December 9, 2013

 

 

Highlighted by a good crop this year, the UK could return to being a net exporter of wheat for the 2014 crop.

 

UK farmers are set to just shy of two million hectares, a 22% increase on last year, according to an Agriculture and Horticulture Development Board/ Home Grown Cereals Authority (AHDB/ HGCA) survey, Graham Redman, partner and research economist at farm business consultant Andersons highlighted a good crop could reverse the recent trend of the UK being a net-importer.

 

Redman said, "The situation for wheat is we have had two years of being a net importer. In 2001 we were a net importer and the last two years we have been a net importer but two years next to each other is unusual."

 

He said, "It is quite possible if you look at long term trends. Every year since 1993 wheat production has been really flat but if you look at the trends of consumption we are consuming more and more."

 

Redman claimed the possible short-term change to a net exporter meant London International Financial Futures and Options Exchange (LIFFE) futures prices could see a downturn in relation to other futures markets, as wheat would need to be priced more competitively for the international marketplace.

 

Jake French, grain marketing consultant at Offre and Demande Agricole (ODA) UK, said, "You would usually see a difference of £10 (US$16) between LIFFE and Eurowheat. Over the last two years UK prices have been over Euronext prices, pricing in the fact we are going to have to pay for wheat to come into the country."

 

French explained the UK was already seeing a slide in the difference between UK and European futures for the November 14 price, the spot price around the time of next year's harvest.

 

He added that price is going back to a normal situation, so the market is factoring the fact UK will be a net exporter.

 

HGCA's autumn plating survey also highlighted the possibility of the second highest-ever oilseed crop. Jack Watts, senior analyst for grains and oilseeds at AHDB/ HGCA claimed the demand for other crop from China was meaning a competitive price and UK farmers had responded with this season's planting.