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Taste for foreign wheat keeps UK imports high

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UK wheat imports defied official expectations of a slowdown amid talk that consumers have gained a taste for foreign supplies which will prove difficult to shift even if the domestic harvest improves this year.

The UK, usually a net exporter of wheat, imported 255,785 tonnes of the grain in April, taking total buy-ins to 2.38m tonnes, far exceeding outward shipments of less than 609,000 tonnes.

The continued strong of pace imports, which showed a slight month-on-month increase, defied expectations from UK government officials of a slowdown as the 2013 harvest approaches.

Defra, the farm ministry, in last month upgrading to 2.54m tonnes its forecast for buy-ins in 2012-13, which ends this month, assumed that "imports will slow to 418,000 tonnes" over the last three months of the season.

In fact, while full-season UK imports may fall short of the 2.85m tonnes implied by the latest data - a figure within 15% of the Chinese or Moroccan purchases which move international markets – imports for May at least are expected to come in strong, with a large shipment to Avonmouth among those reported by traders.

Price factor

The increasing appetite for imports is in part a function of the expected delay to this year's UK harvest following a cold spring which slowed crop development.

UK wheat imports

2012-13 (Jul-Apr): 2.376m tonnes

2011-12: 907,032 tonnes

2010-11: 999,902 tonnes

2009-10: 1.240m tonnes

2008-09: 1,304m tonnes

Source: HM Customs

"We are already at levels where wheat can be shipped in from the Continent," the UK grain trading arm of a major European commodities house said.

"The UK's November feed wheat futures price is still at about the same level as the November milling wheat price in Paris."

'Cannot get the consistency'

While importers still need to pay transport costs on top, they are proving willing "to pay £20 more a tonne over UK wheat prices" for foreign supplies to ensure quality, and avoid the trouble of dealing with a domestic crop of poor quality following last year's rain-hit harvest.

"Bakers and millers just cannot get the consistency in UK wheat, and are avoiding the grief by buying abroad," a UK grain trader told Agrimoney.com.

"The protein is too high, but there is no lower-protein domestic stuff of suitable specification to blend it with.

"The elasticity is low. And it is giving low yields for flour because the bushel weight is so small."

Booking ahead

The demand from the milling industry for imported wheat is "inexorable" the trader said, adding that in feed too, for many "high performance" uses, such as laying hens, UK wheat is missing quality specifications, requiring it to be at least blended with imported supplies.

Main origins of UK wheat imports and (change on year)

1: Germany, 828,135 tonnes, (+590%)

2: France, 416,728 tonnes, (+263%)

3: Canada, 303,332 tonnes, (+26%)

4: Denmark, 152,955 tonnes, (+1,860%, 7,802 tonnes a year before)

5: Poland. 143,517 tonnes, (25 tonnes a year before)

6: Estonia, 91,371 tonnes, (0 tonnes a year before)

2012-13 (Jul-Apr): 8282008-09: 1,304m tonnes

Source: Agrimoney.com HM Customs. Data compare July-to-April periods

"Many have already ordered German imports for next season, well above what they would normally do."

German is a major European source of harder milling wheat, for which the UK has continued to rely on Canada too.

In the industrial sector, while the closure of the Ensus ethanol plant has cut demand from that site, Agrimoney.com has been informed of one large starch plant imposing a lower limit of 90% imported wheat.

London wheat for November stood 0.3% lower at £167.50 ($262) a tonne in lunchtime deals, when the Paris November contract stood 0.5% down at E195.75 a tonne (also equivalent to $262 a tonne, or $7.13 per bushel).

By Agrimoney.com

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