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UK may beat Saudi Arabia on wheat imports

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Farm officials are poised to revisit UK grains estimates amid ideas that they have underestimated the country's import needs, which may turn out more than those of Saudi Arabia.

The UK farming and environment ministry, Defra, will on Wednesday unveil fresh forecasts for UK cereals supply and demand in 2012-13, a season marred by a dismal harvest, with wheat yields at a 20-year low, and the lowest bushel weights on records.

The poor result has provoked ideas that the current Defra estimate of UK wheat imports of 2.0m tonnes, while a historically high figure, may be too low, after topping 1m tonnes in the first five months of the marketing year.

Import upgrade?

A major European commodities house "it looks as if the season [import] total will be above 2.5m tonnes", a figure which would top the 2.3m tonnes that Saudi Arabia is expected to import in 2012-13, according to US Department of Agriculture forecasts.

It would come in just short of the 2.7m-tonne buy-ins forecast for Iran, although these countries, as structural importers, will not export as much wheat as the UK over the season.

To judge by historical precedent, which shows that UK imports in the July-to-November period an average of 44% of total volumes for the whole marketing year, buy-ins should hit 2.3m-2.4m tonnes over the whole season, said the HGCA, which assists Defra on its cereals estimates.

"However, we are very much not in a typical year, so it is hard to know whether this will hold this time," HGCA senior analyst Charlotte Garbutt told Agrimoney.com.

"In a year like this, imports may not be linear," she said.

'No demand rationing'

The revisions come against a backdrop of apparently resilient demand, with wheat use by millers, starch and ethanol producers rising 9.8% to 2.72m tonnes in July-to-November period.

This figure has been boosted by the Ensus and VIvergo biofuel plants coming onstream, and the poor flour extraction rates the poor-quality wheat is offering mills, forcing them to use more.

Production of animal feedstuffs was, at 1.1m tonnes, 4.9% over the period than a year before.

"Data on usage in the first five months of the season does not yet show significant demand rationing," the HGCA said.

Wheat vs maize

However, it does reveal a switch in usage in feed from wheat to barley, which is relatively plentiful, and maize (corn) being imported from France and the Ukraine, Ms Garbutt said.

The commodities house said: "New crop Ukrainian maize is already trading into Europe and it could be bought delivered to the UK at about £165 a tonne, far below current UK wheat prices for autumn delivery.

"What's more, even old crop maize from the Black Sea looks cheap and we are getting to the stage when some feed manufacturers may take the step of switching to more maize, in the knowledge that they would benefit, not just for the rest of this season, but next season as well."

By Agrimoney.com

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