UK wheat exports tumble as stocks grow thin

17th Jul 2012, by Agrimoney
UK wheat exports tumbled to their lowest in at least two years, as inventories began to run low – heralding the squeeze on old-crop supplies which drove prices back above £200 a tonne.

Wheat shipments from the European Union's third-ranked wheat producer reached 70,262 tonnes in May, down by nearly one-half on April's total, and indeed the lowest figure for at least two seasons.

The decline reflected a slump in exports outside the EU to a mere 246 tonnes, marking the end of a run of shipments to Algeria and the US.

However, shipments to other European countries fell too, notably to Spain, usually the top buyer of UK wheat, which took only 4,000 tonnes during the month.

'Historically low stocks'

The trade drop came in a period in which prospects for supplies of feed grains, which form a large part of the UK crop, appeared healthy, with the US looking set at the time for a record corn harvest.

Meanwhile, UK wheat supplies were running thin ahead of the harvest, with shipments having reached 2.24m tonnes by the end of April, not far short of an exportable surplus for 2011-12 estimated by agriculture officials at 2.45m tonnes.

This forecast assumed stocks closing the marketing year, at the end of last month, at a "historically low" 1.53m tonnes.

Harvest delays

In fact, UK wheat prices saw an end-of-season rally which took London's July futures to £210 a tonne, close to the record high of £222 a tonne, as rains provoked fears for a delayed harvest, and boosted demand for crop left over from last year.

FCStone commodity risk manager Jaime Nolan Miralles said on Tuesday: "Continuous rains and poor sunshine hours [will ensure] harvest will see delays of between two and three weeks.

"Quality will definitely underperform last year's averages," he added.