Exporters have been racing to beat the Brexit deadline for UK wheat with ports in the south of England a hive of activity in recent days.
Harvest pressure has continued to weigh on the UK market, with farmers still reporting high yields as most in the southern half of the country finished their combining, according to Frontier’s Simon Ingle.
“Wheat production estimates vary widely; between 16 million tonnes and 17mt, but it would seem likely we will need to ship up to 2mt,” he said.
“It is this situation which has pushed UK wheat prices down, but, helped by weak sterling, this has enabled the trade to compete and secure essential export sales.”
Mr Ingle said this was proving a major test for the country’s logistics capability as exporters race to beat Brexit deadlines with most vessels headed for Spain.
He added that ‘technically oversold and perhaps having fallen too far relative to other origins’, UK futures had staged a small rally mid-week last week.
“The flow of wheat to ports will need to continue at a brisk pace to prevent the build-up of burdensome stocks,” he said.
AHDB’s James Webster said in a normal year, surplus wheat would find a home primarily in the EU.
“However, this year is far from normal,” he said.
He said the UK would need to export wheat beyond October 31 and it was highly likely to involve trade with the EU.
The tariff rate quota for wheat imports meant up to 2.5mt of low and medium quality wheat was accepted into the EU at a reduced tariff of €12/t (£10.75/t) each season.
With the EU having only imported 210,000t so far, the UK could potentially access this without a deal, albeit at a discount of €12/t (£10.75/t).
Outside the EU, Mr Webster highlighted UK trade would centre on Asia and North Africa, with the UK’s needs to trade with the EU then dependent on comparative pricing.
“Recent North African tenders have been in a similar range to where UK wheat is currently pricing,” he said.
“This limits the volume of UK wheat which needs to price into Europe with a €12/t tariff, limiting the Brexit risk for the crop.”
However, there would be non-tariff barriers, including meeting specifications such as a 14 per cent moisture basis, quality and the status of trade agreements with third countries.