UK wheat imports opened 2013-14 at their fastest pace in at least 22 years, confirming market talk of a lingering taste for foreign supplies which has spurred ideas of particular weakness among domestic prices.
The UK - which after a dismal harvest last year brought in 2.94m tonnes of wheat in 2012-13, the most since the 1970s - imported 328,511 tonnes in July, the first month of the new season, customs data showed.
That was the highest July figure since at least 1991, and confirmed market talk, which Agrimoney.com has previously reported, that imports remained strong despite prospects, which have been realised, of a far better UK crop this year.
In part, buyers purchased ahead for the summer because of the likelihood of a delayed UK harvest this year, a knock-on effect of a dismal autumn planting season and cold spring, which encouraged buyers to snap up foreign supplies ahead.
Preference for foreign wheat?
However, there is also talk that flour millers bought foreign supplies forward thanks to having enjoyed the consistency of imported wheat last season.
UK wheat imports in July were notably strong from Canada, at 50,211 tonnes, and Germany, at 103,741 tonnes – both countries noted suppliers of high quality milling wheat.
The extent of imports has fuelled ideas that the UK will be forced into substantial wheat exports to limit stockpiling despite, on paper, having produced less wheat than it needs to cover its own consumption this season.
This would, many traders believe, weigh on UK prices, which would be set to levels needed to compete on export markets, even against some tough competitors such as Black Sea shippers.
"The general view is that, because of the high level of imports, the UK will probably need to export something," traders at a major European commodities house said.
"But just how much is open to question," as is the type of wheat which will be exported, with the potential for ethanol plants to swallow extra lower-quality supplies, and leave the UK, typically a feed wheat exporter, with supplies of milling grade to sell.
"Feed wheat may actually not be in surplus, so it could be a mix of low grade milling and soft wheat" that is shipped, the traders said.
"The problem is that the whole of northern Europe has harvested a very good quality wheat crop this year," boding ill for premiums of milling grain over feed.
"Certainly, premiums for the lower protein wheats on the near Continent have fallen almost to zero."
Exports in July reached 31,631 tonnes, falling to low, but not unprecedented, levels ahead of the harvest. The UK, the third ranked European Union wheat producer, is typically a net exporter.
Net rapeseed imports
The customs data also showed the UK turning net importer of rapeseed in July, with buy-ins of 39,105 tonnes far exceeding exports of 4,616 tonnes.
This represented the first month of net rapeseed imports for three years, and follows some talk that the UK will, unusually, be unable in 2013-14 to meet domestic annual consumption needs of about 2m tonnes this year thanks to a harvest depleted by poor weather and pest attacks.
The US Department of Agriculture estimates the harvest at 2.0m tonnes, although results are deemed particularly difficult to gauge this year given uncertainty over how much crop was abandoned, even late in the growing season.
However, again, a buoyant start to US rapeseed imports in 2013-14 had been expected anyway, given the late domestic harvest.