We Couldn't Erm, Run Out Of Wheat Could We?

24/11/10 -- It's a startling thought, but could the UK actually run out of wheat this season? We all know that we've been exporting it like there's no tomorrow. Based on the most recent data we've got, at an average 285,000 MT a month during July/September. Scarily, export pace has been accelerating during this period, with 386,000 MT shipped out in September alone.

If we were to carry on exporting at 285,000 Mt/month then 3.4 MMT would have exited these shores by the end of the 2010/11 marketing year in June. That is more than Defra's projected 1.3 MMT of exports for the entire season plus their estimated 2 MMT of carryout combined.

Of course the customs data we have is now almost two months out of date. If I was a betting man, and conveniently I am, I'd wager that the pace of exports during October and November was at least in line with the average so far. That would mean we've already shipped 1.4 MMT so far this season, so we're ahead of Defra's full year target with seven months still left to go.

One report I read yesterday, quoting a leading protagonist in the trade, suggested that wheat exports this season could in fact be more like 2 MMT. He's clearly right, and let's face it he should have a better handle than most on how much his company have exported during these "missing" two months.

What nobody knows (yet) is how much everyone else has exported too.

Other questions spring to mind, like how accurate is Defra's estimate of a 2010 wheat crop of 14.8 MMT? Some suggest that the reality might have bene lower than that. In addition what many seem to be overlooking is how much wheat got sold off as whole crop this year? Far more than normal according to anecdotal reports I was hearing back in the summer.

All of this suggests a very tight supply line for UK wheat come the spring and early summer. Now I don't really believe that we will run out of wheat per se, the market should see to it that compounders substitute other raw materials into their rations instead where possible. However price needs to encourage them to do that, and that would suggest even higher levels yet to me.