The UK government agency Defra's first prediction is that UK wheat production this season will be at its lowest level since 1981. Insiders expect this crop forecast to be revised down even further in the coming months. This lower production also means that more imports are expected.
Defra expects 10,1 million tonnes of wheat to be harvested this year. This is 37,5% less than in the 2019 season and well below the 5-year average of 15,1 million tonnes. On the other hand, this first forecast is higher than insiders had anticipated. They spoke earlier namely a harvest of 9 million tons, mainly due to the very wet autumn in 2019. Barley production is estimated at 8,4 million tons. This is 3,9% higher than in 2019 and also significantly above the 5-year average of 7,2 million tons.
Downgrade expected
Insiders expect Defra's harvest forecast to be revised downwards even further in the coming months. “The forecast is higher than calculations made by both government agency AHDB and several trading parties, so the figures are expected to be revised by the time the final figures are published in December,” said James Webster, senior analyst at AHDB to Farmers Weekly. AHDB's expectation is 9,9 million tons.
According to Webster, the difference stems from the fact that Defra does not yet have results for Wales and Northern Ireland. It has adopted the figures from the 2019 season for these regions (collectively 250.000 tons of wheat), while the harvest is also expected to be lower in those areas. The market has not really responded to Defra's harvest forecast, because a smaller harvest had already been priced in. This applies not only in the United Kingdom, but lower production figures are also priced in elsewhere. At the Matif in Paris this is reflected in a ranking that is significantly above the level of last season and the 5-year average.
Import increase in prospect
The consequence of lower wheat production is that an increase in imports is in the offing. Wheat consumption in the United Kingdom is around 15 million tonnes annually. With a production of 10 million tons or less, a significant shortage is visible. Another factor is that the quality of British wheat has declined. "A lot of imports can therefore be expected from the mill," Webster concludes.
There is little chance that the Netherlands will fill this 'gap'. The export of grain and grain products to the United Kingdom until August amounts to a value of €186 million, which is relatively low compared to other countries and other products. If we look at total exports to the United Kingdom, the Netherlands is in fourth place, with an export value of €48 billion in 2019. This mainly concerns pharmaceutical products.
Who can fill that gap? Probably Germany. This country has long been the United Kingdom's largest supplier of grain products. The export value of total goods exports in 2019 amounted to no less than €76,5 billion.