UK Wheat Exports Full Steam Ahead
14/12/10 -- Customs data out today reveals that the UK exported almost 325,000 MT of wheat in October. Despite frantic tugging on the emergency cord, that's only 70,000 MT less than in September, and now brings the marketing year to date total to almost 1.2 MMT.
That's just 100,000 MT shy of Defra's anticipated exportable surplus for the whole of the 2010/11 period just a third of the way through the MY.
How much further down the track this runaway train is going to career is anybodies guess. If it was to continue at this pace we'd be looking at a shocking 3.5-3.6 MMT by the end of June.
Now nobody is suggesting that that will happen, but the more realistic figure of 2 MMT that many in the trade have been talking about for the past month or so is perhaps now starting to also look too low.
From what I have been hearing November wasn't exactly a quiet month on the export front either. We could easily be looking at 1.6-1.7 MMT having been shipped out by the end of the calendar year, with fully six months of the season still remaining.
Could this prompt some sort of US-style regulation on UK (and/or EU) grain exports? After all, right now nobody actually knows the size of the existing commitments for the rest of the season do they? At least not collectively.
Nah, that sounds like far too sensible an idea to me, lets carry on muddling along in the dark with out of date information. It's always worked up until now.
London Wheat Surges To Fresh Highs
03/12/10 -- London wheat has me flipping back through the record books this morning after front month January opens GBP3.45 higher at GBP188.45/tonne. Not only is that a contract high, a close at that would be the highest since March 26th 2008. Which just happens to be my birthday!
The overnight Globex market now sees wheat up around 23-24c, posting gains of 75-85c since last Friday's close.
"There is clearly going to be a dearth of quality wheat available in the first half of 2011, with America looking like being the only volume long-holder," say Dow Jones Newswires today. I wonder where they read that? Oh, there it is just a bit lower down, says an observer.
There you go, you wait all this time then two free lunches come along in quick succession. They could at least call me Nogger rather than an observer, you'd have thought. Internationally renowned blogger, market analyst, divorce specialist and raconteur would be better, but I'd settle for Nogger.
We Couldn't Erm, Run Out Of Wheat Could We?
24/11/10 -- It's a startling thought, but could the UK actually run out of wheat this season? We all know that we've been exporting it like there's no tomorrow. Based on the most recent data we've got, at an average 285,000 MT a month during July/September. Scarily, export pace has been accelerating during this period, with 386,000 MT shipped out in September alone.
If we were to carry on exporting at 285,000 Mt/month then 3.4 MMT would have exited these shores by the end of the 2010/11 marketing year in June. That is more than Defra's projected 1.3 MMT of exports for the entire season plus their estimated 2 MMT of carryout combined.
Of course the customs data we have is now almost two months out of date. If I was a betting man, and conveniently I am, I'd wager that the pace of exports during October and November was at least in line with the average so far. That would mean we've already shipped 1.4 MMT so far this season, so we're ahead of Defra's full year target with seven months still left to go.
One report I read yesterday, quoting a leading protagonist in the trade, suggested that wheat exports this season could in fact be more like 2 MMT. He's clearly right, and let's face it he should have a better handle than most on how much his company have exported during these "missing" two months.
What nobody knows (yet) is how much everyone else has exported too.
Other questions spring to mind, like how accurate is Defra's estimate of a 2010 wheat crop of 14.8 MMT? Some suggest that the reality might have bene lower than that. In addition what many seem to be overlooking is how much wheat got sold off as whole crop this year? Far more than normal according to anecdotal reports I was hearing back in the summer.
All of this suggests a very tight supply line for UK wheat come the spring and early summer. Now I don't really believe that we will run out of wheat per se, the market should see to it that compounders substitute other raw materials into their rations instead where possible. However price needs to encourage them to do that, and that would suggest even higher levels yet to me.
Baby, Baby, Where Did Our Wheat Go?
17/11/10 -- Customs data out last night reveals that the UK has exported 854,000 MT of wheat during the first three months of the 2010/11 marketing year after 386,000 MT left our shores during September.
That's almost double the 441,000 MT that was exported during the same period in 2009. It also means that we've already shipped two thirds of what Defra expect us to export for the entire marketing year in the first quarter alone.
It certainly looks like things are going to be pretty tight come the spring. We might not be able to feed the animals (what few remain), but at least we can drive around in our 4x4's content in the knowledge that in doing so we are saving the planet though.
