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Monday, April 8, 2013

Freeze affecting UK may be forced to import 'wheat'....


In the era of modern technology also, how much mankind is dependent on Nature gets exhibited once too often……. In India, rice is the staple food of South Indians; while in most parts of Northern India, it is the wheat. Wheat (Triticum spp.) is a cereal grain, originally from the Levant region now cultivated worldwide. In 2010, world production of wheat was 651 million tons, making it the third most-produced cereal after maize and rice. Whilst it is possible to make flour from many different types of grain, wheat easily is  the most widely used. This is because of the unique properties of wheat flour which allow the production of bread and other risen doughs. In UK flour millers use over 5 million tonnes of wheat per year, most of it grown in the UK, to produce over 4 million tonnes of flour.  That is used to make bread, rolls, cakes, muffins, crumpets, croissants, pastries, pizzas, biscuits, wafers, coatings, rusks, starch, confectionery, soups, sauces and many other foodstuffs.

The news is that UK will become a net importer of wheat in the year, for the first time in decade…. Which is stark contrast to 2011’s harvest when wheat was exported out of UK. It is stated that about  85% of the wheat used by UK flour millers is home-grown, although the precise proportion depends on the quality of the UK harvest.  The main sources of imported wheat within the European Union are Germany and France, whilst Canada is the main source for the rest of the world.  Flour millers in UK depend on farmers to grow enough grain of the right type for milling different kinds of flour.  It is stated that in the last few decades, there have been big improvements in the quality of wheat produced in the UK. Different varieties of wheat are suited to different types of flour, meaning that farmers have to be careful about selecting the right wheat to grow, and then keeping varieties separate at harvest time and in store.

Most wheat grown in the UK is winter wheat. This is planted in the autumn, generally between September and November. Winter wheat accounts for more than 95% of the UK grain used by millers. Grain planted in January-March is generally spring wheat. This tends to yield less, but can suit some farms well. Now their wheat production is on the downswing. The primary reason – the cold climate – the freeze that sweeping the country.  It is reported that the freezing weather is about to force them to import wheat for the first time in the decade.  Reports state that UK might have to import around  1million tones of wheat. Freeze also damaged many seeds, meaning next harvest will also be affected. The cold weather has devastated wheat crops across the country; the ruined harvests, which have cost farmers £500million, will force Britain, traditionally a significant net exporter of wheat, to boost imports by more than a million tonnes.

According to Farmers Union, the last 12 months have been unreal for the farmers – last April there was a drought like situation, then heavy rains and floods followed and then in the winter it is the frozen land and snow.  In the end, Britain is facing importing about 1.5million tons more wheat than it exports in this 'crop year' - which runs from July 2012 to June 2013. Last year the country saw net exports of 1.6million tons, according to the Agriculture and Horticulture Development Board.  It is not wheat alone, potato imports also expected to jump in the next crop year after plantings stood at just 4,000 hectares by the end of last month, just over 10 per cent of the 30,000 hectares planted this time last year.

Globally, China tops the wheat exporters, reportedly producing 42,856 TMT [thousand metric tones] more than India, the world’s second largest wheat producer. India produces around 65856 TMT but consumes 65283 TMT of wheat.  India imports some quantity of wheat and also exports some !  In India, it is almost the winter crop that counts. The state of Uttar Pradesh produces the most wheat in India, accounting for 35 percent of India’s total wheat production. The state of Punjab is the second largest producer of wheat in India, producing 22 percent of the nations total wheat production.

Some reports of the Agriculture Ministry of India put that India will do everything it can to push record volumes of wheat onto the global market to cut massive stocks.  Bumper harvest is expected to start rolling but sadly, the warehousing facilities are not that great.  Lot of produced quantity gets wasted that way.  Not sure whether the present scenario presents India a golden opportunity at least for the near future.  According to another report Railways are short of freight cars and is not just that properly equipped to cope with the wheat boom.  Nation’s imports are going up as the rich and wealthy clamour to import even those that are available in India and there has been spurt in luxury cars, cloth and edible items.  The bureaucratic procedures also stymie the exports in some manner as there is the tendering process and slow documentation  coupled with slower movements in port handling.

There is another twist………… according to a report in Bloomberg - China, the world’s biggest consumer of wheat, bought almost 1 million metric tons from the U.S. as prices slumped 30 percent from a four-year high reached in July.  It is stated that China on April 4 ordered 14 to 16 cargoes of so- called soft red winter wheat to be shipped from the Gulf of Mexico in the second half, the Beijing-based researcher wrote in a report today. Panamax-sized vessels that carry wheat typically take cargoes weighing about 60,000 tons. Imports may reach a “relatively high level” in the 2013-2014 marketing year, after reaching a projected 3 million tons in the current year, according to the report.

U.S. soft red winter wheat, including cost and freight, was quoted between $325 and $330 per ton on arrival at Chinese ports on April 5, equivalent to between 2,430 yuan a 2,470 yuan a ton after tax, according to the report. At Guangzhou port, the price of domestically produced so-called Jiangsu red wheat cost about 200 yuan more, according to grain.gov.cn., which is a unit of the China National Grain & Oils Information Center ~ and that is great business sense

With regards – S. Sampathkumar.
8th April 2013.

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