PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 18:34 UK, 19th Sept 2013, by Agrimoney.com
UK wheat quality soars, but milling premium dips

UK farmers have come up with a far better quality crop, but that does not mean far better prices.

The proportion of UK wheat making full milling specifications for bread flour has recovered historic low of 4% last season, when crops were affected by the second wetter year on record, to 37% for the near-completed 2013 harvest, the HGCA crop bureau said.

"This year the domestic crop quality should be enough to meet all but the highest specifications," HGCA analyst Amandeep Kaur Purewal said.

The improvement reflects improvements across the board, in particular a rise to a 23-year-high of 334 seconds in the Hagberg falling number - boosted by the dryness which has speeded the harvest after a late start, and discouraged the sprouting which is reflected in lower figures.

While these findings are provisional, drawn from the first 40% of the harvest, which tends to include more of the higher quality varieties, "it seems likely that even if the Hagberg falling number falls when the final results are processed, it may still rank as one of the highest recorded," Ms Purewal said.

'Will provide support to prices'

However, the extent of the improvement means that milling premiums over feed wheat "are lower this year" - a squeeze compounded by the relatively small production of lower-quality grain.

The overall wheat harvest was constrained by a damp-affected autumn planting season, with official data on Thursday confirming that sowings in England, responsible for the vast majority of UK wheat output, fell 18.9% to 1.51m hectares this year.

"The proportion of feed grade wheat will be relatively lower, which will provide support to [feed] prices," a factor which "has already started to impact" the milling premium, Ms Purewal said.

'So many imports'

The premium is also being undermined by strong imports, which data on Wednesday showed continued in July to arrive in force.

While this was expected, given the lateness of this year's domestic harvest delaying the onset of fresh domestic supplies, "they were still coming in in August and we believe in September too", a UK trader told Agrimoney.com.

Some mills are said to have gained a taste for the consistency of foreign supplies.

"UK milling wheat quality is better, but its price is being hit because it is coming up against so many imports," the trader said, quoting the UK premium for full specification milling wheat at about £15 a tonne, less than half that reached last season.

By contrast, quality wheat is in short supply in the international market in general, a factor flagged by the likes of Australia's Abares crop bureau and the US Department of Agriculture.

'Struggled to find buyers'

Separately, Gleadell, the UK grain merchant, said that the July import data "confirm earlier projections that UK millers had secured 'quality' supplies through the harvest period July-September, to ensure consistency of product following the poor harvest of 2012.

"The reality of continued imports, and a general much-better-quality UK wheat crop has pressured milling premiums as UK supplies have struggled to find domestic buyers."

London feed wheat futures for November delivery closed up 0.4% at £151.85 a tonne in London, helped by firmer markets in Paris and Chicago.

RELATED ARTICLES
Canada nudges higher canola, wheat crop estimates
France to take lead in wheat exports to Egypt
UK wheat imports make bumper start to new season
Biofuels plants key to UK wheat price outlook
LINKS
Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events