U.K. Millers Poised to Buy British as Sun Boosts Wheat Quality

U.K. bread makers will have the chance to buy more domestic grain this year after dry and sunny weather meant the quality of the domestic wheat crop improved from the worst condition since 1977.

Farmers are almost finished harvesting wheat, and while total production probably will be smaller than last year, more grain will be higher quality and suitable for milling into flour, said Gary Sharkey, head of wheat procurement at St. Albans, England-based Premier Foods Plc, the largest U.K. miller and baker. The U.K. may import half as much wheat as it did last season, with conditions “ideal” for crops, he said.

Milling wheat traded in Paris and feed wheat in London both tumbled 26 percent this year on NYSE Liffe on the outlook for record world production. Premier said in January it had no choice but to use imported wheat across its Hovis brand range except for Farmers Loaf after the U.K.’s wheat harvest last year was in the worst condition in 35 years.

“This year is a massive improvement,” said Sharkey, who declined to say whether Hovis will resume using only British wheat. “We’re anticipating that most millers will be returning to more normal usage of U.K. wheat this year.”

Production may be about 12.5 million metric tons, 6 percent less than in 2012, Sharkey said by telephone yesterday. The National Farmers Union estimates that excess rain last autumn meant farmers were unable to plant 25 percent of the area they’d intended for winter wheat, the primary variety grown in the U.K. that goes dormant in cold-weather months before harvest in August and September.

Warm Weather

The U.K. this year had its warmest, sunniest summer since 2006, after experiencing the coldest spring since 1962 and above-normal precipitation through the winter, according to the Met Office. The U.K. had its second wettest year in 2012.

Average grain weights were the lowest since 1977 last year, reducing the amount of flour that millers could extract from every kernel, Agriculture & Horticulture Development Board data show. This season weights rebounded 12 percent, and were higher than the three-year average, according to a preliminary survey of this year’s harvest results released Sept. 9.

Great Britain’s wheat harvest was 95 percent complete, according to an e-mailed report from consultant ADAS U.K. Ltd. on Sept. 12. Spot prices for U.K. milling wheat are about 15 to 20 pounds ($32) a ton lower than comparable varieties in Germany, the biggest foreign supplier to the U.K. last year, Sharkey said.

Lower Imports

Improved quality of domestic crops means the U.K.’s imports may drop to about 1.4 million tons this season, Sharkey said. That compares with purchases of more than 2.9 million tons last year that were the highest since 1978, customs data show. In July, the first month of the 2013-14 marketing year, the U.K. imported 328,511 tons of wheat, almost double the amount a year earlier, customs data released yesterday show.

Uncertainty about this year’s harvest, after the wet start to the season, caused millers to boost their stockpiles of imported grain, said Jack Watts, a senior analyst at the AHDB in Kenilworth, England. Millers held 157,100 tons of domestic wheat at the end of July, 17 percent less than a year earlier, while inventories of imported wheat were 28 percent higher than a year earlier at 145,600 tons, according to the Department for Environment, Food & Rural Affairs.

“I expect a slowdown in the import pace as we progress through the year, because it may take time for all the imported wheat to filter through the system,” Watts said. “Domestic flour millers in the U.K. will find it easier to use this crop than last year, so maybe we can recapture some of the domestic demand lost to European imports.”

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