“With a big UK feed wheat crop this year, we would have expected domestic feed manufacturers to replace imported corn with home-grown wheat in their formulations.
However, while wheat has certainly gone back into UK animal diets, and barley usage by that sector is down significantly, maize has not been knocked out entirely from feed use.
It would appear that UK feed wheat has been unable to compete with EU sourced maize on price, given the record EU maize crop this year.
But another factor to consider here is that livestock producers have adjusted their animal’s diets over the past few years to include higher quantities of corn, given the limited availability of UK feed wheat previously, and they could, perhaps, be reluctant at this juncture to reformulate a diet that has been delivering in terms of animal productivity," Helen Plant, senior analyst, cereals and oilseeds, with Agriculture and Horticulture Development Board (AHDB) Market Intelligence, told FeedNavigator.
In recent data from the UK’s HM Revenue and Customs (HMRC) for November, maize imports were 231Kt with the season total brought to 717Kt.
At the same time, the HMRC data showed wheat exports for November were down 12Kt in comparison to October, although the UK remained a net exporter.
Plant says substantial UK feed wheat exports are now required to reduce the potential carry over into 2015/16. However, she notes that a weakening euro against Sterling is making UK wheat less competitive on the European market.
“Our main export market is Europe so, evidently, UK prices will have to follow European values in order to stimulate exports and avoid grain surplus,” she said.
International wheat futures
This week saw the value of UK feed wheat futures decline, hitting a two month low. May 2015 UK feed wheat futures closed at £130.50/t on Tuesday, a drop of £3.15 on the previous week.
May 2015 Chicago wheat was also down $4.50 on last week at $198.30/t. However, the May 2015 Paris wheat bucked this trend somewhat being up €1 at €196.50/t after a rebound on Wednesday.
The euro hit a 10 year low against the US dollar this week as speculation grows that the European Central Bank is set to announce an economic stimulus package. Analysts say this is supportive of European markets, partially insulating them from the falls in global prices.
Ukraine grain exports
Meanwhile, reports of military incursions by Russia in Ukraine earlier this week have lent a certain amount of uncertainty to international grain markets.
“Politically, it is difficult to determine what will happen in the short term, even next week. We can’t yet predict what impact such tensions will have, if any, on availability of grain supplies from both countries,” said Olivier Bouillet, analyst with farm advisory agency, Agritel.
He said though that rumors abound that Ukraine’s agricultural ministry could impose restrictions next week on wheat exports due to the fact it is uncertain how much the next harvest in July will yield. “The authorities are said to be keeping a close eye on crop conditions,” said Bouillet.
Traders, he said, have already been asked to limit milling wheat exports to 200,000 tons per month in January and February, despite a large volume of wheat in stocks.
The Black Sea grain specialist said this season has seen Ukraine ship 8.5 million tons of all types of wheat out of a total surplus of 11 million tons.
Meanwhile, Arthur Marshall, another analyst with AHDB market intelligence, says that grain continues to flow out of Russia in advance of the impending export tariff introduction in February, albeit subject to the recently tightened customs regulations slowing shipments.