Ukraine's growing status as a corn exporter, creating a large source of the grain, at competitive prices, on Europe's doorstep.

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