UK Wheat Harvest Likely Around 15 MMT
The UK wheat harvest is now 95% done say ADAS, with yields down 3-5% at 7.5-7.7 MT/ha. With a planted area of around 2 million ha this season, that would suggest a wheat crop of 15-15.4 MMT. Allowing for the fact that what is left to cut is mostly in the wilds of Scotland, let's go with a nice round figure at the low end of the scale of 15 MMT.
A contribution of a million tonnes in round figures is what we can expect from our Scottish, Welsh and Northern Irish brethren.
That would seem to suggest that the NFU were indeed guilty of talking their own book again earlier in the week with their English crop estimate of 13.5 MMT. To the tune of half a million tonnes, coincidentally exactly the same amount that they were on the low side with in 2009.
A crop of 15 MMT would be an increase of 4% on 2009.
Similar calculations using a winter barley yield of 6.2-6.3 MT/ha and a spring barley yield of 5.0-5.2 MT/ha suggest a combined UK crop of only 4.8 MMT this season, a 29% fall on last year.
UK Wheat: A North/South Divide Is Opening Up
The NFU's estimate of a English wheat crop of 13.5 MMT this year has got me thinking. Where is this stuff grown, and where is it all going?
Less than a quarter of last season's UK wheat crop was grown north of the M62, with Scotland, the North East, North West and Yorks/Humber regions producing 3.45 MMT of the UK's 14.4 MMT output.
Based on my calculations though, these regions accounted for 44% of UK wheat consumption in 2009/10, and that is only factoring in 300,000 MT of UK wheat going into bioethanol production.
Scotland, the North East and the North West are already wheat deficient. By the 2011/12 season with Vivergo in operation, even if it only operates at 50% of capacity, the Yorks/Humber region is also set to consume more wheat than it produces.
If Vivergo and Ensus were to run at full capacity in 2012/13 then the north of England would be something like 4.6 MMT wheat deficient based on current production rates. That's more than double what the region currently produces.
By then only three regions in the UK will produce more wheat than they consume: the West Midlands, the South West/Wales and the South East. That's not good news if you are a northern wheat consumer, but it's pretty damn sexy if you grow the stuff.
Of course we may have another player in the market by 2013: Vireol's GBP200 million Grimsby facility (that is unless the length of time taken to build their "exciting new website" directly correlates to how long the plant will take to construct).
By 2013 the average northern wheat grower could see his crop being fought over like the video for Frankie Goes To Hollywood's "Two Tribes" - except there will be three of them in the ring.
UK Beats Defra's Wheat Export Target In 2009/10
Figures out today reveal that the UK exported 2.43 MMT of wheat in 2009/10 (July/June), down by almost a third on 2008/09 but still some 230,000 MT above Defra's target for the marketing year.
Three cheers for the hapless Spanish, they were the main export home as usual. We managed to con them into taking 1.26 MMT of our "burdensome" stocks during the entire marketing year, that's up by a third on 2008/09. The muppets.
Pity we conned them at the bottom of the market though.
Still we did manage to stitch up the Philippines and Yanks too, erm that was also at the bottom of the market.
The Dutch then? Portuguese? We even kippered the Germans. What we sold to that lot at the bottom of the market as well?
Still at least we beat them in the football. Not the recent football obviously, I'm talking about the good old days when the refs could tell whether the ball was over the line or not.
Look, the bottom line is we managed to shift more tonnage than expected, at the bottom of the market I'll grant you, but we shifted it. It was getting burdensome. We were awash with the stinking stuff.
Get me the Spanish on line two..."No no senor, we sent you some wheat on holiday, we didn't sell it. No it was just going away for a couple of weeks and now we want it back. The line's gone dead..."
Exportable Surplus, What Exportable Surplus?
Defra have not so much moved the goalposts halfway through the game as set them on fire with the release yesterday of their
June Census figures pegging the English wheat area at 1.79 million hectares. An increase of only 98 thousand hectares (5.8%) on 2009.
Yet in March they told us that the UK planted wheat area was up 11.4%. It sad that it takes us until halfway through harvest to find out what was planted almost twelve months ago but there we have it.
With wheat yields being widely touted as down around 10% this year, and if Defra are right, then that would potentially leave us with an English wheat crop of only around 12.7 MMT this year.
Throw in a contribution of say 850,000 MT for the rest of the UK and talk of a domestic crop of 15 MMT+ is suddenly looking extremely unlikely.
Discuss.
UK Wheat Yield Expectations Cut
French analysts Strategie Grains have cut their UK wheat yield projections for 2010 from 7.96 MT/ha to 7.72 MT/ha. That equates to a 2.6% decrease on last season's average of 7.93 MT/ha, they say.
UK wheat production this year is pegged at just under 15.5 MMT, a 1.1 MMT increase on last year.
