PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 12:43 UK, 27th Mar 2014, by Agrimoney.com
UK's record corn imports stoke wheat crop doubts

The UK upgraded further its estimate for corn imports to a record high, putting the country alongside the likes of Morocco and Vietnam in its buy-in volumes, and raising questions over the size of last year's wheat harvest.

The UK farm ministry, Defra, hiked by 284,000 tonnes to 2.01m tonnes its forecast for corn imports in 2013-14, putting them well ahead of last year's 1.69m tonnes.

The upgrade represented the second by Defra, which had initially expected a decline in imports this season from a high last year prompted by the poor quality of the 2012 domestic wheat crop, much of which was not deemed suitable for feed use except through mixing with higher quality grain.

However, the revision to the corn import forecast had been on the cards after monthly data showed them continuing to exceed expectations, topping 300,000 tonnes a month for the first time in December, and exceeding this figure again in January.

'High levels of imports'

The upgrade "reflects the high levels of imports seen for the season so far", the HGCA crop bureau said, flagging the elevated import volumes.

"Further large shipments are expected in February/March, with imports forecast to tail-off later in the season."

The forecast implies imports averaging roughly 280,000 tonnes for the final five months of 2013-14.

In fact, the upgrade was larger than expected by some traders that Agrimoney.com had spoken too, who had forecast a figure of about 1.8m-1.9m tonnes.

However, the HGCA highlighted follow-on exports of corn from the UK to Ireland, which are fuelling a forecast tripling in shipments to 218,000 tonnes for this season.

Corn vs wheat

The growing popularity of corn as a feed grain has been confirmed in official data showing it rising to 11% as a component in the average compound feed, encouraged by its discount to feed wheat.

Feed use accounts for the majority of UK corn use, expected at 1.22m tonnes this season, nearly double historic rates.

 "Corn has been priced at a discount of about 20 a tonne to wheat. Historically you have been looking at parity, so it's a no-brainer than people are going to use more corn," a UK grain trader told Agrimoney.com.

Market signal

However, while the discount is in part attributed to the increased supply of corn from Ukraine, on Europe's doorstep and from which there are no reports yet of export hiccups thanks to the Crimea crisis there are thoughts that another dynamic may be involved too.

"The market seems to be telling us that there is not as much wheat in the UK as the numbers tell us," the trader said, suggesting that the official estimate for last year's harvest of 11.9m tonnes represents an overestimate.

"Milling wheat is close to 200 a tonne even though we have imported a stack of it into the UK. And there is not much wheat be found on farms, anywhere.

"It is not like last year," when many growers hoarded wheat into May in, unfulfilled, expectation of higher prices.

Changes in buyers' habits?

An official source told Agrimoney.com acknowledged that market participants had expressed surprise at the high price of UK wheat, compared with levels which might be expected given supplies at levels suggested on paper.

However, given the poor quality of the 2012 harvest, and the low level of last year's crop, the apparent dearth of supplies may also be down to "people being more conscious of security, and not running on minimum stocks as they might have done in the past," the source said.

"People might be carrying a bit more in their reserves."

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