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Basic Payment Scheme figures cause confusion in UK grain markets

BPS figures caused confusion with a larger than expected divergence in wheat area from the June survey figures.

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BPS figures cause concern in the grain markets

Grain markets were trying to determine the ‘true area’ of wheat planted for harvest 2018, after Basic Payment Scheme (BPS) figures caused confusion with a larger than usual variance from the June Survey results at 6 per cent

 

With certainty needed in the grain markets, AHDB raised concerns of how the industry could confidently predict crop sizes in a post-Brexit world.


The supply and demand balance is ‘critical’ in ascertaining the requirements of trade, and therefore farmgate prices, with any confusion creating more volatility.


The wheat area was pegged at 1.560 million hectares - ‘quite a drop’ from what was expected, according to Frontier grain director Simon Christensen.

 

Difference


He said if the figures were correct it was about 900,000 tonnes of wheat, which would make a difference.


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David Woodland, Gleadell, said: “This data, which is subject to further investigation, showed a greater-than-normal divergence from the June survey estimate for the English wheat area.


“If correct, this would dramatically tighten the dynamics of the UK’s supply and demand balance sheet.”


Mr Christensen said Frontier did not believe the drop was as drastic as 6 per cent but did believe there was a lower wheat crop out there than they were working with previously.

He added: “If you go back 12 months, we had the same issue hit us, but it was three per cent difference, and again if you put your minds back, it was about March onwards the wheat market took off.”


However, he said demand pulls were different last year with two ethanol plants ‘churning through wheat’.

 

Ethanol


Mr Christensen said he did not see Vivergo, in Hull, opening again soon as the economics of ethanol production solely on wheat were ‘still pretty poor’, and he could not see the plant coming online in the short to medium term.


However, as Ensus, Teeside, ran on a blend of different commodities he expected it to be back in play at some stage.

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