September 1, 2004

Slow UK 2004-05 Wheat Harvest Worsens Export Prospects

Delays to the U.K. 2004-05 wheat harvest due to rain is worsening export prospects to traditional U.K. grain destinations. Deteriorating quality is also adding to bearish pressure on feed wheat prices with feed wheat exports expected to be limited until end-December, sources said Tuesday.

A significant part of the milling wheat harvest will be downgraded to feed quality, so that the U.K. is unlikely to be able to supply its usual milling wheat buyers consistently.

Imports of milling wheat are set to rise, with Germany seen as one of the major suppliers to the U.K. during this marketing year, traders said.

As a result, U.K. growers and grain pools are currently holding on to quality milling wheat harvested in recent weeks in the hope of higher prices later in the campaign. Thus the milling/feed wheat premium has widened up to GBP24 a metric ton, basis delivered Liverpool, with feed wheat quoted at GBP69/ton for September, traders said.

As for feed wheat, quality has also been affected with the U.K.'s strong competitor, Black Sea feed wheat, posting better moisture and test weights, a trader said.

The U.K. so far has missed out on taking advantage of problems in getting Black Sea wheat to the ports for shipment to Spain and Italy among other destinations since U.K.'s harvest progress has been hampered by the bad weather, traders said.

The harvest delay is now running at two to three weeks, agronomist John Garstang, agronomist from the ADAS Centre for Sustainable Crop Management said.

However, Black Sea shipments will pick up soon and traders are expecting large tonnages at very low prices to come out of the region, thereby creating a bearish outlook for the U.K. export market.