The UK barley crop is estimated at 5.3 MMT, comprising 2.36 MMT of winter barley and 2.94 MMT of spring barley. That represents a reduction in output of 21.7% this year.
England's spring barley was in a “disappointing state” they said, although they think that this will partially be offset by better conditions north of the border in Scotland.
UK Wheat
Variable seems to best describe the state of play, with what is looking like being only an average wheat crop at best this season. Although rains were forecast to finally arrive to the parched south east overnight, many are saying that they're too late to do much, if any, good.
All in all it hasn't been an ideal season: a dry autumn enabled good planting progress, but also caused late emergence. Follow that up with a hard cold winter, a dry spring leading to poor nitrogen uptake and then a heatwave means "we are lucky to have anything at all," one grower in the south east tells me.
His yields will be "at the bottom of our average, if we do not set a record low for recent years," he adds.
In his area 2nd and subsequent wheats are generally thin, and were a week or so behind in development before the hot weather hit. Rain now will not help these crops, he says.
Growers here seem to be gearing up to start harvesting wheat around the first week in August. Indeed there seems to be a feeling that rain now may slow things down rather than add anything to final yields.
Spot the continuous wheat field:
UK Wheat Exports
As was expected April was another decent month for UK wheat exports with 279,000 MT leaving our shores for mostly EU destinations. Spain was the largest home taking more than 50% of that.
That brings cumulative 2009/10 marketing year (July/June) exports to 2.01 MMT, leaving us on course to attain, or maybe even slightly exceed Defra's export target for the current season.
April barley exports were 95,000 MT, bringing total marketing year to date shipments to 913,000 MT against a Defra target of 1.2 MMT.
UK Set To Beat Defra Wheat Export Target
Figures released from Defra show that the UK exported 319,406 MT in March, a two thirds increase on February. That brings total wheat exports for the year to date to over 1.7 MMT.
With three months left to account for in the current July/June marketing year, we now only need to average just over 160,000 MT per month to hit Defra's target of 2.2 MMT for the entire marketing year.
With April also looking like it was a decent volume month, that should be more than comfortably achievable if the pound remains weaker than Bob Cratchit's offspring.
UK Wheat Exports To Beat Target?
The UK exported 191,000 MT of wheat in February, bringing total wheat exports for the year to date to 1.4 MMT, according to the latest Defra figures.
With four months left to go in the current July/June marketing year, we need to average 200,000 MT per month to hit Defra's target of 2.2 MMT for the entire marketing year.
That looks easily achievable I'd say once we get the March and April figures in, which will include some sizable "one-off" shipments to the Philippines and other exotic destinations. There's even a consignment of around 45,000 MT loading in Tilbury this week destined for the US, I understand.
It looks likely therefore that we will probably surpass exports of 2.2 MMT during the current season.
To the end of February Spain still remains our number one buyer, taking more than half of all exports, with Portugal, the Netherlands and Ireland bringing up the next three slots.
UK Wheat Export/Import Imbalance
The UK exported 164,492 MT of wheat in December, according to the latest customs data. That brings total exports for the 2009/10 marketing year to date to 953,594 MT, or 44% of Defra's UK target for the entire MY with six months remaining. Clearly the pace is going to have to increase somewhat to hit this season's full target of 2.161 MMT.
Conversely, the UK has already imported 734,191 MT of wheat in the first half of the marketing year, that is 76% of Defra's projected imports for the entire period of 968,000 MT.
Oh dear, it looks like we are going to import more than planned and export less.
Barley exports for the MY to date are at 491,956 MT, with a further 66,914 MT going into intervention as of Feb 11th.
UK Grain Exports Latest
The UK exported 172,402 MT of wheat in September, bringing the cumulative total for the marketing year which began on July 1st to 438,169 MT, say Defra.
You might recall that Defra recently pegged the UK exportable surplus at 2.16 MMT, although that inexplicably made no allowance for usage from the bioethanol sector.
With Ensus set to shift into production in January, there is clearly likely to be a significant hole made in that during the first half of 2010.
Exactly how big a hole that will be remains to be seen, Frontier's latest market report suggests that 450,000 MT might be close to the mark.
If they're right, then that leaves us with a surplus of 'only' around 140,000 MT per month to export during Oct 09/Jun 10, which would not appear to be an unachievable target by any stretch of the imagination.
We also exported 107,386 MT of barley in September, taking the current MY total to 263,437 MT, said Defra. That's slightly above last year's pace of 215,315 MT, but still leaves plenty to be exported or go into intervention.
