The UK, once one of the European Union's top wheat
exporters, looks poised to be a net importer of the grain again this season, Gleadell
said, citing a harvest which has "largely disappointed".
The UK began 2017-18 as a net importer, buying in 155,497
tonnes in July, compared with exports of 16,254 tonnes.
But while there is often such an imbalance early in the
season, ahead of the onset of supplies from the domestic harvest, the trend of imports
exceeding exports looks set to hold, for what would be the fourth time in the
past six years
"It is evident that we will be a net importer again this season,"
the grain merchant said.
Historically, the UK has been a net wheat exporter, a
position it ceded only once up to 2011-12, on data going back to 1995-96.
On average, it was a net exporter of 1.7m tonnes over those
However, production of the grain has suffered from the
historic wetness of 2012, which in curtailing autumn sowings depressed the 2013
harvest too, and more lately by the battle against black grass, which has prompted
a shift to spring crops to create a longer window for applying pesticides.
Spring sowings continue to account for only a small
proportion of overall UK wheat seedings.
Meanwhile, domestic demand has increased, thanks largely to
the increased running rates of the Ensus and Vivergo ethanol plants, which have
capacity for more than 1m tonnes of wheat a year.
Gleadell said it was working on the UK harvest coming in at 14.5m
tonnes, or at the "top end" 15.0m tonnes.
"With crop often coming pretty wet off the field, one of the
big questions is where the harvest ends up by the time is has lost a percentage
through drying," Gleadell trader David Woodland told Agrimoney.com, although
adding that yields have "largely disappointed".
Meanwhile, the merchant was working on the prospect of a "slight
increase" year on year in consumption of wheat by ethanol plants, and a small
reduction in milling use.
Furthermore, Mr Woodland flagged the weak level of stocks entering
2017-18, a hangover from an enthusiastic start to last season for exports,
following on from a relatively weak harvest.
Indeed, he had expected the UK to prove an even larger net
importer in July, given the tendency of many consumers to guarantee supplies
through foreign purchases until they get a better idea of the quality and quantity
of the domestic harvest.
Wheat vs barley vs
However, the final trade balance will "depend to some extent
on farmer retention", and the availability of wheat on the market, Mr Woodland
Furthermore, there remain questions over the relative
popularity of grains in livestock rations, with barley "discounted heavily", at
some £12-20 a tonne below feed wheat.
Indeed, at CRM AgriCommodities, James Bolesworth was
sceptical over the prospect of the UK remaining a net wheat importer, thanks to
the likelihood of feed mills turning to other grains, including importer corn.
"Typically, corn imported from the European Union is at a
premium of about £10 a tonne to wheat," Mr Bolesworth said.
"However, at the moment the premium is at £2 a tonne, and
last week corn fell into a discount, of about £2-3 a tonne."
Still, Mr Bolesworth acknowledged that UK wheat was "not
competitively priced for export" at the moment, with the question of whether
the country will be a net importer or exporter indeed a key once for pricing.
Gleadell also said that "UK wheat is not competitive for export", flagging the revival in sterling, which "seems underpinned after its recent rally".
Being a net importer allows for significantly higher pricing
for domestic supplies, which have to exceed the price of rival foreign supplies
plus shipping costs before they become uncompetitive.
Still, with the European Union as a whole enjoying a better
harvest this year, and the Black Sea forecast to see record exports, Mr
Woodland said he was advising farmers "to sell a bit, to go into the market
when we do see a rally".