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Traders frustrated by drawn-out UK wheat harvest

As the UK wheat harvest continues to progress, results are showing major regional differences in yields, specific weight and quality.

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It remains very hard to get a true picture of crop size or quality at this stage, according to Jonathan Lane, head of grain trading at ADM Agriculture.

 

“Spot demand continues to be evident for dry, available wheat of all grades and, to add to what has been a drawn-out frustrating harvest, a general lack of trucks is an ongoing issue for our sector as it is across the economy,” Lane said in ADM’s latest market report.

 

After trading near £200 earlier in the month, UK November new crop futures have been pressured by recent weakness in both the US and European markets.

 

Data for the UK 2020/21 marketing season is now complete, and even with wheat imports reported at just under 2.5 Mt, the carry-out was projected at a historically low figure of just under 1.1 Mt.

 

“This was due to an upsurge in animal and industrial usage during the last quarter of the marketing year as travel and social restrictions were slowly lifted,” said Lane.

 

“This coincided with tightness in the UK market during July and early August. However, spot premiums for ready-to-move wheat have steadily declined since.

 

“Looking at 2021/22, Defra has pegged the provisional English wheat crop area at 1.624M ha, lower than most trade views. This suggests a crop of slightly below 15 Mt.

 

“Given the expected increase in domestic demand, this would leave a more normal carry-out and an exportable surplus at best of just under 500,000t, which is certainly manageable.

 

“Earlier indications suggested the UK could tap into some lower milling quality exports given the demise of this season’s French wheat harvest, but reports show UK quality is generally lower on the year, especially in the south.

 

Until final yields and production can be obtained, UK futures are expected to follow the French market. With prices at historically high levels, we would still promote a little-and-often selling strategy to growers,” concluded Lane.

 

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