February 16, 2011

UK wheat exports slow down amid high prices

The momentum of UK wheat exports has retarded, as high prices amid tightening supplies, may be starting to discourage buying.

The UK, the EU's third-ranked wheat producer, exported 266,162 tonnes of the grain in December, with Spain, the Netherlands and France the top destinations, customs data showed.

The figure was 40,000 tonnes higher than a year before, maintaining a string of trade improvements since Russia's export ban, and drought elsewhere in the former Soviet Union, forced buyers to seek out supplies elsewhere.

Tunisia, which did not import any wheat from the UK in 2009-10, imported nearly 24,000 tonnes in December, a third successive month of large purchases.

However, the UK's December figure was down nearly 40% on the November result, and well below the average of 330,000 tonnes for the first five months of the 2010-11 marketing year, which began in July.

It tallied with expectations of a rapid decline in the level of exports in the second half of the season.

FCStone analyst Jaime Nolan, forecast that the pace of exports would "slow sharply for the balance" of 2010-11, after already topping a UK government forecast of 1.3 million tonnes for the whole season.

"Price has been rationing demand since November," he said.

A similar dynamic looks likely to set in in other major European exporters too, such as France and Germany, he added.