Defra: UK Wheat/Barley Supply And Demand
Defra are out today with their latest UK cereal S&D numbers. They peg UK 2009/10 wheat production at 14.181 MMT and barley output at 6.747 MMT. For wheat that's a decrease of just over 3 MMT, or 18%. The barley harvest is up just over 600,000 MT, or 10%.
For wheat, domestic consumption levels are left relatively flat, and in line with the previous five year average at 13.678 MMT. That's the bit I don't get, their figures, as they state in their notes, take into no account whatsoever for bioethanol production increasing usage.
I know that the Ensus plant at Wilton has been a bit of a stop start affair, but surely they are going to run on something other than fresh air for the first half of 2010?
Even without any extra offtake from Ensus that leaves us with an exportable surplus of 2.161 MMT, 39% down on last season.
For barley, domestic consumption is also seen relatively flat and in line with the previous five year average, at just over 5 MMT. The big difference here however is that increased production, and a large carry-in, sees the exportable surplus rise almost 150% to just over 2 MMT.
I wonder if Ensus can run on barley?
Defra Peg UK Wheat Crop At 14.2 MMT
Defra say that the 2009 UK wheat crop was 14.2 MMT - 300,000 higher than the NFU's 13.9 MMT - but still 18% down on last season. Yields averaged 7.9 MT/ha they say.
They peg barley production at 6.7 MMT, also higher than the NFU's 6.33 MMT and 10% higher than last season, largely due to a significant switch into spring barley. Barley yields averaged 5.8 Mt/ha, they add.
OSR output was 1.9 MMT they say, broadly unchanged from last season's 1.98 MMT. Yields were better than last year at 3.4 MT/ha, they say.
These figures are Defra's first efforts at forecasting the 2009 harvest results, final UK figures won't be issued until January.
English Wheat Crop 12.9 MMT - NFU
The NFU say that this year's English wheat crop will only muster around 12.9 MMT on a combination of the very wet autumn planting conditions, a dry spring and persistent rains throughout July, August and September.
Without giving a specific figure, yields will be below the five year average of 7.8 MT/ha., they say.
"Second wheat was affected most by the poor growing conditions but first wheat yields were better then anticipated and have partly compensated. Quality is reported as good, particularly in first wheats with reasonable protein levels and good specification achieved by wheat growers across the country," they say.
Story here: Wheaty wheaty
UK Wheat Crop Might Only Be 14 MMT
Yesterday's Defra planting figures surprised the trade with the English wheat planted area coming in lower than had been expectied. Prior to that the only 'official' figures we had to go on were from the HGCA's spring planting survey. That pegged the English wheat area this season at 1.76 million ha.
As the Defra survey was conducted in June, we can only assume that it more accurately reflects what really went into the ground. They peg the English wheat area now at 1.6789 million hectares, the spring HGCA report says that plantings in Scotland were 90,600 ha. and in Wales 16,900 ha., if we still assume that they are correct that gives us a combined UK (excluding NI) area of 1.7864 million ha.
The latest ADAS harvest report says that wheat yields are set to come in close to average at 7.9 MT/ha., those figures combined would give us a UK wheat crop (excluding NI) of 14.11 MMT this season, 19.4% down on last year's bumper 17.5 MMT. That would be the third lowest production in the last fourteen years, beaten only by 2007/08 and 2001/02.
If we were to throw in a slightly lower yield for the Ginger Countries (7 MT/ha in Scotland and 6 MT/ha in Wales) that would bring us down to 14 MMT.
Playing Devil's Advocate With The Wheat Market
European wheat futures have edged up a tad now that the harvest is largely in the bin, with many farmers being reluctant sellers at current levels.
Having fallen thirty quid since the beginning of June, London wheat has had the temerity to post a little rise of GBP2.75 (currently) in the last two sessions, much to the angst of some.
"To be honest, the movement seems excessive and hard to explain. External factors are driving the market," one Reuters pundit bleats.
"It's very difficult to be anything but bearish," says another punter, adding that "Spain's dockside silos are already full to bursting".
Chuck in "It might rally a bit higher in the short term...but there's no bull argument for it," with a dash of "buyers are simply not prepared to bid any more".
All spoken like men who are maybe rather keener to buy than they might like to make out?
My response to all that would be what I call my Milk Link approach: "well if you already have a queue of sellers as long as your arm, what are you doing knocking on my door?"
There's a bit of a difference between the current market and twelve months ago, perhaps the most over-riding factor is that this year we've got the Eastern Europeans moaning about prices being below production too. They aren't such eager sellers themselves this time round.
If the buyers don't want to bid, sod 'em, let them come back when they do.
You can't load a boat with fresh air you know.
