Wheat yields are looking good and prices are on a downward trend but manufacturers shouldn’t get their hopes up yet, according to one market analyst.
After a rocky couple of years, wheat harvests appear to be settling to nearer average levels but the next few weeks are crucial.
The UK wheat harvest is expected to start mid-to-late July. Helen Plant, senior analyst at the Agriculture and Horticulture Development Board (AHDB), said: “The crop looks good but we have been here before, when it’s all fine at the start of June but a couple of weeks of poor weather - particularly wet weather - and the situation changes.”
The good news for bakers and wheat processors is that the global market is bearish, with prices falling, she said.
“The reason prices have dropped is that the forecast for lots of crops globally is looking good. But there is still quite a lot that can go wrong. It is a very sensitive stage.”
Wheat imports over the last two years have been quite high in the UK, largely due to poor home-grown quality in 2012, and then last year there was a much smaller crop.
Plant added that with average yields and normal quality you can expect import levels to be lower.
“After the last two exceptional years, people would be pleased to get back to a more normal situation but every year has its challenges.”
In theory, UK wheat processors will have access to more local, competitively priced wheat, she explained, although UK bakers may be reluctant to rely on local supplies after being stung in 2012.
Hovis for example changed its ‘100% British wheat’ pledge in early 2013 after the poor UK harvest. It has since returned to sourcing British wheat, but tentatively , without claiming on pack due to continued uncertainty. Poor quality UK wheat also stopped production of two Weetabix cereal varieties because of technical problems in 2013.
In a HGCA insight report, AHDB analyst Jack Watts states: “The last four years have seen less than ideal weather conditions for the UK wheat crop, which has now sent the rolling five year average yield into decline (the 2009-2013 average was7.48t/ha).
“This makes a ‘typical’ or ‘normal’ UK average wheat yield of 8t/ha seem unrealistic, let alone the record yield of 8.28t/ha in 2008.”
The HGCA Market Report said this week that in the US, recent rainfall helped stem concerns for the winter wheat crop and spring wheat planting was progressing ahead of last year's pace. European crop prospects continued to look good, whilst the arrival of rain in Russia eased fears for the country's wheat crop, following dry weather.
However the International Grains Council revised down its estimates for global wheat production by 2% to 694 million tons, due to the expectation of more ‘normal’ average yields compared with last year's highs.