LONDON: Britain wheat crop is on track to be its highest in at least six years, ensuring the country's return as a net exporter after a two-season hiatus, but selling its surplus could prove challenging given an expected global glut of feed grain.
Britain predominantly exports feed quality wheat with the bulk of its sales made to customers within the European Union, particularly Spain, the Netherlands and Portugal.
Traders and analysts said this year's wheat crop was likely to be between 16 million and 17 million tonnes and could even come close to the record 17.23 million harvested in 2008, up by more than one-third from last year's 11.92 million.
"We don't seem to be getting the level of export business that we need relative to the size of the crop we've got. I think it is quite a concern," Jack Watts, the Home-Grown Cereals Authority's lead analyst on cereals and oilseeds, said.
Traders said a poor quality French crop this year has increased competition in the feed grain market, which already looked set to be intense with the United States set to harvest a huge corn crop.
"French (feed) wheat is much cheaper than the UK's so the UK can't compete in Spain, Portugal, Ireland or the Netherlands," one trader said.
"It needs to change because Britain needs to export feed wheat." Britain has been a net importer of wheat for the past two seasons, after heavy rains during the harvest and autumn of 2012 damaged the crop that year, and wrecked plantings of the following season's crop.
NORTH AFRICA:
Some traders are pinning hopes on substantial exports of higher quality bread-making grain to customers in North Africa, believing the poor quality French harvest may create opportunities for sales to that region.
"With the quality we have exports (to North Africa) could be as high as three quarters of a million tonnes," said one trader, adding that Algeria and Morocco provided the biggest opportunities.
Britain has had limited success in exporting to Algeria, one of the world's top wheat buyers, in the past.
The largest flow of British wheat to Algeria in the last couple of decades was the 120,000 tonnes shipped after the record 2008 harvest.
"There are sales that have already been made to Algeria private buyers which are normally filled by the French," one trader said, adding, however, that competition had been tough.
"You will compete against various countries. Germany has been cheaper than us recently for example, Black Sea as well," the trader added.
Some traders said there was a risk that French quality issues had been overstated.
They noted that Egypt, the world's top wheat importer, made its first purchase of French wheat in nearly eight months at a tender last week.
"We've got opportunities (to sell to North Africa) but we mustn't get carried away. The French have some feed wheat but they have good quality as well," one trader said.
Traders said farmers have been slow to sell, although activity was now beginning to pick up.
"We have been chronically slow to react to the (favourable) harvest conditions.
The UK has not been treating itself as an exporter in the past few months," one trader said.
Traders said the potential volume of Britain's wheat exports remained unclear but it was unlikely to be as much as the 3.52 million tonnes exported in the 2008/09 marketing year.
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