Wheat Market Update Wheat Market Update Amandeep Kaur Purewal - - PowerPoint PPT Presentation

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Wheat Market Update Wheat Market Update Amandeep Kaur Purewal - - PowerPoint PPT Presentation

Oct 16, 2022 186 likes •469 views

WGIN Stakeholders Meeting , Rothamsted 30 November 2017 WGIN Stakeholders Meeting , Rothamsted 30 November 2017 Wheat Market Update Wheat Market Update Amandeep Kaur Purewal Senior Analyst, AHDB Amandeep Kaur Purewal Senior Analyst,

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Wheat Market Update Wheat Market Update

Amandeep Kaur Purewal – Senior Analyst, AHDB James Webster – Analyst, AHDB Amandeep Kaur Purewal – Senior Analyst, AHDB James Webster – Analyst, AHDB WGIN Stakeholders’ Meeting , Rothamsted 30 November 2017 WGIN Stakeholders’ Meeting , Rothamsted 30 November 2017

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Overview

Global perspectives Another year of plentiful supply, however, although all looks calm on the surface there are some key risks to be aware of. UK focus A contrasting domestic situation compared with the global

  • picture. Why we can’t just label wheat as wheat and the

challenges in store post‐Brexit

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Global perspectives

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A smaller world wheat crop, that has grown

710 715 720 725 730 735 740 745 750 755 M tonnes

Global production Source: USDA

20 40 60 80 100 120 140 160 180 M tonnes

Production in top exporting countries

Australia Canada EU Russia Ukraine United States

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Nearby global wheat futures – UK prices move up

Source: AHDB 120 130 140 150 160 170 180 190 200 210 220 $/t UK feed wheat Chicago wheat Paris milling wheat

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China is distorting perspectives on global wheat

* Forecast Source: USDA 15% 20% 25% 30% 35% 40% Stocks-to use (STU)

Wheat stocks-to-use ratio

Global STU Global STU exclud. China

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Top five wheat exporters (Mt)

Source: IGC

2015/16 2016/17 (est.) 2017/18 (proj.) EU‐28 33.8 USA 29.1 Russia 32.5 Russia 25.4 Russia 27.6 USA 26.7 Canada 21.9 EU‐28 26.4 EU‐28 26.0 USA 21.6 Australia 22.1 Canada 20.8 Ukraine 17.4 Canada 20.3 Australia 19.0

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Dryness in Australia hits wheat production estimates

1 June – 31 August September

Source: Australian Government

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EU wheat supply and demand – Euro strength impacts need monitoring

Mt 2015/16 2016/17 est 2017/18 f’cast Opening stocks 12.2 14.7 10.1 Production 151.3 133.7 151.5 Imports 4.1 3.3 3.3 Domestic demand H&I usage Animal feed 120.2 58.5 55.8 116.6 58.3 52.4 116.3 58.8 51.8 Exports

  • inc. flour

32.8 25.0 27.0 Ending stocks 14.7 10.1 11.6 5 10 15 20 25 30 35 Jul Oct Jan Apr M tonnes

Cumulative EU exports - soft wheat

2015/16 2016/17 2017/18 Source: EU Commission

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Global maize supply and demand

Source: USDA 10% 12% 14% 16% 18% 20% 22% 24% 550 650 750 850 950 1,050 1,150 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18* Stocks to use ratio Production and demand, Mt Production Demand Stocks-to-use * Forecast

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Wider price spread between global wheat and maize

Source: AHDB 120 130 140 150 160 170 180 190 200 210 220 $/t UK feed wheat Chicago wheat Paris milling wheat Chicago maize

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Global wheat heading towards a precarious situation?

5 10 15 20 25 30 Mha

Harvested wheat area

US Canada EU Australia Russia 24% 26% 28% 30% 32% 34% 36% 38%

Proportion of global wheat stocks held by top exporters

Source: USDA

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Global summary

  • Another year of comfortable supply but elements of risk ahead
  • Increasing importance of Russia
  • Global wheat stocks excluding China paint a different picture

from the headlines

  • Wheat area in the main exporting countries in decline – higher

reliance on yield means higher volatility.

