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British wheat imports to soar as crop quality fails

Britain is on the hunt for high-quality bread wheat after 
domestic production and quality come up short

Reuters / Britain will be a net importer of wheat for the first time in a decade this year, turning customer to its traditional export rivals after a disease-ravaged harvest, much of which fails to meet the quality required for bread.

Traders and analysts said diseases fuelled by the wettest June since records began more than a century ago have left Britain, the European Union’s third-biggest producer, with a lot of wheat which fails to meet minimum quality standards required by industries such as flour milling.

“The expectation is we will import quite a lot more wheat in the current year, probably about double the normal level, and that is because the quality of what is available in the U.K. is much lower than normal,” said Alex Waugh, director general of the National Association of British and Irish Millers.

Britain normally imports about one million tonnes of high-quality wheat for the milling sector while exporting up to 2.5 million tonnes of lower-grade supplies, much of which is used in animal feed rations.

This season, imports look set to soar while there appears to be little interest from overseas buyers in Britain’s often substandard supplies.

Trader estimates for U.K. wheat imports this season range from about 1.8 million to 2.5 million tonnes.

“We’ve got an incredibly bizarre quality that has been produced in the U.K. which is causing a lot of problems for a lot of people,” one trader said.

Britain’s Farm Ministry earlier this month estimated that U.K. wheat yields have fallen to a 23-year low, citing high levels of disease and a lack of sunshine in the key grain-fill period.

The U.K. crop was estimated at 13.31 million tonnes, down 13 per cent from the prior season and well below the record 17.23 million harvested in 2008.

The low level of yields has been compounded by poor quality with specific weights, a measure of the density of wheat, particularly low.

“There is simply not the same amount of flour in the U.K. wheat as there would be in a normal year. So that is part of the reason for having to look overseas,” Waugh said.

Strategie Grains estimates that only about 10 per cent of this year’s British wheat crop is of milling standard against 27 per cent in 2011.

Looking far afield

Germany, France, the United States and Canada are the U.K.’s traditional suppliers but this year the net has been cast wider to include Lithuania, Denmark, Sweden and Poland, traders said.

“Initially there has been a bit of a hunt around to find what works best but the main sources are going to be Germany, France, Canada and the U.S.,” Waugh said, noting they had all supplied the U.K. market for years, though not in the quantities that will be needed this season.

Traders in Germany said British buyers have been in their market seeking both standard and higher protein grades.

“We have seen some purchases in the last month or so of several shiploads of between 1,500 to 3,000 tonnes from German Baltic Sea ports,” one German trader said.

“These are relatively small volumes but are probably being used as test blendings to see how the flour turns out. Talk is they were successful and I think we will see more substantial business in coming months,” the trader added.

The final level of imports will depend on the extent to which domestic consumers make use of the poor-quality U.K. wheat.

Some British traders noted biofuels producer Ensus has been willing to buy wheat with specific weights as low as 60 kilos per hectolitre, which probably only excludes the bottom five per cent of the crop.

“Ensus appears to be a friendly home for low specific weight wheat,” said Jack Watts, senior analyst with Britain’s Home-Grown Cereals Authority.

Traders said bioethanol producers outside Britain may also take a look if the price was right.

“No one (overseas) is interested in low-grade wheat at the moment because there is plenty of corn that is cheap but we’ve got nine or 10 months to go (until next year’s harvest),” one British trader said.

“It is going to be fascinating how it unfolds. This is a particularly unusual year,” the trader said.

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