Defra mistake fuels flour problems
further speculation that China is importing large amounts of raw
materials wasn't enough to fuel further debate over rising flour
prices, Defra have reported a mistake was made in its June 2003
census.
George Mason, wheat buyer at Heygates said that Defra had conceded 'due to an internal processing error' it had largely over-estimated wheat plantings south of border by 63,000 hectares- the equivalent of 500,000 tonnes of wheat. The figure has now been reduced to 1.72 million hectares. This revised crop area is down 8 per cent from the comparative period and clearly has major implications on prices.
Mason told British Baker, "The situation has seen a further twist this week, with Defra reviewing its June census for wheat plantings in relation to its 2003 harvest."
He also added that trade estimates calculate that the UK will have exported 1.6 million tonnes by Christmas, leaving a total of just 300,000 tonnes to be placed between January and Harvest 2004.
Mr Mason continued: "Calculating that the UK has only a 300,000 tonne wheat surplus and uses 250,000 tonnes per week this means that if the 2004 harvest goes back by as much as two weeks the UK will be in deficit.
"The arrival of the harvest in 2004 next August/September really will be crucial. The dynamics of UK supply and demand have taken on a new look today."
"Earlier this week Defra announced that the UK harvest was even smaller than expected and wheat futures rose by £3 in a morning", Peter Knight, MD of Smiths flour mills (part of Northern Foods) said.
"The situation is very serious, because grain is not coming into the supply chain even at these higher prices, making it very difficult to cover forward requirements to the end of the 2003/4 harvest year in August."
He concluded, "Like all millers we are examining our cost base and will be making a decision on flour price movement early in the new year."
Those farmers who sold, at Harvest, during the summer months will be regretting their decision. Scotland is traditionally a large importer of wheat and now the trade feed price is reported to be approximately £125 (€178) per tonne, comfortably the highest figure for several years. Last week ADM Milling announced its intention to increase the costs of flour by £24.37 per tonne for breadmaking and £34.37 per tonne for soft flours due to the current global market problems.
Roger Baird of grain traders WN Lindsay, which operates in the Borders, Fife, and Tayside, said: "It is farcical to have made a simple mistake like this and it has most definitely had an effect on the market. To see a £5 per tonne rise on the futures market in just one day is very unusual."