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Bringing the UK into focus

James Webster

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Above average production driven by yield

2 4 6 8 10 12 14 16 18 20 Mt Source: Defra

UK wheat production

*Provisional 5 year rolling average

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Dom. Use (Mt) 13/14 14/15 15/16 16/17* 17/18** Total 14.19 15.29 14.81 15.79 15.88 feed 6.37 7.08 7.09 7.31 7.40 5 10 15 20 Mt Opening stocks Production Imports 1 2 3 4 5 6 Mt Closing stocks Exports Exports & free stocks Operating stock required

*Estimate **2017/18 First official estimate Source: DEFRA, AHDB

UK wheat S&D – increasingly important to domestic price formation

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Competition in the feed sector

75.00 95.00 115.00 135.00 155.00 175.00 195.00 215.00 235.00 £/t Feed Wheat Feed Barley 0% 20% 40% 60% 80% 100% 2013/14 2014/15 2015/16 2016/17 2017/18 Q1

Usage of wheat, barley and maize in GB animal feed

Wheat Barley Whole and flaked maize

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Cumulative net wheat trade – many moving parts

Source: HMR&C

  • 1,000,000
  • 800,000
  • 600,000
  • 400,000
  • 200,000

200,000 400,000 600,000 800,000 1,000,000 Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun 2013/14 2014/15 2015/16 2016/17 2017/18

UK wheat trade and cumulative net-trade (2013/14 - 2016/17)

Imports Exports Cumulative net-trade

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Challenging bread quality and consistency, but offset by a stronger group 1 & 2 area

Source: AHDB Cereal Quality Survey

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Gross margins positive for winter wheat

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Worrying trend for the group 3 area and expect a further fall off in

  • quality. Rebound in 2018?

5 10 15 20 25 30 35 40 45 50 2011 2012 2013 2014 2015 2016 2017 % % of GB wheat area sown to nabim group 3 varieties % of group 3 samples meeting 74Kg/hl, 220s, 11.5% 4.8 5 5.2 5.4 5.6 5.8 6 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Disease resitance rating (1-9, where 9 is best) Source: AHDB Recommended List

Average resistance of nabim wheat Groups to Septoria tritici

Group 1 Group 2 Group 3 Group 4 Soft Group 4 Hard

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Indication of lower area in 2018/19

500 1,000 1,500 2,000 2,500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Kha

GB wheat area

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What about Brexit?

EU import tariffs applicable For in quota volumes Outside TRQ system or

  • nce quota limit is

exhausted Low/ medium quality soft wheat €12/t €95/t High quality soft wheat (14% protein, 12% moisture basis) n/a Variable rate

Domestic market price Export price Export price subject to EU import tariff Import price Import price subject to reciprocal import tariff 110 120 130 140 150 160 170 £ per tonne

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Wheat isn’t just wheat

Domestic market price 110 120 130 140 150 160 170 180 £ per tonne

A grade of wheat in surplus e.g. low grade bread wheat

Domestic market price 110 120 130 140 150 160 170 180 £ per tonne

A grade of wheat in deficit e.g. high protein bread wheat

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Challenges and opportunities for the UK wheat market

Challenges

  • Feed wheat facing a more competitive

market.

  • Agronomic challenges leading to

higher spring plantings (in particular barley).

  • Brexit

Opportunities

  • With potential import substitution in

wider agriculture, feed wheat demand could grow.

  • Could spring wheat see a boost, from

the increased spring plantings?

  • Niche markets present potential
  • pportunities for export.
  • Opportunity to press forward with

productivity, and have a competitive agri-food sector.

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For more on Brexit…

www.ahdb.org.uk/brexit

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www.ahdb.org.uk

‘Inspiring our farmers, growers and industry to succeed in a rapidly changing world’ ‘Inspiring our farmers, growers and industry to succeed in a rapidly changing world’

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amandeep.kaur.purewal@ahdb.org.uk

024 7647 8954

Thank you

james.webster@ahdb.org.uk

024 7647 8844