The UK wheat price has reached its highest point for the current crop year, with bakers set to face even higher prices from January as the entire UK export surplus is now spoken for.
The latest delivered wheat price (north west) for January 2011 has hit £219 per tonne, according to HGCA market data.
“Prices are now at their highest level for the current crop year, and not far from their high point of £230 in 2007/08,” said Alex Waugh, director general, National Association of British and Irish Millers. The London futures price for feed wheat has hit its highest ever level at £199, with breadmaking wheat costing significantly more.
Lewis Wright, wheat director, ADM Milling, concurred: “Wheat prices have continued to rise in recent weeks, with new weather worries [in Australia] compounding concerns about an already tight supply.”
Gary Sharkey, head of wheat procurement at Rank Hovis said it was now inevitable that the UK would have to import wheat in the New Year as all of the UK’s surplus export stock has now been sold. “The prolonged rainfall in the UK during August, resulted in an exportable surplus 35% lower than predicted.
"UK farmers managed to harvest the majority of bread-making wheat in good condition, but due to the UK offering wheat at a more competitive price than France, the much smaller surplus (1.3 million tonnes) found numerous and sometimes unusual, export demands,” he said.
“This surplus is now forecast to be shipped by the end of December, and the trade also reports export sales of circa 500kts from January – June, making imports a certainty.” He said, for example, that the price of German wheat was around £15-£20 per tonne more than the current peak UK prices.
FWP Matthews, joint MD, Paul Matthews explained that when most millers put their flour price rises through in September, some bakers would have had the option of taking out a 12-month contract, but said he believed quite a few probably took contracts out up to the end of the year, and will be faced with a big increase come January.
Another industry source said: “Quite a number of flour customers only took short-term cover back in September, because they thought, as some analysts and bankers were saying, that this was only a short-term spike in price, which has turned out to be wrong.” He added it was likely that, come January, millers would be looking to review their price structure again.
* In the table used alongside the published version of this story (17 December issue of British Baker) the key is incorrect. The columns in the table should show, from left to right, production, then consumption figures. For example the 2010/11 December figures should read: production estimate: 647 million tonnes, consumption estimate: 667 million tonnes. Apologies for any confusion caused by this error.