getting the best out of wheat wheat markets · ukraine – 24.5mmt ... exports/imports 158 137 166...

GETTING THE BEST OUT OF WHEAT

Wheat Markets Ensuring consistent quality in a volatile world.

Julius Deane

What drivers affect wheat markets?

• Supply & Demand

• Quality

• Foreign Exchange

• Logistics

• Politics

UK Wheat

Milling Premiums

Wheat Production 2015 & 2016

Canada –

30.5MMT

USA -

63MMT

Black Sea –

131MMT

Russia - 71MMT

Ukraine - 26MMT

Kazakhstan -

14.5MMT

Australia -

30MMT

Argentina –

14.5MMT

EU-27 -

145MMT

Canada –

29MMT

USA -

55MMT

Black Sea –

112MMT

Russia - 59MMT

Ukraine –

24.5MMT

Kazakhstan -

13MMT

Australia –

24MMT

Argentina –

14MMT

EU-27 -

156MMT

2015 2016

Wheat Quality 2016

Adverse weather is affecting

quality, lower proteins

Relatively good, lower

specific weights

Exceptional yields but mixed protein

and specific weights, case of quantity

over quality

Bumper crop forecast but

excessive rain is affecting

quality

Argentina – 14MMT

Massive variation across

Europe, losses in France and

Germany made up in Eastern

Europe

UK Quality – National picture

UK Quality – our Mill data

Wheat Type 2015 2016 2015 2016

Protein Specific Weight

Group 1 13% 13.2 13.5 78.2 76.2

Group 1/2 12% 12.3 12.6 77.6 76.7

Soft Biscuit 11.2 11.3 74.8 74.0

Hard Biscuit 11.6 11.6 77.2 74.6

Canadian 15.6 16.2 81.1 80.1

German E 13.8 14.3 80.0 79.0

French 11.1 11.4 78.9 77.5

UK Quality cont.

Nabim Variety Working Party

Zero Waste from a Flour Mill…

Canadian Quality

• Exports significant tonnage of high protein milling wheat annually

• Produces around 27MMT, considerable variation (20MMT – 38MMT) in recent years

• Pre-harvest reports suggested yield and quality would be good

• Reality - weather has slowed harvest and considerably damaged quality

Foreign Exchange – over the last 12 months

FX / wheat price

LIFFE in € - last 12 months

Long Term FX

£ vs. €since 1999 £ vs. $since 1992

GETTING THE BEST OUT OF WHEAT

Brexit implications on wheat & flour

• Weak currency – prices up for wheat & energy

• Export restrictions on wheat and flour?

• Ireland/France/Holland

• Import duties on wheat & flour?

• Staff

UK Supply and Demand

World S&D over last 5 years and forecast

Per MMT 11/12 12/13 13/14 14/15 15/16 16/17

Opening Stocks 199 197 177 194 216 241

Production 697 658 715 728 735 745

Supply Total 896 855 892 922 951 986

Exports/Imports 158 137 166 164 172 173

Food & Seed 550 542 572 574 574 589

Feed & Residual 146 137 172 132 136 148

Use Total 697 679 699 706 710 737

Ending Stocks 199 176 194 216 241 249

Short term LIFFE

3 Month LIFFE

Long term LIFFE

3 Year LIFFE

Long term LIFFE

15 Year LIFFE

Cautions ahead

•EU Maize crop not all in yet

•Dry start to planting season across EU (England Sept 82% LTA)

•Have “plenty” of wheat quantity, but restrictions on quality this season

•Oil market well off bottom

•Currency?

•Markets………