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AHDB Milling Wheat conference: Surplus wheat stocks could be on shaky ground

While 2017/18 has seen a record global wheat crop of 758.2 million tonnes, increasing reliance on wheat yield rather than area and potential lack of availability of stocks could bring tighter supplies.


Marianne   Curtis

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Marianne   Curtis
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Speaking at the AHDB Milling Wheat Conference, held in Cambridge, AHDB senior analyst Amandeep Kaur Purewal said the area used by top exporters to grow wheat had stagnated, with an reliance on yield to meet demand.

 

She said: “This increases the risk to supplies from bad weather.”

 

The global wheat stocks cushion is also lower than headlines might suggest, warned Ms Purewal.

 

“The stocks to use ratio of the top exporters is 25-26 per cent, a far cry from the level a decade ago [36 per cent],” she said. “If we include China, the world stocks to use ratio is falling. The proportion of stocks China holds is increasing and they are not necessarily accessible.”

 

 

 


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Domestically, the Defra/AHDB Early Bird Survey shows a continuing decline in winter wheat area with it forecast to decline two per cent year-on-year for harvest 2018.

 

“If yield is at or below the five-year average, we could have the lowest crop since 2013/14,” Ms Purewal added.

 

“This will leave relatively tight supplies and could affect the exportable surplus. We can’t assume the UK will be a net exporter of wheat. If anything, we are becoming an importer.”

 

Understanding markets key to milling wheat opportunities

Whatever the outcome of Brexit trade negotiations, better connection along the supply chain between farmers, merchants and processors is vital, according to Martin Savage of nabim.

 

“There needs to be a close dialogue between farmers, merchants and processors.”

 

Mr Savage outlined the possibilities for the UK to grow more wheat for the home market, substitute imports, and export. “However, the key to all of these will be to understand the market, achieve consistent high quality and reduce production costs.”

 

The UK imports nearly one million tonnes of milling wheat. While some, such as French wheat is for specific purposes such as making baguettes where provenance is important there is the opportunity for some substitution, said Mr Savage. “German A wheat could be substituted but it is less easy for German E. But varieties such as Edgar, Montana etc could replace German E. North American wheat has high quality protein, required for high quality bread applications and there is limited possibility for substitution.”

 

In terms of exports, Spain currently tops the list (15 per cent of wheat exports) with Algeria close behind it (14 per cent), said Mr Savage. “A tariff system would drive us away from these markets. Egypt is a very big buyer of wheat but it buys on price and Russia is only a Black Sea away.

 

“Jordan and Saudi are good potential buyers and payers but we face the same problem as for Egypt.”

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